On 4/14/06, Charles Brown <[EMAIL PROTECTED]> wrote:
wikipedia said:
"The New Zealand economist Bill Phillips, in his 1958 paper "The
relationship between unemployment and the rate of change of _money
wages_(emphasis added -CB) in the UK 1861-1957" published in Economica,
observed an inverse relationship between_money wage_ changes and
unemployment in the British economy over the period
examined."
On capitalists raising prices when wages go up, that is what Citizen Weston
was arguing and Marx was replying to in _Value,Price and Profit_. Prices
need not go up, if profits go down...
Marx was right, under the gold standard (which prevailed at the time),
which prevents any price inflation. Nowadays, prices may or may not
rise with money wages, but capitalists have much more control over
prices than under the gold standard. Currently, it's import and export
competition (along with the dollar exchange rate) which determines how
much power the businesses have over prices.
CB:> On the prices, price control without wage control. I know that's
radical, but I was trying to state it most radically - workers' dream. I
guess it was sort of the Keynesian backdoor route to socialism. Amazing that
with Samuelson, it was the prevailing "empirical" position in bourgeois
economics. I agree that it is an empirical observation,not a theory. But for
policy purposes , what works empirically works, regardless of why.
what works empirically may change. For example, to many economists
("monetarists") in the 1970s, it looked as if one could easily control
inflation by restricting the growth of the money supply (based on an
empirical generalization). But then when Volcker applied this advice,
the empirical generalization began to break down.
Price control made more sense in the 1970s than it does today, because
more domestic markets were oligopolized then than now.
I agree with the long quote from the Wikipedia (partly because I wrote
much of it, e.g., the part about the unplanned side-effects of the
Vietnam war).
CB: > But Friedman counts low unemployment as bad for his class too,
doesn't he ?
Tight labor market causes, well, wages to rise, because there aren't as many
unemployed competing for jobs, no ?
I don't know what he thinks about his class. He uses the word
"natural," which suggests that he sees a certain amount of
unemployment as something Nature bestows upon us. And if you mess with
Mother Nature (getting the actual unemployment rate too low), then
Mother Nature punishes you (with accelerating inflation).
...
me:
Instead, he wanted the
gummint out of the economy (except to preserve property, profits,
etc.) In his view, the unemployment rate was determined by Nature (the
"Natural" rate of unemployment). If the gummint messes with Mother Nature,
there's Hell to pay in his view.
CB:> I'm thinking Friedman was a necessary fake step away from gummit
intervention, as Reagan was a fake step away in practice. They faked the
idea that gummit had to get out of fiscal intervention to end the
Keynesian/New Deal policies of backdooring to socialism. Then they brought
the gummit back in to operate on the Phillips Curve in reverse. But ,
anyway, Friedman was always for gummit monetary intervention , wasn't he ?
Monetary intervention is Natural , isn't ? The only thing unatural is
intervention to lower unemployment.
right. The _laissez-faire_ vision always has a Big Brother state in
the background, using overt force (or the reserve army of labor) to
maintain capitalist rule rather than using "soft power" (legitimation)
as New Deal liberals would prefer.
me:
The natural rate of unemployment is in some ways similar to Marx's idea
of the reserve army of the unemployed. Marx saw capitalism as requiring some
minimum amount of unemployment to prosper (though Kalecki pointed out that
this wasn't necessary under fascism;
CB: Did fascism prosper ? Fascism kind of blew up before it could prosper.
well, at the time people saw Mussolini's Italy as prospering. Hitler's
Germany did see falling unemployment rates (and a falling wage share
of the product, BTW) in the 1930s. I wasn't setting the bar very high
in using the word "prosper."
me: > some argue that social democracy can lower this, too). For Friedman,
capitalism is natural, so it's Nature that requires a minimum amount
of unemployment.
CB:> But monetary stuff is not necessarily natural, so its ok for the gummit
to adjust the money supply, m-1, m-2, m-3...?
The main thing for MF is to maintain the scarcity-value of money to
keep prices from rising.
me:
in the US, price controls have always been associated with wage
controls, with emphasis on the latter. If profits are cut, the
capitalists would go ape-shit.
CB: > I get this. This "control prices/don't control wages" is a bit tongue in
cheek. I think it is part of the ultimate stages of the Keynesian model of
reaching socialism by "euthanizing the rentier" and the like.
I don't know if Keynes actually took that euthanasia stuff seriously.
The
capitalists would have to be asleep to let us put in policies to raise
wages, lower unemployment, and keep prices and profits down...
However, evidently the capitalists were somewhat asleep in the early sixties
, with the mainstream economics consensus being based on Phillips Curve
empirical talk. Friedman is the bossses counterrevolutionary leader.
no, it was a period of optimism for business. Profit rates were
generally rising from the 1950s to the 1960s. Inflation was low
(though it wouldn't go to zero). The domestic commies had been beaten.
This was before Watts and 1968. It looked like the best of all
possible worlds for many, especially white middle- and upper-class
males. So "we" could give the workers a little (lower unemployment)
and they'd give "us" a little, all in the pluralistic democratic
consensus way. (Of course, individiual capitalists "in the trenches"
wanted to keep _their_ workers' wages down, etc.)
To its credit, PC etc seems to suggest a peaceful economic route to
socialism, like voting it in. It is radical reform.
no, since the lower the unemployment rate, the higher inflation would
be. Just as we choose to buy the medium-price dish on a menu (rather
than the really good, but expensive, one) the vision was finding the
situation that was neither too hot, nor too cold, but "just right."
me:
in the early 1970s (and again in the later part of the Ford
administration), money wages rose more than prices. But during most of the
1970s, prices rose more than money wages.
CB: > It would seem from the standpoint of the ruling class, that this was a
mission accomplished. Their interest in "flation" is inflating prices and
deflating wages, including the effect of the relationship between the rate
of change of the two on each other.
yeah, but whose hand holds the whip?
me:
I wrote a lot of the Wikipedia text.
CB: > Yea,I thought I remembered you saying that. So, above is you talking to
yourself ? :>) You seem to be having a dialectic with your wikipedia note,
if the part I quote is from you.
of course I talk to myself. No-one else listens.
me: > Since then, I decided that it
wasn't worth it (because people come along and rewrite, sometimes
messing things up totally).
CB: That's terrible .
true, but keeping the Wikipedia straight is a labor of Sisyphus.
me: > Because of this, instead of rewriting the
entry on the "labor theory of value," for example, I'm going to write
a primer on the subject and simply put a link to it in Wikipedia so
that interested readers can look at it.
CB: I think you should stick in there and fight for the wikipedia note
location. Maybe we could organize a group to "patrol" the site.
nah, there are too many "Austrians," "libertarians," and plain old
shit-heads. It makes more sense for the left to have its own
encyclopedia. Louis' Marxism site has something like that. See
http://www.marxmail.org/faq_frame.htm
--
Jim Devine / "There can be no real individual freedom in the presence
of economic insecurity." -- Chester Bowles
