At 10:19 PM 1/29/95, Eugene Coyle wrote: >Ok, I'll take the bait. What are you saying here Doug? Are you saying >that high capacity utilization raises costs and thus CAUSES price >increases? > That seems implied in what you wrote. But you also imply the other >assertion, that businesses raise prices to raise (or what is the same >thing, "protect") profits. > The argument that rising costs -- whether it is labor or any >other cost -- makes businesses raise prices has always amused me when >it comes from some neo-classical or a businessman using neo-classical >support for the argument. For if a business can raise prices it will. >It doesn't need an excuse. > My view is that high capacity utilization is associated with >high demand, and is thus a time when businesses can raise prices. The >high capaicty utilization is not the cause of the high prices. > One could argue that either way, prices rise, i. e. inflation, >and things are bad. Inflation, yes; bad, not necessarily. But yes, whether it's the CU causing bottlenecks or CU as a a proxy for a tight economy, high CU is associated with rising inflation rates. It's a fact. > Yes, of course it is part of the class struggle. But it seems >to me that we can bring the struggle more sharply into view if we say >that that is what is going on, rather than let our enemies get away >with the implication that bottlenecks and shortages are causing the >inflation. I'm all for bringing class into ostensibly technical questions. > Finally: Why the popularity of the word "bondholders"? I've >never subscribed to the view that the FED is protecting bondholders. >The Fed is protecting capitalists by keeping unemployment high. That >keeps wages down. The interest is much wider than "bondholders". I >suggest that we talk about capitalists, not bondholders. Gene In a sense all big capitalists are bondholders in that all want to keep their wealth in liquid form. While you might expect the Fortune 500 industrialists to object to tighter money, in practice few do - the auto industry (esp. Chrysler) and housing are notable exceptions, and the NAM even pipes up now & then. Most F500 types understand that keeping things a bit slack keeps workers pliant, and may even make it easier to gobble up small fry and competitors. Besides, the personal wealth of most CEOs is in financial instruments, which can't help but influence their political views. Doug -- Doug Henwood [[EMAIL PROTECTED]] Left Business Observer 250 W 85 St New York NY 10024-3217 USA 212-874-4020 voice 212-874-3137 fax
