Re: [Marxism] Who Said "Debauch the Currency": Keynes or Lenin?

["farmelantj@xxxxxxxx" <farmelantj@xxxxxxxx>]

 "Politicus E." <epoliticus@xxxxxxxxx> wrote:
---------------------
With respect to Jim's comment, Michael is correct but let us bear in
mind the view that nominal wages are sticky but aggregate prices are
not has been held by a long chain of economists and others since
Keynes too.

In accord with this premise is the political conclusion,
held by certain elements of the capitalist class and their
intellectuals, that inflation is an instrument of class warfare that
weakens the working class (under certain conditions), and thus must be
utilized to good effect should the circumstances warrant.  A good
recent example of this political position can be found in an article
by Samuel Brittan (FT, 28 May 2009, 'Inflation can act as a safety
valve'), which concludes "[i]n some circumstances a little bit of
old-fashioned inflation is the best safety valve available [to induce
workers to accept a reduction in the real wage.]""

A number of (centrist, neoclassical synthesis) Keynesian economists
also would defend this position.
-------------------------------

It seems to me that inflation can serve as a weapon
for either side of the class struggle depending on
particular conditions.  Keynes and many other
bourgeois economists have noted that it can
be used as a means for cutting workers's real
wages without eliciting opposition from them
since their money wages remain untouched.

On the other hand, progressives have often been
willing to tolerate a bit of inflation as a side effect
of fiscal and monetary policies that enhance the
bargaining power of workers in relation to capital.
The expressed concerns from capitalists over the
virtues of maintaining price stability to some extant
veil their real concern which is that wages should
not rise higher than productivity gains.  When that
does happen there is a redistribution of income
from capital to labor, which is obviously a big
no, no from capital's standpoint.  Capitalists
in general are quite willing to tolerate  recession,
even a severe one if the end result is to weaken
the bargaining power of labor.

This IMO goes a long way to explain the coolness
of European ruling circles to Obama's proposal
that they reflate their economies in tandem with
the US.  The US has weak labor unions and a much
less developed infrastructure of social protections
than does Western Europe.  Hence, US labor markets
are said to be more flexible.  Western European
countries generally have much stronger trade unions
and a stronger social safety net, hence European
capitalists are fearful that reflation would lead
to wages their shooting upwards, thus redistributing
income away from capital there.

Jim Farmelant




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