[PEN-L:130] Incomes Policies, etc. {was Re: Winning Socialism}

[James Devine <jdevine@xxxxxxxxxxxxxxx>]

I wrote: >> in simple terms, the theory tells us that the capitalists have
the whip hand in the economy and if the economy and the government don't
deliver the goods to them, they punish us with unemployment and/or
inflation.   Note that this is very different from MF's theory is which is
simply a matter of supply and demand. <<

Tom writes: >But neither version gives us the whole story. Both leave out
the possibility of administering incomes and prices. Monetarists object to
price/income controls on the grounds that price signals operating through
the market are the only reliable way to allocate resources efficiently ... <

Because I don't think "perfectly competitive markets" play a big role in
our economy, I am not adverse to incomes policies on this level of the
discussion. Incomes policies can stop the vicious circle of inflation, in
which inflation causes expected inflation, which causes inflation, etc.

>But the real problem with price/incomes policy is that it raises political
demands for making the administrative process transparent. It's just sooooo
convenient to blame "the market" (which is to say blame the victim for not
having marketable attributes) for personal hardship.<

right.

There are other problems: incomes policies (IPs) do not solve the problem
of structural unemployment. If the gov't pumps up aggregate demand so that
the structurally unemployed get jobs, that puts a big upward pressure on
wages and prices. IPs work poorly if they conflict radically with what the
"market forces" are doing.

I'm no mystical believer in the market, but when the US had 1 or 2 percent
unemployment during WW2 with wage-and-price controls, it also had
full-scale rationing and "black" markets. A no-strike pledge was in force
(though there were strikes). A national consensus had formed around
fighting the War. I doubt, however, that the political forces exist to
re-create that situation without some Foreign Enemy to fight.

>All I'm trying to say is that the contradictions of Keynesianism are
political, not economic. I think it's really convoluted to try to show why
Keynesianism can't work "economically". And it makes for some strange
bedfellows. <

So are you defining Keynesianism as being incomes policies? (BTW, as I told
Max, just because an argument is "convoluted" doesn't mean that it's wrong.
Besides IPs, do you have an argument against my case?)

BTW, the last big advocate of incomes policies in the US was Richard Nixon.
He thought that they were great, especially for getting himself re-elected.

In the US at least, labor unions have generally opposed incomes policies.
They complain that wages are more controlled than prices under IPs. They
also know how boss-friendly turds like Nixon can use IPs in an
opportunistic way. (I bet Hitler imposed price controls. This is not saying
that IPs are fascist, but rather that they can be used in an opportunistic
way.)

Incomes Policies make the most sense in a place where both capital and
labor are very centralized (and where capital doesn't see fleeing to
low-wage areas as an option), as it used to be in Sweden. IPs used to be
one piece of the bigger program of social democracy; from what I've read,
the IPs helped the rest of the program work better, just as the rest of the
program helped the IPs to work.

But it's hard for me to see them working in a mutually acceptable way in
the US.

(BTW, Tom, are you saying I'm a bedfellow? I never slept with that woman!)

>Keynesianism could work just fine, thankyouverymuch, if the rentiers would
kindly take Maynard's advice and slit their own throats. By the same token,
though, the dictatorship of the proletariat could sail into harbour
uncontested if the capitalist geese would kindly roast themselves and stick
knifes and forks in their backs.<

I don't think that the opposition to full employment (if that's what you
mean by Keynesianism) is just rentiers. Industrial capitalists want the
disciplining force of the reserve army of labor.

>And it should go without saying that monetarism can prevail for as long as
the other 95% of us can tolerate having our faces rubbed in shit and be
told that it was our free choice.<

At least using the terms that macroeconomists use, we don't have monetarism
now. Greenspan is not a monetarist. He doesn't care about the money supply
very much; instead he focusses on the inflation rate uber alles. He doesn't
follow policy rules (e.g., constant growth of the money supply) but instead
"fine tunes" the economy. But he's quite reactionary.

What we see is not ideological dominance by monetarism. Rather, we see the
political dominance of financial capitalists and more generally by capital
as a whole.

in pen-l solidarity,

Jim Devine jdevine@xxxxxxxxxxxxxxx &
http://clawww.lmu.edu/Departments/ECON/jdevine.html
"If heartaches were commercials, we'd all live on TV." -- John Prine.