Re: German real wages in the Depression\Classical Views

[Michael Perelman <michael@xxxxxxxxxxxxxxxxx>]

Building on Paul's story, we all know that the market is contradictory.  So we cannot
expect that we can transcend contradictions by increasing or decreasing wages.
Rising wages can counter a downdraft & they can also encourage increasing
productivity, but rising wages can also encourage more speculative financial activity
if capitalists seek to maintain a target rate of profit.



On Wed, Jun 08, 2005 at 05:56:12PM -0400, Paul wrote:
> Jim D. writes:
> >This seems to be the idea that if wages fall enough, it restores
> >profitability and thus spurs accumulation. I argue against this as a
> >universal rule. Rising profits in a severe recession can make
> >underconsumption problems worse.
>
> Right, IF that were a universal logic (total wages down, total profits up,
> long term accumulation resumed, end of story) it would be a neo-classical
> self-correcting business cycle theory, not a classical theory.
>
> But I also wouldn't buy the converse *as a universal logic* (total wages
> up, profits down, long term accumulation resumed, end of story).  A "pure"
> Keynesian story.  Although it could be true in a particular circumstance,
> at a particular time.
>
> One has to account for BOTH going on at the same time look at the
> elasticities of the impact of each and include the fact that long run
> profit trends *may* be caused by other issues in addition to wages, such as
> technological stagnation.  This is why I emphasized that the story that
> Doug heard sounded only expositional -- to show that the Keynesian story
> *could* be an incomplete look at the picture.
>
> Paul

--
Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 530-898-5321
E-Mail michael at ecst.csuchico.edu