Re: Unemployment and Keynes

[Jim Devine <JNDF%LMUACAD.BITNET@xxxxxxxxxxxxxxxxx>]

On Thu, 24 Mar 1994 15:53:23 -0700 <maxsaw@xxxxxxx> said:
>. . .
>There was an interesting article in Challenge by John Cornwall on the theme
>that labor militance that succeeded in winning wage concessions would end up
>undermining its political gains because of inflationary consequences, so that
>other concessions ought to be considered along with forbearance on wage
>increases.  The primary quid pro quo should be employment increases and
>security, not wages, along with industrial democracy and redistributive
>public expenditure, among other things....

Maybe I'm dumb, but is Cornwall advocating workers forgoing militancy
in order to get job security, employment increases, industrial
democracy, and redistributive government policies???  Now
during the last 15 years or so, workers have been forgoing militancy
in droves and in return they've gotten less job security, stagnant
growth in employment, more dictatorial and anti-union attitudes
on the part of employers, and government policies that redistribute
upward rather than downward.  Assuming that workers have adaptive
expectations (i.e., they learn from the past), why should they
go along with Cornwall's proposal?  Non-militancy hasn't paid off
in the past, why should it do so in the future?  Do workers
have the *power* to forgo militancy in the first place? Isn't
it rather that employers have the power to engage in an extremely
militant campaign against workers' wages, job security, occupational
safety & health, government programs, etc.?  It seems that his
proposal (if I understand it correctly) is like telling a boxer:
sure, you're flat on the mat after being hit by 15 years of
round-house punches, but if you refuse to get up before the
referee's count of ten, things will work out well for you!

Maybe workers don't have adaptive expectations but instead
have rational expectations.  In that case, what is Cornwall's
model of the economy?

I for one am not very optimistic about the possibilities for
labor militancy these days.  After all, at least in the production
of goods, the boss can easily move the company's operations to
some low-wage haven.  Even soft-ware companies are using programmers
in India these days.  But it's a real illusion to talk about
workers being able to forgo militancy and to expect any kind of
benefits from that act.  What's needed instead is a new kind of
militancy, more political and more internationalist in orientation.
Maybe we can end the steady sinking of real wages relative to
productivity that's encouraging world stagnation.

sincerely,

Jim Devine   BITNET: jndf@lmuacad    INTERNET: jdevine@xxxxxxxxxxxxxxx
Econ. Dept., Loyola Marymount Univ., Los Angeles, CA 90045-2699 USA
310/338-2948 (off); 310/202-6546 (hm); FAX: 310/338-1950