Re: Incomes policies

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

In my experience, the problem with incomes policies is that they
politicize the distribution of income. Now that's okay as far as
I'm concerned, but the powers that be (especially the capitalists)
would rather not have such questions as income distribution determined
in an open way as with incomes policies.  They prefer the "natural"
way of fighting inflation -- recessions -- which (on the surface)
seems non-political.

Incomes policies are typically implemented when labor unions,
labor parties, or other non-capitalist political forces are
strong -- or in extraordinary circumstances such as Nixon's
delinking of the dollar from gold. The powers that be have to be
pushed away from the traditional way of fighting inflation (high
unemployment).

Incomes policies often turn out to be in reality *wage controls* --
because wages are easier to control than prices and because of
the usually-dominant role of capitalists and their allies in politics.

Also, the Weintraub style mark-up equation that is so often used to
justify wage controls as a way of controlling prices breaks down
under condtions of high demand, high capacity utilization.  So
when demand is high, prices rise, as do mark-ups, depressing real
wages. (The mark-up equation is most appropriate to conditions of
excess capacity.)

With incomes policies depressing real wages, not only is distribution
politicized, but one side is getting the short end of the stick. This
encourages overt conflict between classes: strikes, demonstrations,
and so forth.  This typically leads to their abandoment.

Recessions also depress real wages.  But many or most people see
them as apolitical events.  So in the end, they are preferred by
the powers that be.

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
if bitnet address fails, try jndf@xxxxxxxxxxxxxx