The wage price spiral refuted

Za die-hard konzervativce: plačno-inflacijska spirala empirično ne obstaja, ni nobene empirične potrditve zanjo. Ever. Torej, policy-makerji, nehajte zlorabljati ta termin. Kajti pravi namen zlorabe tega termina ni skrb pred inflacijo, ampaka zaščita visokih dobičkov za lastnike kapitala.

“Moreover, “A general rise in the rate of wages will result in a fall of the general rate of profit, but not affect the prices of commodities.” In other words, wage rises are much more likely to lower the share of income going to profits and thus eventually lower the profitability of capital. And that is the reason capitalists and their economist prize-fighters oppose wage rises. The claim that there is a wage-price spiral and that wage rises cause price rises is an ideological smokescreen to protect profitability.”

Michael Roberts Blog

Do ‘excessive’ wage rises lead to rising inflation and thus drive economies into a wage-price spiral? Back in 1865, at the International Working Men’s Association, Marx debated with IWMA Council member Thomas Weston. Weston, a leader of the carpenter’s union, argued that asking for increased wages was futile because all that would happen would be that employers would put up their prices to maintain their profits and so inflation would quickly eat into purchasing power; real wages would stagnate and workers would be back to square one because of a wage-price spiral.

Marx responded to Weston’s argument firmly. His reply, which was eventually published as a pamphlet, Value, Price and Profit, was basically as follows. First, “wage rises generally happen in the track of previous price rises” – it’s a catch-up response, not due to ‘excessive’ and unrealistic demands for higher wages by workers. Second, it is not wage…

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