Shane Mage's prescription for overcoming a deflationary situation -- public spending -- is too narrow a view. Basically it is the prescription of Krugman, et. al. and under present conditions inadequate for the target.
Worse, even if public spending works, it is a merely temporary remedy, and changes nothing fundamental. It will retain growth in the economy as a universally aclaimed salvation. Think of an alternative remedy. First, Mage repeats what I posted yesterday -- inflation is the struggle between workers and employers for shares of total output. But in 2015 in the US and elsewhere, workers are disarmed in the class struggle. Monetarists describe great floods of money sloshing around the globe, and blame, alarming to them, potential inflation on that. But also sloshing around the globe is a giant reserve army, looking for work, and undercutting its own struggle for the share of total output. To fight deflation the size of the hours of work on offer by the employed and unemployed alike has to be reduced. That will drive up wages to ameliorate a deflationary situation. The way to shrink the hours of work on offer is to reduce the standard work week, with NO Cut in Pay. And if the working hours are cut, a potential change in aspirations, away from endless growth becomes possible. Cutting hours of work is scalable -- cut again, as needed. It is also exportable. Gene On Jan 26, 2015, at 7:35 AM, Shane Mage <[email protected]> wrote: > > On Jan 26, 2015, at 9:38 AM, Hinrich Kuhls wrote: >> >> yes, I agree with you on the point that Flassbeck and Lapavitsas are >> wrong on >> inflation... > >>> "With open eyes and without ideologi- cal barriers the ECB would have >>> found early on that unit labour costs, not the money supply, are the >>> main de- terminant of inflation for the union as a whole, as well as >>> for its national entities. >>>> From p.16 : In: >>> Flassbeck, Heiner; Lapavitsas, Costas (2013): The Systemic Crisis >>> of the Euro > > Whatever the political merits two years ago of advocating withdrawal > from the euro they were not wrong about inflation, neither in general > nor in regard to the euro. In general, the money supply (in Marx and > in reality) accommodates itself to the quantity of transactions to be > financed (price x quantity) rather than the opposite. Inflation is a > condition in which wage-earners have recently experienced increases > in their earnings and expect further increases, while sellers of > commodities have experienced recent increases in their prices and > production-costs and expect further increases. Since the main cost is > wages and the main demand-factor is working-class income, the process > is self-generated (which is why indexation drives inflation). > Political repression of the money supply (as Volker 1979-1982), by > drastic increases in the cost of credit, can break an upward > inflationary cycle. But there is no symmetry at all--in a declining > cycle no amount of central-bank money creation can by iytslef persuade > commodity-producers to hire at unprofitable wages or invest at a > negative return (ECB-FRB since 2008), which is what is meant by the > old cliché "pushing on a string." That is why overcoming a > deflationary situation requires direct demand-creating public > spending, which of course may either be for useful (proletarian) or > destructive (capitalist) purposes. >>> >>> >>> My question to you and all on the list may be viewed as naive - >>> nonetheless: >>> I had always understood that it was indeed the money supply driving >>> inflation. Indeed as I recall it in prior writings that Marx had also >>> believed that. >>> What am I missing? Is the view expressed by F & L - in fact correct? > > Shane Mage > > "All things are an equal exchange for fire and fire for all things, > as goods are for gold and gold for goods." > > Herakleitos of Ephesos, fr, 90 > > _______________________________________________ > pen-l mailing list > [email protected] > https://lists.csuchico.edu/mailman/listinfo/pen-l _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
