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
