Re: [Marxism] [UCE] coronavirus bailout, inflation and Marx

2020-03-30 Thread John A Imani via Marxism
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John Reimann wrote:  " A large chunk of the bailout will be going to
workers, in effect raising their buying power or at least limiting the fall
in their buying power.
Will that lead to inflation and does it contradict the views of Karl Marx?"

I had written a response to a very similar proposition where in an article
(Short View) in the FT the following statement was to be found:

"...there is growing interest in the power of another type of Chinese
consumer — the more regular, less flashy sort. Incomes for China’s poorest
40 per cent are rising at about 9 per cent a year."

Because it is behind a 'paywall' I have appended the FT article below my
comment that was published in the FT on 12-21-15.

JAI

Marx’s meditation on Citizen Weston revisited

https://www.ft.com/content/d3474ce2-a588-11e5-a91e-162b86790c58

December 21 2015

Sir,

Jennifer Hughes’s comments on the increase in purchasing power of China’s
poorest 40 per cent (Short View, December 17) illustrates why it is that a
rise in the minimum wage does not result in an increase in unemployment.
Nor does such an increase engender anything more than but a brief but
passing inflationary episode.

After describing a fall in the Chinese luxury goods market, Ms Hughes
writes that “there is growing interest in the power of another type of
Chinese consumer...Incomes for China’s poorest 40 per cent are rising at
about 9 per cent a year — more rapidly than for the better off . . .
investors should think about sectors that could get a boost from the bottom
40 per cent.”

Suppose that against a given level of production such an increase occurs.
The additional purchasing power then causes a rise in the price level of
what AC Pigou called “wage-goods” as the pay rise does not allow ventures
into “non-wage goods” (luxury items), only an increase in purchasing of the
former.

This rise in the price level — and through that, the profitability — in the
“wage-good” sector entices some entrepreneurs to exit the “non-wage good”
sector and enter into “wage-good” production. The consequent rise in the
level of this production soon strips the inflation away, sending pricing,
profitability and the general level of inflation back towards their
pre-wage increase mean levels. Only now there is relatively more production
of “wage-goods”.

In addition there will be an increase in the tempo of the economy as income
will have been transferred towards sectors inhabited by those with greater
marginal propensity to consume. Of course some pre-existing concerns
operating marginally at profitability will be unable to afford the wage
rise and will exit the field. These losses will be more than compensated by
the job growth in the “wage-good” industries as a portion of the market’s
productive forces come to be shifted away from the fashioning of luxury
items as “investors . . . think about sectors that could get a boost from
the bottom”.

There is nothing new in this thinking. Marx described the same almost
exactly 150 years ago in his meditation on *Citizen Weston in Value, Price
and Profit
*.

John A Imani
Los Angeles, CA, US

Short View-Jennifer Hughes 12-16-2015

*https://www.ft.com/content/e0b7db56-a3aa-11e5-8d70-42b68cfae6e4
*

“Lower end of the market adds to China’s mass appeal Incomes for poorest 40
per cent rising at about 9 per cent a year.”

“If 500 stormtroopers posing on the Great Wall of China don’t give a film a
boost, then nothing will. As markets digest the implications of the Federal
Reserve’s interest rate decision, the launch on Thursday of the latest Star
Wars installment speaks to another key trend for next year: the Chinese
consumer. Luxury goods sales there are still dropping at an alarming rate.
This week Prada reported a 26 per cent slump in its China business and LVMH
has begun closing some stores. But there is growing interest in the power
of another type of Chinese consumer — the more regular, less flashy sort.
Incomes for China’s poorest 40 per cent are rising at about 9 per cent a
year — more rapidly than for the better off, according to Gavekal
Dragonomics. The middle 40 per cent has greater spending power, so they
drive the bulk of consumption and overall consumption growth is still
likely to slow. But investors should think about sectors that could get a
boost from the bottom 40 per cent.

The sheer numbers involved would be significant if, as elsewhere, their
extra funds go towards better quality goods and experiences. More lipsticks
and cosmetics might be one example. China’s biggest beauty chain, AS

Re: [Marxism] [UCE] coronavirus bailout, inflation and Marx

2020-03-29 Thread MM via Marxism
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> On Mar 29, 2020, at 3:20 PM, John Reimann via Marxism 
>  wrote:
> 
> https://oaklandsocialist.com/2020/03/29/coronavirus-bailout-inflation-and-karl-marx/
>  
> 

I would have thought that what determines whether rising wages will fuel 
inflation is whether production can keep up with demand for consumer goods, and 
I think that’s obviously in serious question at the moment. Roughly 15% of US 
food and about 35% of overall consumer goods are imported, so US supply of 
“everyday stuff” is still heavily dependent on domestic production. For US 
capitalism, I believe the question of the moment is how to meet that demand 
(even if at a lower level due to everyone scaling back their spending) at a 
time when public health imperatives prevent domestic production from returning 
to anything like pre-COVID levels any time soon.

Of course, another question of the moment is how to prevent a cascading debt 
crisis from taking down the financial system if government supports to the 
millions of people suddenly without an income aren’t sufficient to keep most 
people above water for the next year or two.
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[Marxism] [UCE] coronavirus bailout, inflation and Marx

2020-03-29 Thread John Reimann via Marxism
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"I’ve been trying to think through the issue of inflation in light of the
$2 trillion Coronavirus bailout and its affects on inflation.

"A large chunk of the bailout will be going to workers, in effect raising
their buying power or at least limiting the fall in their buying power.
Will that lead to inflation and does it contradict the views of Karl Marx?"
Here's my view on why it won't and doesn't.
https://oaklandsocialist.com/2020/03/29/coronavirus-bailout-inflation-and-karl-marx/

-- 
*“In politics, abstract terms conceal treachery.” *from "The Black
Jacobins" by C. L. R. James
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