Wages and Prices

August 2022 Forums General discussion Wages and Prices

Viewing 13 posts - 1 through 13 (of 13 total)
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  • #230926
    Wez
    Participant

    I found this quote in the forum: ‘Let us invert the logic of our masters. If high wages mean high prices, then no wages should mean no prices. In other words, if the workers agreed to work for nothing they should be able to receive the fruits of their labour for nothing likewise.’
    This would make a great headline for the Standard given the continual propaganda that higher wages lead to higher prices. I think it’s time for a special edition on basic economics that could help those on strike.

    #230936
    alanjjohnstone
    Keymaster

    The Petrol Retailers Association said drive-off incidents, where a motorist fills up and makes no attempt to pay before leaving, have increased by 61% so far this year compared with the same period in 2021.

    https://www.theguardian.com/business/2022/jun/29/fuel-thefts-up-61-as-uk-petrol-pump-prices-keep-climbing

    #230938
    ALB
    Keymaster

    “If high wages mean high prices, then no wages should mean no prices. In other words, if the workers agreed to work for nothing they should be able to receive the fruits of their labour for nothing likewise.”

    I am afraid that line of argument won’t work. It does not follow from “if high wages mean high prices” that “no wages should mean no prices”. This assumes that wages are the only element entering into the price of something whereas in fact there is also the cost of the materials, power, etc.

    So no wages would mean only lower prices and if workers agreed to work for nothing they would not be able to buy anything and would starve. They would be renouncing even that part of the fruits of their labour that they do now get.

    A better approach would be to say that wages are a price and, when prices are going up, why shouldn’t the price of labour-power go up too. And that talking of a “wage/price spiral” is begging the question by assuming that an increase in wages leads to a rise in other prices. If you want to talk about a spiral it would be more accurate to talk about a “price/wage” one.

    You could make the point differently: if there were no prices there would be no wages and, if there were neither, then workers would have price-free access to what they needed and would (collectively) get the full fruits of their labour. A bit laboured perhaps but at least logical.

    #230980
    Wez
    Participant

    In fairness to Eric Boden (who wrote the quote) I suppose he was just inverting bourgeois economic logic.

    #230984
    ALB
    Keymaster

    In Capital Marx quoted John Stuart Mill: “If labour could be had without purchase, wages might be dispensed with.” And commented: “But if the labourers could live on air they could not be bought at any price.”

    Doesn’t seem a good idea to talk about no wages without also talking about the abolition of capitalism !

    Anyway, where can that quote you mentioned be found?

    #231004
    ALB
    Keymaster

    Found this by Eric Boden, which is good and still relevant:

    https://socialiststandardmyspace.blogspot.com/2021/06/do-wages-determine-prices-1925.html?m=1

    #231005
    Wez
    Participant

    ALB -I just put wages and prices in the search field at the top right of this page. It’s the first article link.

    #231007
    ALB
    Keymaster

    Here’s that article. What is interesting is that, written in 1919, it was during a time of rising prices whereas his other article, from 1925, was one of falling prices. In both articles he makes the same point — that wages follow prices (that the price of labour power follows the price of the goods and services workers must buy to maintain and reproduce their labour power).

    But I still don’t get the argument that if high wages mean high prices then no wages would mean no prices. It doesn’t make sense either in logic or as a debating point.

    Wages and Prices. The Socialist View

    #231035
    Wez
    Participant

    ALB – I took it as an example of ‘reductio ad absurdum’ in terms of the bourgeois economic argument.

    #231069
    alanjjohnstone
    Keymaster

    Perhaps this the wrong thread but resistance to price rises has begun with road protests against petrol prices.

    https://www.theguardian.com/business/2022/jul/04/fuel-price-protests-uk-motorways-today-latest

    Shame they cannot connect with the unions

    #231072
    ALB
    Keymaster

    These protesting self-employed are the victims of XR’s main achievement — increased repressive legislation:

    https://www.itv.com/news/2022-07-05/priti-patel-urges-police-to-use-new-powers-against-fuel-duty-protesters

    Not sure blocking the Severn Bridge was a good idea, though.

    #231145
    alanjjohnstone
    Keymaster

    Britain’s public finances are on an “unsustainable” long-term path with a debt burden that could more than treble without further tax rises to cover the mounting cost of an ageing population and falling fuel duties, the Treasury’s independent forecaster the Office for Budget Responsibility said.

    https://www.theguardian.com/business/2022/jul/07/uk-unsustainable-debt-set-to-reach-320-of-gdp-in-50-years-obr-warns

    Debt is on course to reach almost 320% of annual national income (GDP) in 50 years’ time – up from 96% now – unless successive governments raise revenues to offset rising costs.

    Richard Hughes, the OBR chair, said the UK’s debt burden had increased by £1tn above forecasts 20 years ago, following a series of economic shocks – and there was no reason to think these would stop.

    Interest rates are already beginning to rise, increasing government borrowing costs, while an ageing population adds a further burden to Whitehall spending departments, especially the health service.

    “Many threats remain, with rising inflation potentially tipping the economy into recession, continued uncertainty about our future trading relationship with the EU, a resurgence in Covid cases, a changing global climate, and rising interest rates all continuing to hang over the fiscal outlook,” the OBR said.

    #231481
    ALB
    Keymaster

    Critisticuffs have produced an article on the so-called “wage-price spiral”:

    https://critisticuffs.org/texts/wage-price-spiral

    The first part is good but it is not clear where the second part is leading — to the view that credit-financed businesses cause a rise in general price level?

    As they point out in the first part, businesses can’t simply fix prices at will. They have to take into account market demand. In fact, businesses always charge “what the market will bear” (or what they think it will). As explained by the business editor of the Times yesterday:

    “Until businesses feel it in their sales volumes, they are going to continue to carry on pushing up prices as fast as they possibly can.”

    However, at some point a business will “feel it” in its sales volume. At that point it will no longer be able to increase the price of what it sells without losing sales, and so won’t; in other words, the market won’t bear the price increase.

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