1920s >> 1925 >> no-246-february-1925

Wages and the cost of living

If the cost of living to the workers fell to the level of a few shillings per week, wages would be quickly reduced to a level which left them little or no margin after satisfying thqir wants each week.

This is due to the fact that labour power is a commodity, the price of which is determined by its cost of production. All commodities are subject to this law. There may be temporary fluctuations in the price of a commodity due to variations in supply and demand; but these compensate one another in the long run, and a mean level can be traced through the ups and downs which is the actual cost of production.

Wages fluctuate because they are the price of a commodity. The demand for labour power, however, is seldom in in excess of the supply; consequently wages for any particular form of labour power are rarely above the cost of production for that form. Striking an average and taking the more highly-paid with the lowest, we say the cost of production of labour power is synonymous with the cost of living.

As there are always more workers than jobs, competition for them is so keen that wages can always be kept down to a point which, for the bulk of workers, represents a meagre portion of the necessaries of life. It therefore seems to them, that if the cost of necessaries were lower their lot would be improved. The same result would follow if wages were higher and commodities remained the same in price.

The workers, only seeing this much, are between two stools. They can struggle for higher wages, or reduced prices; or both. To concentrate on price reductions is a fallacy; because cost of production determines prices. True the price at one time may be above the cost of production, but that very fact induces greater production and thereby reduces price. While some commodities are rising in price others may.be falling. In the first case the capital is increased, in the second it is withdrawn. In this wav the fluctuations compensate each other, and the cost of production is shown to be the real price. Hence the fallacy.

On the other hand, if the workers concentrate on wages they are met by stubborn opposition from the masters, and are powerless to effect any real improvement in their standard of living. Only by con stant struggle, even, can they prevent reductions in their standard inliving. On either hand they are faced with forces that are invulnerable to their puny weapons. Hence the need for them to understand Socialism.

Almost hopeless as is the struggle for higher wages any agitation for reduced prices is still more so. Yet we find the I.L.P. definitely advising the workers to follow this line. The National Administrative Council passed the following resolution (New Leader, 5-12-24).

“The I.L.P. declares that the rise in food prices is due to manipulation and speculation in food supplies by profiteering combines and trusts, and expresses the view that the effective remedy is State purchase of food and grain imports through a National Board of Supplies. We recommend the branches to educate and organise public opinion in favour of this reform with a view to its adoption by the Government at the earliest opportunity.” etc.

Whether trusts and combines are responsible for high prices does not affect the question, because trusts and combines cannot be broken except by breaking the capitalist state. The New Leader, 28-11-24 admits this in a leading article, as follows :

“There may be talk of breaking up the Trusts : America, with all the bull moose energy of a Roosevelt, tried that and failed​ The disease of profiteering is organic : it is not to be cured by such simple means.”

What then is the means according to the New Leader? In its issue 28-11-24 they say :—

“The ideal is to attain and to keep the general level of prices steady. We believe that by a conscious regulation of credit this can be achieved. It would be necessary, however, to take special measures to stabilise the prices of wheat and meat, and this again we would do by creating a national monopoly of these imported foods, based upon long-term contracts with the organised producers.Stunt thinking will not help us, nor guerilla attacks on the profiteer. Our battle is to alter the basic fact of instability with which private enterprise gambles.”

All the I.L.P. promise the workers is to fix the prices of necessaries at a level that would remain constant. Obviously wages would gravitate to a level that coincided with such prices, and the workers would be as they were minus the ups and downs in the money name of the value of their subsistence.

Notwithstanding this foolish advice, the I.L.P. in its leading article, New Leader, 5-11-12, says :—

“It is our task as a Socialist [?] Party, which is struggling to understand these obscure causes which govern our lives, to insist on probing this fundamental fact ot the trade cycle.”

They appear to recognise the need for serious study, but will require to prosecute that study for some time before they “probe the fundamental fact.” Such of their members as reach this goal will then, leave the I.L.P. to join a Socialist Party—the S.P.G.B.


Leave a Reply