The economic theory behind these new inflation control programs
ignored the fact that inflation is a monetary phenomenon. Increase the supply of money and ceteris paribus its value falls- i.e. it buys less goods and services as the general price level rises.
placed excessive demands on the organized politics of the mixed economies.
They showed the bankruptcy of those politics. 'Money illusion' had been used to fool the workers that they were getting real wage increases. Savers had been shorn like sheep by negative real interest rates. Entrepreneurship had been replaced by Schmoozing. This Ponzi scheme was bound to collapse. When it did, the working class moved to the Right.
Within the new councils and commissions for planning the macroeconomy there remained the vestigial rights and privileges of private property.
Unless they didn't, as was the case behind the Iron curtain where people queued up for turnips- this is called 'repressed inflation'- or else risked their lives trying to get across the Wall.
After some success in the early 1960s, such guideline policies almost uniformly failed against the accelerating inflation at the decade’s turn.
The fall in the terms of trade for primary products helped but then OPEC reversed that trend
By the 1970s, economists and administrators sought to give such incomes policies greater force. Denmark had frozen wages in 1963; Great Britain in 1966 and again in 1972.
Britain declared a State of Emergency but ended up with a three day week. The Head of the Civil Service stripped off his clothes and rolled around naked on the carpet of Number 10 screaming about a Communist conspiracy. Heath was defeated but so was Wilsonism (there would be no 'white heat' of a tech revolution) while Callaghan and Healey openly embraced Friedmanite monetary theory. They hoped a 'social contract' would influence expectations but nobody expected anything but chaos from Labor whose rank and file were moving to the left while Dagenham Man decided to back Thatcher. She had a cock-eyed 'Rational expectations' theory about killing inflation without raising unemployment but instead presided over deindustrialization caused by high real exchange rates (the so called 'Dutch disease') North Sea oil defeated the Unions by pricing British labor out of the market.
The French froze prices in 1963,
Not really. They price and wage target was 4.5 per cent. But they were trying to increase competition so the hit on real output seemed small. The context was Bretton Woods and Balance of Trade deficits
the Swedish in 1970, and the Norwegians in 1972.
Sweden and Denmark were fighting devaluation. Sweden devalued 5 times between 1976 and 1982. It only went on free float in 1992. This meant that 'twenty years of Trade Union struggle' caused a fall in real wages of about 10 percent by 1994.
In the Eighties, every time the Swede's announced a price and wage target, the outcome was about double that. They also tried a Layard style Tax based Incomes policy. Meanwhile Thatcherites were laughing their heads off in London's forex markets. Ultimately the Swedes threw in the towel because their Courts rejected a law banning strikes. The message was clear. Unemployment has to rise because the non accelerating inflation rate of unemployment has risen. Lots of peeps don't want to work and its pointless pretending they are starving proles from the Great Depression. Then Sweden imported Muslims like crazy. They work but nobody wants to featherbed them too much.
In 1971, the Nixon administration froze both wages and prices for three months, followed by a partial system of wage-and-price controls.
Why did this strategy always fail? The answer is simple. After a month or two people start wondering how many Teamsters the Government would be prepared to throw in jail. The answer was obvious- none at all. Thus you either got 'wage drift'- i.e. employers paid more but said they weren't actually doing so- or the Unions brought down the Government. One solution was 'solidarity wages'- i.e. the skilled hold down their demands so the unskilled can rise. This failed even in Scandinavia. The other was 'Tax based Incomes Policy' but 'fiscal drag' (which put people into higher tax brackets) was already driving cost-push inflation. There was no money illusion or gross pay illusion. People looked at real disposable income. Having negative real interest rates meant credit rationing of an increasingly insane and discriminatory type. The asset stripper profited. Decent firms went to the wall.
None of these efforts succeeded in halting world inflation. There were two reasons for this failure. First was that, given private control of investment, profit limitation often came at the price of capacity expansion.
There was one and only one reason for inflation. Excessive money supply growth. Public Sector Borrowing Requirements were being financed by printing money. Also, Governments were doing stupid shit with their money. This was equally true of Command economies. But Governments always do stupid shit with money. Thus inflation is a monetary phenomenon.
Of all the sectors impacted by the Nixon freeze, for example, none was more important than energy: while the controls insulated the US from the geopolitical price shock from the Middle East, under their restraint on profits the oil companies nevertheless reduced output and shortages developed.
The US had a bonkers regulatory regime which nobody could understand. This started with the Nixon shock but then the OPEC embargo prolonged the craziness. What was the result? Reagan got in and scrapped all that shite. Ayn Rand came to be seen as a great prophet. Keynes was in the crapper along with Marx and Mao and so forth.
“I have yet to see… any firm evidence that efforts of the sector… have produced any significant increase in investment or in employment, and that is the test,” said Jack Jones
Whom Mrs. Thatcher should have gone down on her knees to personally thank for his role in putting her in office and turning the Labor Party away from Socialism. He was once considered the most powerful person in Britain. Thanks to him, the British decided that even decent Unionists must not have any say in Economic Policy.
of the British Trades Union Congress (TUC) of British incomes policies in 1977. “In my view, an industrial strategy which relies only on polite talks with industrialists and trade associations… is not a strategy at all.”7
If that 'polite talk' is as stupid as shit- sure. But this was not an inevitable outcome. The Unions could have made sensible suggestions and hammered out a deal such that productivity rose, real wages rose, international competitiveness rose, the real exchange rose. Instead they fucked up the lives of young working class people. They created mass unemployment. They returned England to the days when Etonians ruled from Mayfair Mansions while the proles drooled away their lives drunk or stoned out of their heads on dingy Council Estates. Meanwhile, even darkies who had followed the Thatcherite path could rise to become Chancellor or Home Secretary.
So long as investment and production remained by law privately controlled, investment decisions were held hostage to private prerequisites on profit rates.
Sadly, decisions of whether to work or go on strike were also privately controlled. Why can't those stupid proles not understand that they should just do whatever stupid Lefties tell them to do? Also must men insist on having penises? Penises cause RAPE. Also, why are women so attached to their babies? Some babies have penises. Penises cause RAPE. Ban them now.
The political scientist Gerhard Lehmbruch appraised the failure of such experiments in West Germany and Austria: “Enlarging the field of corporatist economic decision-making beyond incomes policies (or, more exactly, control of wage policies) would have meant, among others, control of profits and of investment…”
It would have meant totalitarian rule. If you don't go to work we ship you to a Gulag.
The late Leo Panitch described these 1970s experiments in inflation control as the “specific form of state-induced class collaboration in capitalist democracies” characterized by a “belief in the neutral state and its promulgation of ‘planning’.” To Panitch, faith in the state’s neutrality in the class struggle revealed “the emptiness of this planning.”
Canadian Marxist nutjobs are nicer than non-Canadian nutjobs. But nutjobs they remain. Still, someone has to teach worthless shite at Universities because otherwise young people might actually learn something useful there.
The social and the national in price stabilization
Popular consent was the second cause for the failure of incomes policies.
They are also the reason we can't ban penises even though they cause RAPE.
During the 1970s, North Atlantic governments exhorted their publics to participate in incomes policies on the grounds of “growth,” but continuing inflation revealed the weakness of this purpose as a cause in itself capable of securing popular consent to planning.
Only because that planning was shit. It was perfectly possible for the Unions to have hired smart peeps to hammer out a mutually beneficial deal with Corporations and the Government. They preferred to maximize rents for existing older, mainly White and mainly Male members.
If macroeconomic stability required falling real wages or controls on employer profits, what good was it?
If people saw that planning was smart not stupid or crazy, they might have got behind it. The problem was that money was being wasted. Corporations were being subsidized just as Government bureaucracies where growing while worsening outcomes. Meanwhile good career paths for young working class people were disappearing. Previously, Unions had looked after 'Dad's lads'. Now the lads were abandoned and soon the Dads too were forced to take their redundancy payments and try to make the best of things. That's when they discovered that post-war affluence had been based on pauperizing savers. Jack Jones became a Grey warrior fighting for the 'triple lock' on pensions. Once again, it was the young who paid the price.
A general expansion, in which all lines of industry are stimulated by an undirected expansion of spending, proved impossible without inflation.
Because that spending was on stupid shite. Smart spending need not be inflationary.
Particular public goals, such as affordable housing, increased income for disadvantaged groups, a growing renewable energy sector, or greater social equality, compete for resources with other private goals, such as luxury housing, corporate profits, or fossil fuel company operations.
Then they stopped doing so because the former were just virtue signalling shite which some cunts pretended they wanted whereas the latter had to do with cool shiny stuff everybody really liked.
Some sanctions must come into play to consciously allocate resources toward a capacity profile geared toward the desired composition of full-employment demand.
Gulags. That is the sanction you need.
War, NBER founder Wesley Mitchell wrote, alters economic calculation. Rather than figuring goods in terms of money to direct production by the profit motive, managers must figure money in terms of goods to plan necessary financing for the social project.
Nonsense! They just use cost plus pricing and lobby for increased quotas. There is allocative inefficiency but scale and scope economies become available- provided Corporations don't have too much power to scupper needful coordinating actions- e.g. ensuring fighter planes fly at the same pace as the bombers they are supposed to protect.
Prices are controlled, the government enters the market as a purchaser and as a distributor, frequently distributing on a non-price basis. Resources must be allocated to wherever they can expand the necessary composition of final goods required by the program. Unless some particular composition of output is defined, government efforts to break any particular set of capacity bottlenecks in the course of a general expansion will only reveal other points of resistance up and down the supply chain. “The factor that sets the effective limit to accomplishments shifts from month to month, still more from year to year, and from country to country,” Mitchell wrote.
Operations Research and Dynamic Programming using Ito integrals can tame the underlying problem. In any case, like the Chinese, the Ruling Party can give a role to markets and then take back control rights. Totalitarianism can win through. But it does need Gulags. Socialism can triumph in the US provided you replace darker skinned people in Jail or ICE detention with Trade Unionists and Liberals and Activists of various descriptions. The good thing about Communism is that it kills lots of Lefties and bleeding hearts. But that's also the bad thing about Communism. Democracies can disintermediate nutters in a polite but firm manner. Then sensible deals can be done.
What those committed to the principle of incomes policy discovered during the last crisis of capitalism was that
Marx had shit for brains. Capitalism does not suffer crisis or lysis. It is a pragmatic accommodation to changes in the expected fitness landscape.
the objective of national planning had to be spelled out to the public in terms more specific than “economic growth” if private participation was to be ensured.
National planning had to be sensible for any such spelling out to work. But in so far as it existed, it was stupid shit.
For such a strategy to have any chance of success, the bottleneck-breaking authorities must have some sense of the desired composition of final spending which their efforts are intended to satisfy.
But greedy schemers get to be the bottleneck-breaking authority by hook or crook so as to extract a rent.
In a representative government, only elected leaders can provide a moral sanction for such national planning. “What was the collective purpose that could weld individuals together and whose expression could be the object of politics?” the historian Richard Adelstein asked of the Progressive-era legal reforms. “What… was the public analogue to corporate profits?”
Expected Social Welfare as some sum of utilities. Democratic politicians can get 'stability pacts' by drumming home the lesson that sustainable real wage growth is possible if there is a virtuous circle of productivity enhancing investment. You can also keep rents and property prices under control while reducing the working week and improving education and training. Germany did this though it may have underinvested in infrastructure and done stupid shit when it comes to energy policy.
The question has confronted peacetime government ever since.
No it hasn't. Keynesianism died. Nobody gave a shit about mass unemployment. They liked confident leaders like Thatcher and Trump.
In the United States, only the armaments program of World War II, and the particular composition of procurement contracts and materials required to meet them, has supplied such a collective purpose. It has had no parallel in America’s national history.
Because there are no more Hitlers or Tojos who think it a smart idea to declare war on America.
The debate over incomes policies during the 1970s turned on this underlying theoretical point. As Great-Society economist Gardiner Ackley
who thought Johnson should pay for Vietnam through taxes- in which case the US would have pursued Irma Adelman's plan for South Vietnam. Once fiscal control of a project passes to Congress, sooner or later the cheapest option is taken.
wrote during the Nixon controls:
Many believe that the ‘consent’ of the great economic interest groups—which, in the long run, is the only possible basis for a successful system of inflation control—can only be secured and maintained if the system of wage-price restraints is coordinated with the other tools of government policy in order quite consciously to promote a progressive redistribution of income in specific directions which society approves.
Whites really wanted Blacks to have more money- thinks nobody at all. Them guys got ginormous dongs. Fuck they need dollars for?
Indeed, to the extent that the source of existing inflationary pressure lies in a fundamental dissatisfaction with the existing income-distribution on the part of one or more powerful groups, while other groups resist any significant change in that distribution, there can probably be no real ‘consent’ to an incomes policy.
But we know German style 'stability pacts' can work well enough.
The unhappy search for popular consent during the 1970s exhausted the Cold War-liberal faith in what had become of the welfare state.
Fiscal drag meant that the Government was flush with funds which it flushed down the toilet. Only by reversing fiscal drag could big Government be pruned back. Indexing Tax allowances removed a perverse incentive for politicians. But inflationary bias was not contained till China rose and rose. Now that Sanctions will reverse globalization, all the nutters are coming crawling out of the woodwork clamoring for Government money to piss against their favorite wall.
The need for a larger social vision brought Ackley, the consummate American Keynesian technocrat, to a belated realization earlier reached by countless leaders of movements for social transformation—from the “industrial democracy” of the Gilded-Age socialists and the Populist Party’s “cooperative commonwealth,” to Martin Luther King Jr’s “Arc of History”—the realization that those who hope to self-consciously open new chapters in human experience must of necessity turn the page of their own history.
Spoiler alert- this is done by dying. That's how your own history will end.
Nixon, in his cynical way, attempted this renaissance: it won him an inauguration, but at the cost of the prestige and moral authority of the federal government. Weakened by the Nixon administration’s exploitation of the situation, public officials’ role in controlling prices came under coordinated business attack during the 1970s. Employer organizations such as the Business Roundtable; research institutes funded out of business grants and private fortunes, such as the Cato Institute, the American Enterprise Institute, and the Heritage Foundation; and professional associations such as the Federalist Society remade the legal scheme bequeathed by the New Deal.
Because those it had been bequeathed to sucked ass big time. Also, they may have been off their heads on drugs.
In the process, the courts and Congress pared government rate regulation considerably. As interests recomposed, under deindustrialization and growing trade liberalization, into a competition for national income between the energy sector and the growing service industries, among them the most refractory being health care,
Why do Americans want health care? They should concentrate on abolishing penises. Penises are very evil. They cause RAPE!
a popular understanding of the responsibility for prices was displaced from the institutions of production and distribution
which were very 'popular' indeed. Most of those involved were disabled hobos raised in LGBTQ single parent homes.
to the Federal Reserve and the Treasury.
who didn't have any 'popular understanding' at all.
Prices fixed privately by giants in the market are now the norm:
Previously, prices were fixed by homeless peeps in consultation with members of the Prostitute's Collective.
hence the crisis when the sovereign interest requires an expansion of effective demand.
My sovereign interest is requiring an expansion of effective demand for free cable. Also more porn on cable. I don't really understand the internet.
The legal scheme and intellectual priority given to inflation’s macroeconomic causes shapes our social world.
Not really. It is obvious that the relevant Supply shocks can be reversed. The question is whether the West wants to go down the road of coexistence with a Eurasia which is going down a very different ideological road. It is possible that we can draw up the drawbridge and get rid of dirty energy and dirty money and dirty politics and dirty, filthy, atrocities of the sort we see in Ukraine. This may be a pipedream. Still, to make it possible, we would need increased subsidiarity. Macro can go fuck itself. Tiebout sorting is how community spirit is built up.
With public budgets restrained, and employer power over production and prices unchecked,
and workers power to urinate and defecate not even subject to basic scrutiny and approval by the neighborhood party cell
Also, how come some people are allowed to have penises? Dicks cause RAPE! Ban them immediately.
we turn to interest rate policy in the brink. Within the labor market, this intellectual prohibition against structural reform protects and enforces the largely autonomous structures of race, sex, gender,
Why? Because dicks have not been banned. Get rid of dicks and there won't be no friggin' autonomous structures.
ethnicity, and citizenship shaping the distribution of income.
with their dicks. Why does no one get that unless we ban dicks they could shape the distribution of income. Indeed, they could endanger macro-economic stability and over-fulfillment of the five year plan.
Low wages for public school teachers in many states, for example, are the legacy of
them being crap at teaching or being forced to teach crap. High wages for private school teachers- or guys who impart useful skills- are based on a virtuous circle whereby they so enhance the earning power of their pupils that their wage represents a declining share of the economic surplus generated. That's how Baumol cost disease is defeated. It isn't by teaching Critical Race Theory. We must have Critical Penis Theory. Anything much bigger than my micro-dick must be sliced off immediately. This is the only way we will achieve a truly equal and fair society.
an era when the profession was dominated by women whom many expected to work only partial careers earning second incomes for their husbands.
The reason this was so was because those States provided plenty of jobs which didn't require much more than the 3 r's. However, there were always some very well paid American teachers. Moreover, 'Tiebout' competition meant that outstanding academics and coaches were lured to new built High Schools in new built suburbs. Property values were connected to good Public Schools- some of which were very good indeed.
The growth of open-shop construction is a perverse example of the revolution in ethnic and racial norms: enabled by the chiseling of federal labor and employment law, the right to work for poverty wages has been made into a positive case for diversity in the industry.
Whereas closed-shop construction is great for the Mafia. The problem is that every cement foundation will crack because of all the bodies buried there.
In our own time, the persistence of differences in income and prestige by gender and race has been a boon to a beleaguered labor movement, which rightly sees them as a basis for new organizing.
But the true beneficiary will be the robots.
But until wages policies are coordinated with both the macroeconomic throttle and control of other incomes, the growth of a new labor movement will be vetoed by the public preference for recession over inflation.
This is not currently the case. The supply shocks have nothing to do with a battle between Government, Labour, and Corporations over the cutting up of a cake that is turning stale.
In a country where elections reign supreme, only a broad social vision will command the popular consent required to coordinate this national program.
Only if everybody shares this lunatic's 'vision' will he get what he wants.
In the experience of the United States, only victory in war has supplied that vision.
No. The First World War changed nothing. The Second did because suddenly America became the richest and most powerful country on earth. It had an Empire in all but name.
When American planners sought to use the symbols of patriotism and growth to shoehorn a stabilization policy into the legal schema of the Cold War, the result was a profound disorganization of national life.
There were no 'American planners'. Congress was jealous of its privileges.
The inadequacy of these symbols alone for the project of renovating that legal scheme is even greater than for pursuing stabilization within it.
What can be more symbolic than the ginormous penises everybody except me has? Ban ginormous dicks! Do it now!
Building up institutions to serve this function toward ends more distinguished than human destruction
big dicks ruin lives! Why do you think nuclear missiles look like ginormous dicks? It's all a Capitalist plot! Did you know that the Illuminati had dicks? This shit goes all the way up to the top. Biden has a dick. Guess who didn't have a dick. That's right- it was Hilary (real name Lenina Stalinsdottir). Fuck you Trump! Fuck you very much!
today is a task of historical importance.
That should be 'world historical importance'. This fucker can't even get the jargon right.
As the quest for inflation control policies returns from its historical sojourn,
it went on holiday to Venezeula- right?
and the conflict of social classes is reconvened,
and Marx rises from his grave along with Lenin and Trotsky
these essays offer new perspectives on one intractable problem of our modern forms of social organization.
No. They are stupid shite. Modern and premodern forms of social organization need to smart things. This means that virtue signalling nutjobs must be disintermediated. Nobody really wants to live in a world where all dicks are the same size- not even me. This is because some dudes need bigger equipment so as to make babies. Without babies our species dies out. I don't mean intellectual babies like this Elrod dude. I mean the kind which fill up their nappies with stuff less stinky.
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