Marx made important contributions to inflation theory but remember that he wrote Wages, Prices and Profits in the 1860s, when the world was still in the gold standard era i.e. a fixed exchange rate regime that exerted a natural deflationary force to the economy.

Marxist theory of inflation has developed much further in the hundred years since. Robert Rowthorn’s conflict theory in the 1980s is a much better representation of inflation in a modern economy, which took into account of endogenous money supply, the conflicting force between firm’s mark-up profit and leverage strength of the union in pushing for real wage increase, the central bank setting interest rates, and most importantly, the collapse of the Bretton Woods causing the natural deflationary force of the fixed exchange rate regime to be lifted and made the Keynesians lost control of the inflationary spiral.

That’s when neoliberals came in and brutally crush the unions.

[–] Melkonian@lemmygrad.ml 25 points 3 days ago (5 children)

I respect you've spent a lot of time in the shadow realm of modern economics and I understand that finance capital has more ways to punish workers. This, however, is not a refute on Marx's arguments against the so called wage-price spiral. Any wage increase won by the working class is a direct benefit to the working class. Saying otherwise only serves the capitalists and leads to to why the US no longer makes economy cars and affordable housing. Deflation, wage-price spirals, and every other argument as to why wages can't increase and prices can't fall is NOT for the benefit of the working class.

[–] xiaohongshu@hexbear.net 11 points 3 days ago* (last edited 3 days ago) (3 children)

Two different things here.

First, wage-price spiral is not a problem until you have full employment and all resource utilization is fully occupied. In that case, GDP can only be driven by inflation. Strong unions can push through real wage increase and cut into the capitalist profit, which was why the UK went into an inflationary spiral as it did in the 1970s because the capitalists did not want to give up their profit. The Keynesians did not have an answer for that, hence the neoliberals came in and crushed the workers unions.

Second, I agree with you that under current neoliberal system, where full employment is not reached, there won’t be wage-price spiral. Hence, you won’t find it in the IMF study that Roberts quoted.

However, for any socialist who is serious about bringing full employment for the economy to ensure the prosperity of the working class, you cannot avoid this problem. As I already presented, you either go with Stalin’s mechanism or the MMT price anchor mechanism.

If you ignore this problem, you WILL get inflationary spiral as the Keynesians did, and the next thing you know, your government is overthrown. Again, ignore this at your own peril. So many left wing governments continue to regurgitate neoliberal model and see how they end up.

[–] Melkonian@lemmygrad.ml 2 points 3 days ago (1 children)

Any serious socialist would not be using capitalist economics and markets to determine prices.

[–] xiaohongshu@hexbear.net 8 points 3 days ago* (last edited 3 days ago) (1 children)

Tell that to the Soviet and Chinese economists and all the Marxist economists.

[–] Melkonian@lemmygrad.ml 1 points 2 days ago

Would if I could, but we've got the benefit of hindsight and modern computing. Not sure which Marxist economists you are referring to, but if they are reinforcing capitalist economic propositions they should be discarded. The UK could have gone another way during the inflation of the 1970s, but the same old tired nonsense was wheeled out and we got the old Thatcher classic "There is no alternative."

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