Wages and Inflation

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democratic form but also their class content. As once the bourgeois and kulaks [prosperous peasants] were not permitted to enter the Soviets, so now it is necessary to drive the bureaucracy and the new aristocracy out of the Soviets.

In the Soviets there is room only for representatives of the workers, rank and file collective farmers, peasants and Red Army men.

Democratisation of the Soviets is impossible without the legalisation of Soviet parties."

51, emphasis added)

DEFENCE This programme for the political revolution in no way means any attack on the nationalised property relations which remain the great gain of the Russian Revolution. On the contrary, the removal of the parasitic and reactionary bureaucracy is the only way firmly to safeguard these gains from the dangers of imperialist attack.

The Third International was wound up by Stalin in. 1943, (though the reactionary policies of the Kremlin are still followed by most Communist Parties).

Only the Fourth International (despite the capitulation of the Pabloite faction in 1953 to the illusion that the Stalinist bureaucracy could become a revolutionary force) carries forward today the fight for internationalism and against bureaucracy. The WSL is at the forefront of that fight.

Stalin As the rate increase in of the retail price index soars upwards from 9% in 1973, through 16% last year to 21% over the last twelve months, the campaign is stepped up to lay the blame for inflation squarely on the shoulders of the working class.

The report of the government's Price Commission at the end of April stated bluntly: "The primary factor causing prices to rise is - and can only be - rising labour costs" Such arguments, accepted by the ruling class and labour leadership alike leave workers defenceless in the face of the worsening economie depression. It is vital to understand that inflation is an expression of the developing capitalist crisis and not simply the result of wage increases. only cease in capitclist society that class. the only class in carries out the process of labour, is is the source of all value. No commodity contains value that does not also contain necessary hours of labour in its production. This is why internationally in the present inflationary crisis paper currency (which is churned out in splitseconds on printing presses, containing no value) but which, until 1971, was tied directly to a relationship with gold (which is the only form of money under capitalism which actually embodies real value) is declining rapidly in purchasing power against manufactured commodities which do contain labour. Currencies now "float" chaotically up and down against each other, massively worsening the crisis.

The argument that wage increases are the main cause of inflation totally ignores the question of productivity (output per man). For example over the. period 1962-72 the average annual growth in productivity was 3.8 per cent and that of real incomes after tax only 2 per cent. The working class therefore over that period contributed more to capitalist profits in the form of productivity increases than it took in the form of wage increases. It cannot be argued therefore that that the cause of the increasing rate of inflation during this period from 3.5 per cent a year over 1962-9 to 8 per cent a year over 1969-71 was wager eating into profits.

Productivity increases are the main method available to capitalism to offset the inevitable tendency, discovered by Marx, for the rate of profit to fall. They increase profits by reducing the portion of the working day which the working class spends producing the commodities it will purchase with its wages and increasing the portion spent producing profit for the capitalist.

However productivity increases are less and less effective in achieving this since they involve further automation, mechanisation or the introduction of new techniques, which are all expensive, and an increase in the ratio of fixed capital (machinery) to labour power. The problem for the capitalist is that he cannot derive profit from machinery, but only from the exploitation of the working class. As a machine runs it produces commodities, but wears out. Each finished commodity therefore includes in its price a proportionate part of the cost of the machine.. (Under inflation of 21% annually of course this in itself causes a dilemma for the capitalist, who must continuously find extra capital to simply maintain the same machinery.) Mean### PRICES In a desperate attempt to restore profits in an economy distorted by this kind of inflationary government finance, firms raise prices. Price rises in one sector are cost increases in another, thus provoking further price rises throughout the economy. This is the root of inflation. It is a phenomenon of the unplanned nature of the capitalist system and its world-wide crisis of value. Wage rises are largely a response to this, an attempt by the working class to preserve its living standards.

As the crisis of profitability deepens, so inflation mounts higher, and at an annual rate of 25 per cent threatens to disrupt world trade and destroy the value of the pound. At such a rate of inflation further inflationary spending to maintain full employment is out of the question, and the slump, capitalism's own method of restoring the rate of profit, cannot be postponed any longer. Thus unemployment now climbs towards a million alongside a high rate of inflation.

The restoration of profitability to capitalist production demands the elimination of unprofitable firms, and lines of production, leading to massive increases in unemployment, further increases in the productivity of labour through speed up for those still in work, and, at the same time, wage cuts. Yet in the antiquated areas of British industry a massive re-equipment is needed to compete internationally in the growing slump. This requires investment which cannot be easily obtained on the money markets. The obliging Labour leaders however have set up the National Enterprise Board to provide a pool of government finance to back up capitalism.

Before the objective requirements of the operation of the law of value the reformist Labour leadership prostrates itself completely. When Healey demands that unions return in wage bargaining to the limits of the TUC guidelines, he means a wage cut. No trade unjonist should be taken in by Len Murray's assertion that the guidelines, by specifying that wage increases should equal price increases, defend workers living standards. Murray is talking about money wages. Because of direct and indirect taxation, a money wage increase considerably in excess of price rises is necessary to defend living standards. strength of the working class, and which Thatcher, Joseph, the right wing of the Tory party, and now the fascist National Front, now seek to exploit to the full to drive the lower middle class politically to the right.

That sections of the working class are already realising the need for such a strategy can be seen from the recent motion calling for the conversion of threshold agree ments into sliding scale agreements passed by the Scottish TUC conference last month. Threshold agreements are a tactic by the employers to defuse the class struggle by giving compensation for some inflation. The sliding scale demands compensation for all increases in the cost of living as determined by the working class itself.

POWER

Such a strategy comes into direct collision with the need of capitalism to restore profitability on the backs of the working. class. through wage cuts achieved by forcing real wages to lag behind price increases. Because of this the STUC motion is just the beginning. The fight for the sliding scale poses the question of power: how is the economy to be run? The struggle to defend living standards put this question of the agenda now. There must be no mistake: the productive forces exist for a defence and an improvement of living standards. The only barrier is the capitalist system of production which will not develop these productive forces because it cannot do so profitably. This is why a decisive element in the struggle to defend jobs and wages is for factory committees to be established to exercise control over the employer on behalf of the workers in each plant. These factory committees: have the task not only of struggling against all forms of speed up, but also of forcing the employer to reveal the account ledgers and the actual workings of the industry, thus beginning to accumulate the basic knowledge needed to run a socialist economy, once industry has been nationalised under workers management.

The struggle for the sliding scale and factory committees therefore poses the question of breaking with the Murrays and Healeys who are agents of capital in the ranks of the working class and building a new leadership under the banner of the Fourth International to fight for power.

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Paze SOCIALIST PRESI PRESS, Thursday May 15th, 1975