Libmonster ID: U.S.-1892
Author(s) of the publication: V. I. TEREKHOV

"Exhortion and Controls. The Search for a Wage-Price Policy 1945 - 1971". Ed. by C. D. Goodwin. The Brookings Institution. Washington. 1975. 326 p.

This peer-reviewed book focuses on the U.S. government's policy on wage and price regulation in the postwar period. This work seems to conclude a series of studies on various aspects of this problem published by the Brookings Institution earlier [1]. We are talking about measures to stimulate economic growth, combat economic downturns and inflation, ensure employment and regulate labor relations. The appeal to the field of finance is very characteristic of the United States, where the nationalization of the financial and credit sphere has become one of the most advanced forms of state-monopoly capitalism. Government regulation of prices and wages concerns not only economic, but also socio-political processes, since the administration, when implementing a policy of controlling wages and prices, inevitably faces problems in the relationship of entrepreneurs and their organizations with trade unions. Interest in government control of wages and prices increased dramatically after the Nixon administration resorted to emergency measures in August 1971, "freezing" prices and wages for 90 days, and this short-term action itself developed into a whole series of measures that covered almost the entire American economy and in one way or another in the form that existed before April 1974.

The book is based on the materials of a two-day conference held in Boston in November 1974, which was attended by 45 prominent economists, as well as a number of former employees of all post-war administrations. The conference was called to summarize the experience of price and wage control and develop recommendations for the future. When preparing the reports that later became separate chapters of the book, not only materials from the libraries of all recent presidents were used, including those that were not published until 1974. The authors of the collection are Neoliberal Keynesians dealing with problems of economic history: C. Goodwin and N. de Marchy (Duke University), S. Herren (Vanderbilt University), S. Gordon (Indiana University), W. Barber (Wesleyan University), J. Cochran (Southern University). Carolinas) and A. Weber (Carnegie Mellon University). During the discussion, some very frank opinions were expressed about inflation and the fight against it.

The compilers of the collection write that the actions of the Nixon government served as the most important incentive to develop problems of government control over wages and prices. The president of the Brookings Institution, C. Gordon, wrote::

1 "Studies in Wake-Price Policy": J. Sheahan. The Wage-Price Guideposts. Washington. 1967; A. R. Weber. In Pursuit of Price Stability: The Wage-Price Freeze of 1971. Washington. 1973.

page 190

"These developments occurred in a country that relied heavily on the power of market competition as a regulator of business activity, and under an administration that previously resisted any government intervention in private' wage and price decisions ' (p.VII). At the same time, the authors note that already under Truman, the government was faced with the whole complex of problems caused by inflation and in one form or another existing now. Even then, almost all the concepts that American economists and politicians still use were introduced. Moreover, even then, according to the authors, the entire arsenal of anti-inflation tools used today was used (p. 92). This statement, made in 1974, is tantamount to admitting the ineffectiveness of the means used so far to combat inflation and its consequences. At the conference, some of its participants were openly perplexed by the fact that only the methods and methods of forming government policies for regulating prices and wages were considered, while the question of the effectiveness of this policy itself was, in fact, carefully avoided (pp. 385-386).

This once again confirms that, despite the depth and scope of state - monopoly regulation, many of the most important tasks cannot be solved within the framework of the capitalist system. Despite the detailed development of individual techniques and methods, bourgeois economic thought is not able to find a way out of the crisis situation. The entire system of state-monopoly regulation of the economy, which was built since the 1930s according to Keynesian schemes, was initially programmed for the development of inflationary processes. According to one of the authors of the book, A. Weber, the simultaneous achievement of the main goals of economic policy of all post - war US governments - maintaining full employment and price stability-was impossible. The only way to create the appearance of full employment was to sharply increase military spending, which in turn sharply increased inflation (pp. 353-354).

Much more interesting are the materials that show the differences in the approach to solving the problems mentioned above that exist between individual groups of the ruling class. The book shows that after World War II, government regulation became an integral part of American society. At different times, regulation took on a different color, and often it changed even during the same administration's time in power. This was most evident in the second half of the 1940s and during the presidency of D. Eisenhower. The idea of linking wage growth to overall production growth was put forward in January 1946, in the midst of a debate about how to develop government regulation. It was then that the principles that later became the basis of the "guidelines" policy were formulated (pp. 28-29), and the position of entrepreneurs who sought to establish strict limits for wage growth was theoretically justified. In case of their violation, the responsibility for the increase in inflation was assigned to the trade unions. This was a typical neoconservative concept of state-monopoly regulation of prices and wages, openly implemented at the expense of workers, a policy of strict state regulation applied to the trade union movement, in contrast to neoliberalism, which combined state intervention in socio - economic processes with a liberal-reformist solution of domestic policy issues.

The very idea of strictly linking wage growth with labor productivity growth is clearly anti-labor in the policy of "benchmarks", since the source of inflation is sought not in the huge unproductive expenditures of the bourgeois state, not in the actions of entrepreneurs who inflate prices in the pursuit of profit, but in the struggle of workers for wage growth. The class essence of bourgeois economics and statistics was clearly revealed in the system of "reference points". If wage growth is the most clearly defined measure, then productivity growth is much more difficult to reduce to a single national indicator, and the actual increase in the cost of living is even more difficult to determine .2
2 According to government data, the real growth of wages and the cost of living in the United States in 1941-1945 was 24% and 33%, and according to trade unions, 20% and 45%, respectively. To Sivachev. Working policy of the US government in the Second World War, Moscow, 1974, pp. 175-177).

page 191

All this leads to the fact that the government, using very approximate estimates of the growth of labor productivity and the cost of living, in fact, arbitrarily sets limits for wage growth. In the sectors of the economy associated with the latest achievements of the scientific and technological revolution, these limits of wage growth, which are strictly protected by state bodies, are obviously lower than the growth rate of labor productivity.

Another important difference between these main trends of state-monopoly regulation, which was already evident during the Eisenhower presidency, was the question of attitudes to inflation. The Eisenhower administration tried to avoid direct pressure on entrepreneurs (p. 113-115), although in the context of "stagflation" (i.e., a combination of industrial stagnation and rising inflation) that worsened in the late 1950s, it felt the need for government regulation (p.95). The conclusion of S. Gordon, the author of an essay devoted to the period of Eisenhower's presidency, about the alleged complete passivity of the government during this period seems to be unfounded. The dismantling of the wage and price control system created during the Korean War, which was carried out in 1953, did not go as quickly and smoothly as it seems to the author, and proposals to grant the president the power to freeze wages and housing fees for 90 days in the event of an emergency came from the ranks of the Republican Party.3 By itself, the dismantling of the system created during the period of "extraordinary circumstances" did not mean the abandonment of regulation at all. The Eisenhower government's doctrine of "sharing responsibility" between powerful "big business" and "big trade unions" is, according to S. Gordon, "a more fundamental departure from the general theory of the market economy than the doctrine of government intervention, since it calls on private actors, as well as public ones, to be guided in their actions by the criterion of public interest" (p. 133). Subordination of "private subjects" to the "public interest", which, according to S. Gordon, is carried by the bourgeois state, in practice means complete subordination of trade unions to the goals of government regulation. During the Eisenhower presidency, a number of laws were passed that significantly limited the possibility of active trade unions. It was the doctrine of " division of responsibility "that became the ideological and theoretical basis of the" landmarks " policy, which was later implemented by the Democrats. The neoconservatism of the republican administration also acts in this case as a desire not to impose ready-made solutions on entrepreneurs, but to make them realize the need for measures proposed by the government, to merge the actions of entrepreneurs and state bodies. An equally important indicator of the transition of Republicans to the position of recognizing the legitimacy of state regulation was the government's intervention in the steelworkers ' strike in 1959, when the practice of interfering in labor relations in the so-called "key industries" finally entered the set of state - monopolistic means (see pp. 130-132).

In the activities of the government of L. Johnson, the authors of the collection see the further development of the policy of "guidelines", according to which wage growth is associated with the growth rate of production. J. Cochrane tries to prove that the Johnson government was successfully fighting inflation by the mid-60s, applying this principle in key industries (p. 194). However, the author is immediately forced to admit that, despite this, unemployment persisted, and prices rose. In the context of the escalation of military operations in Indochina, the entire system of "reference points" policy began to collapse (ibid.).

The content of the book is quite clear about the crisis of the ideological and theoretical foundations of state-monopoly regulation in the United States. At a certain stage, the policy of state regulation based on Keynesian recipes undoubtedly helped the ruling class. Deficient funding and rampant military spending temporarily spurred economic development and mitigated the effects of economic crises. However, they have led to such a development of inflation, which requires a constant increase in these costs, generating even greater inflation, threatening to disorganize the entire economy.

3 "Congress and Nation 1945 - 1965. A Review of Government and Politics in the Postwar Years". Washington. 1965, p. 361.

page 192

A kind of vicious circle has formed, the way out of which cannot be found within the framework of Keynesian doctrines. That is why the discussion in which A. Weber raised the question of the need to create a new mechanism for government control over prices and wages, and in which such economists as J. Weber took an active part, led to the creation of a new mechanism for government control over prices and wages. Galbraith, L. Kaiserling, and W. Rostow proved virtually fruitless, and did not find a way out of the situation in which inflation is an integral part of all state regulation.

page 193


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