William F. Warde

Why Big Business Profiteers Are Trying
to Blame Inflation Upon Labor’s
Demand for Living Wages

(9 February 1946)


Source: The Militant, Vol. X No. 6, 9 February 1946, p. 6.
(William F. Warde was a pseudonym of George Novack.)
Transcription/Editing/HTML Markup: 2018 by Einde O’Callaghan.
Public Domain: George Novack Internet Archive 2018; This work is completely free. In any reproduction, we ask that you cite this Internet address and the publishing information above.


At the same time that the big corporations are fighting against adequate wage increases, they are conspiring to smash all price controls and clamoring for outrageous price increases.

On the one hand corporation spokesmen howl that they cannot afford to meet the wage demands of the unions and that if they should do so, prices would shoot upward in a ruinous inflationary spiral. They even have the gall to contend that, since this will happen, the workers themselves would derive little or no benefit from any wage increases they might win by strike action.

On the other hand, the big corporations are refusing to settle the strikes unless and until the administration grants them greatly increased prices for their products. Thus, Irving S. Olds, chairman of the board of U.S. Steel, last week called for an outrageous price rise in excess of $6.50 a ton for steel. Henry Ford 2nd followed up by telegraphing Reconversion Chief Snyder that government control of prices should be promptly removed.
 

Profits Above All

Why does Big Business resist wage increases on the pretext that these will spur inflation, while it simultaneously plots to wreck all price controls and extort huge price increases which are bound to speed up inflation? The explanation is simple. The corporations are aiming to defend their profit interests – those blood-stained profits they piled up during the war and the added billions they expect to grab from future production.

All their talk about the “danger of inflation” is designed to conceal this central fact and thereby deceive the workers and deny their just wage demands.

It should be understood, first of all, that an increase in wages does not necessarily bring about increased prices. It does mean, however, a direct and immediate reduction in the capitalists’ rate of profit. That is why employers at all times stubbornly resist the wage demands of their workers.

That is also why the capitalists who now falsely argue that wage increases bring about inflation, do not dare to face this question: Why, during the war, while wage rates were frozen, did their profits go 250 per cent above 1939 levels and the cost of living double? The mere statement of these facts shows that inflation does not have its source in wage increases.
 

Wages and Prices

The unions have proved that the big corporations can easily pay the demanded increases out of war profits and capital reserves without raising prices. This fact is so irrefutable that companies such as General Motors have refused to open their books to union inspection and arrogantly assert that they do not recognize ability to pay as a factor in determining wage increases.

Even though the unions have shown that increased labor productivity and improved plant efficiency alone will enable the companies to easily absorb wage increases, still the big corporations keep insisting that wages be held down while prices must be boosted!

It is true that inflation, expressed in the soaring costs of living, is a growing threat to the American people. But the responsibility for this danger rests entirely upon the capitalist rulers and their government at Washington. The current inflation is a direct consequence of the Second World War, its ruin, its wastefulness, its colossal costs.

For over four years, instead of producing homes, clothing, household appliances, autos, etc. the factories have turned out shells, guns, tanks, bombers. This war economy has prevented the people from getting the goods they needed during the war and created the present scarcities. Moreover, to finance its imperialist slaughter, the capitalist government accumulated an astronomical national debt of almost $300 billion, thereby inflating the currency and cutting the real purchasing value of the dollar.
 

Government’s Role

These inflationary factors have been further reinforced by unrestrained profiteering and speculation. In war time, through cost-plus contracts, subsidies and other devices, the government guaranteed high profits to the capitalists while freezing workers’ wages.

Ever since the war ended, Big Business has been conducting a relentless campaign to maintain its enormous profits and even augment them. Again the President and Congress have been lending a helping hand.

Congress eliminated the excess profits tax. It has provided for corporate tax refunds of more than $20 billion, guaranteeing high profit levels. And now, under pressure from the corporations which have launched an all-out assault on price curbs, the government is scrapping one control after another and yielding to the extortionate price demands of Wall Street.
 

What Labor Faces

What will be the consequences of this Big Business holdup and Truman’s surrender to the Wall Street bandits?

First: it guarantees a continuation of unrestrained profiteering. Anticipating these lush profits, the stock market is booming to heights unsurpassed since 1929.

Second: it means an enormous impetus to inflation, new and bigger boosts in prices. The costs of living, the prices of food, clothing and all the elementary necessities, will inevitably go higher and higher.

Third: this total breakdown of price controls and granting of price rises will lead to the cancellation of labor ‘s wage gains won in battle on the picket lines.

Thus it is not wage increases which are serving to create and to accelerate inflation. Inflation arises from the anarchy of the rotting capitalist system and the destructiveness caused by its reactionary wars.

It is being aggravated by the insatiable greed for profits of the financial and industrial magnates. It is being facilitated and encouraged by the capitalist government, which Big Business controls and maintains in power.

It is precisely because of this capitalist-fostered inflation that the workers are obliged to fight for substantial wage increases. The most effective way to combat the vicious consequences of the growing inflation that the profiteers and their agents in Washington are inflicting upon the American people is for labor to demand a rising scale of wages which is automatically adjusted to every rise in living costs.

 


Last updated on: 19 September 2018