The working-class, can have no control over the capitalist state, whether that comes to its economic and financial policy or its military adventures. There is no point in Marxists proposing such control, which would only delude workers into the belief that the state is somehow neutral, or controllable by them. But, that does not mean that we cannot point out the consequences of this or that policy implemented by that state, as against some other. It is why we argue the need for socialist revolution, and for workers to smash the existing state, and establish their own state in place of it, in order to, then, pursue these other courses.
So, for example, in current conditions, where inflation at a high level has been caused by decades of excessive liquidity thrown into circulation, by the state, to inflate asset prices, and which has now surged into the real economy, as it was bound to do, eventually, but has happened, now, due to the implementation, and then lifting, of lockdowns, we can make that clear, as against the claims of bourgeois pundits that the inflation is somehow caused by wages, or supply bottle-necks, or imbalances of aggregate demand and supply. We can point out that the cure for the inflation does not reside in, again, artificially slowing the economy, via rises in central bank rates, fiscal austerity, or limits on wages, all of which, if implemented, would lead only to stagflation, but resides, instead, in reducing the amount of liquidity in circulation, reducing central bank balance sheets, via QT and so on.
The bourgeoisie, undoubtedly, will, as they are, attempt to blame wage rises, and to restrict them, using draconian laws to limit workers ability to resist, if necessary. But, in conditions like the 1840's, 1890's, 1950's, and those we have today, where there are labour shortages, and firms competing for labour, those attempts are doomed. But, precisely because they are doomed, the response of the capitalist state to rising wages, whether due to firms voluntarily paying more, or from strikes, is to then increase liquidity further, so that firms can raise prices to compensate for the higher wage costs, rather than suffer an equal hit to their profits. In such periods, however, wages still rise by more than profits, resulting in increased wage share, and rising living standards for workers, just as, in times when capital responds by introducing labour-saving technologies, and a relative surplus population is created, wages rise significantly below profits, and profit share is thus increased.
That cannot be changed by appeals to that capitalist state, and demands for a sliding scale of wages itself can only be achieved in those conditions where labour is scarce, and can impose its interests, as against the needs of capital.
Martin talks about the control of inflation during World War II, despite the link to gold being suspended.
“It was limited in World War Two in Britain by a scheme largely worked out by John Maynard Keynes: heavy taxation of the well-off, part of wages becoming "deferred pay" to be recouped after the war, rationing to limit demand for some commodities, controls on profits and prices possible only because of the exceptional wartime willingness of capitalists to comply with the government, repression of high finance. The scheme worked to some degree, though at the cost of much black-marketing. Some elements of it might work for a workers' government, under which the major producers would be controlled democratically rather than by capitalists, and where the whizzing of money round financial markets, so frantic today, would be suppressed even more thoroughly than in the war economy.”
Again, this seems to reflect an acceptance of the notions that lay beneath the Keynesian measures described, which is that inflation is a consequence of an imbalance of aggregate demand and supply. Hence limiting demand by higher taxes and limits on wages. And, again, his criticism of the limits of this approach, even for a Workers Government, reflects that, and misses the point. He goes on,
“Even then it would have limits: prices, if they exist at all, and it is hard to imagine doing without them even in a socialist future when markets have been largely superseded, are important for registering and comparing costs, so manipulating them administratively on a large scale and over long periods can lead to serious misallocation.”
Yes, of course, that is true, as Trotsky sets out in the quote from The Revolution Betrayed, cited earlier, but, it misses the point that if you devalue the currency by printing excess money tokens/credit, it will lead to inflation, and that cannot be avoided by simply attempting to administratively control prices. But, it also shows a failure to understand what money and prices are. As Marx describes in A Contribution To The Critique of Political Economy, The Poverty of Philosophy, and Anti-Duhring, and elsewhere, if you have money, you have commodity production and exchange, and the determination of production and distribution by the market, because money is the general commodity, and arises naturally out of commodity exchange. Prices are merely, exchange-values expressed in quantities of money, or the standard of prices, and so imply the continuation of money, and consequently of commodity production, and the domination of the market.
The existence of black markets is simply one manifestation of that. The idea that inflation can be controlled by measures such as controls on prices, wages, profits, either directly, or via taxation, or rationing and so on, in conditions of excess liquidity, is simply a repetition of the errors of Duhring addressed by Marx and Engels in Anti-Duhring, which copied the errors of Proudhon, not to mention of John Law, the Pereire Brothers and others.
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