In the 1980's, although the mass of profit did not rise so rapidly, because capital itself grew less rapidly, so employing less additional labour, and creating less additional new value, the rate of profit rose sharply, because the new labour saving technologies, introduced, led to falling wage share, and rising profit share, raised the rate of surplus value, and also brought about a significant fall in the value of both constant (particularly fixed) and variable capital, which also created a huge release of capital. That meant that the supply of additional money-capital rose significantly compared to the demand for it, causing interest rates to begin a secular, and long term decline, from around 1982 onwards.
So, its simply wrong, when Martin says,
“The "Thatcherite" policies "worked" to reduce inflation - but only by way of bringing long periods of slump, union-bashing, high unemployment, and increased social inequality, which of course reduced market demand and pushed bosses to moderate prices and seek redress instead via cutting labour costs.”
Just as its wrong to claim that it was Volcker's policies that had worked to reduce US inflation. Had capital not, in the 1970's, responded to the shortage of labour, and consequent crisis of overproduction of capital, by engaging in a new period of technological innovation, so that it could begin replacing labour on a large scale, then worker's would have continued to increase wage share, and central bank's would have responded by continuing to increase liquidity to enable firms to raise prices to compensate for rising wage costs, so that inflation would have continued an upward spiral. Indeed, central bank chairman Arthur Burns is remembered for having introduced more restrictive monetary policy, in the 1970's, but to have withdrawn it, leading to inflation rising sharply once again, in the late 70's, and early 80's.
The reality is that Burns had to reverse, because, at the time, labour was still strong, and able to raise wages to, at least cover price rises, so that restrictive monetary policy led to wage share rising further relative to profit share, as money wages (and the social wage) rose faster than prices. The breakdown of the Social Contract, and the Winter of Discontent (1978/79) in Britain, was an indication of it.
Its only when, the effects of the newly introduced technologies undermined labour, creating a relative surplus population that prices could rise faster than wages, and workers could be systematically defeated, in the 1980's. The undermining of the power of labour, via labour-saving technologies, is also what led to the period of stagnation, just as it had in the 1870's-80's, and in the 1920's-30's. Its not government or central bank policy that enables this, but the normal operation of the long wave cycle, and the change in material conditions resulting from it.
Martin skips over the period 2000-2008, describing it as a period of low inflation, and low interest rates. But, its the period that is currently most interesting. It is the period immediately after the start of the new long wave upswing in 1999. Far from that being marked by low inflation, it saw the usual surge in demand for food and primary products, which cannot be quickly met from existing sources, and requires a large increase in investment in new farms, mines and so on, driven on by a sharp rise in primary product prices. In the post-war period, the new long wave upswing, which began in 1949, required married women to join workforces, required the encouragement of immigration to increase the workforce, and rise in the social working-day. It was not until the early 1960's that the effects began to cause wage share to rise notably.
After 1999, the US saw increased migration from the South, and the EU's free movement of labour saw workers migrate from its East to fill job vacancies in the West. Britain took on 2 million migrants to fill jobs in skilled areas, such as for plumbers, and so on. Even so, employment grew so rapidly that wages started to rise, even though unions remained historically weak, as firms competed for labour.
That was true globally, with the working-class growing by a third in the first decade of the new century. Even with new global sources of food and primary products, by 2008, this increased global workforce was demanding food at a level that led to huge price rises, and a global food shortage, leading to food riots. By 2007, interest rates were already rising, as was inflation, and workers such as UK lorry drivers were able to demand a 14% pay rise, and to have it conceded after just 2 days of industrial action, and similar things happened across Europe. As interest rates rose, from what had been historically low levels, it was enough to cause asset prices, which had been perpetually inflated by the liquidity thrown into circulation over the previous 20 years, and diverted into such speculation, to crash, bringing about the global financial meltdown of 2008.
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