In this pamphlet, Marx covers all these issues, looking at the difference in labour supply in the US and Europe, and its effect on wages and prices, for example, but also the effect of the new gold discoveries, and inflation of prices due to the consequent fall in the value of money. But, he also covers the response of capital, the role of competition and so on. For example, as he sets out, as early as 1849, British agriculture faced labour shortages, because large numbers of workers were drawn not only into the better paid industrial jobs, but also into the huge expansion of construction jobs on the railways, and other infrastructure projects. Agricultural wages rose, in response, but British farmers could not raise prices, because, after the repeal of the Corn Laws, and associated tariffs, they had to compete against cheap agricultural imports from Europe. As with the US that faced labour shortages, the response of British farmers was to engage in technological innovation, introducing machines to replace labour.
By 1865, it was not just agriculture that faced labour shortages, but the economy as a whole. The consequence was rising nominal wages. But, the new gold discoveries also reduced the value of money, leading to an inflation of prices, as firms sought also to protect money profits against these rising money wages. The period of prosperity, begun after 1843, had turned into a period of boom, in the 1850's, as wages rose, fuelling more sharply rising aggregate demand, and, now, in 1865, had culminated in a period of crisis, as those rising relative wages squeezed profits, signifying an overproduction of capital. The same sequence was seen, as the period of prosperity, begun in 1949, turned into boom, between 1962-74, and into crisis, after 1974, before entering the period of stagnation from the mid-1980's to 1999.
In the 19th century, the period of crisis, after 1865, turned into the period of stagnation that ran until around 1890, and has been termed the First Great Depression. During that period of stagnation, new technologies were introduced (intensive accumulation), raising the rate of profit, and created the conditions for the new upswing after 1890. which brought a new, massive growth of the working-class, trades unions, and workers' parties. A similar thing occurred in the 1980's/90's stagnation that created the conditions for the new global upswing after 1999, and the sharp rise in the size of the global working-class.
Understanding these mechanics, described by Marx, in this pamphlet, is vital to understanding the conditions of the current period of upswing (though for the last 15 years that may not have seemed to the the case, in developed economies) and its manifestation, once again, in a strengthening of the social weight of labour, and attempts to defend profits against rising wages, via the use of inflation produced by central banks.
For this series of posts, I am working from the 1951, Allen and Unwin Edition of the work, and all page numbers relate to it.
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