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OF PRICES

AVE YOU noticed how

prices have been rising

lately? How could you
have missed it?

In Toronto, for example, it
now costs more to get a haircut,
to drink a glass of milk, to eat a
Slice of bread or smoke a cigar-
ette than it did a month ago.
Meat prices, which rose some
time ago, are. still hanging up
among the clouds.

Canned soft drinks, which
used to sell for 7 cents a can,
Now sell for 9 cents per can.

Prices on all types of consum-
€r goods are going up.

The cost of living will be
8iven another spurt on April 1
when the Ontario government
implements its increase of the
Sales tax from its present 3
Percent to 5 percent.

A sideline to this is the sug-
Bestion that many restaurant
Owners may time a hike in the
Prices of meals and drinks to co-
' Incide with the sales tax in-
Crease on taxes. A night on the
town, which now Costs about
$20 for two couples, may cost
$25 after April 1.

Rising municipal taxes are
hurting homeowners. The tax in-
Creases have provoked Mrs.
Phyllis Clarke, who has been a
Candidate for board of control in
*Oronto, to issue a leaflet call-
Mg for relief from the senior
80vernmenis.

Tn February the Canadian As-
Sociation of Purchasing Agents

took note of a general and con-
tinuing trend of upward price
movements. :

Some examples in DBS statis-
tics included: the general whole-
sale index up from 246.8 in Janu-
ary to 252 in October; the con-
sumer price index from 136.9 to
139.3; prices of residential build-
ing materials up from 149.5 to
151.4.

“It is worthwhile noting that
corporation profits were also up
in the third quarter of 1965,
after record gains before that.
One of the factors behind high-
er profits was selected price in-
creases in a wide variety of in-
dustries.

Overall corporation profits in
the third quarter were at a sea-
sonally-adjusted annual rate of
$1,263 million, up 2.9 percent
from the $1,227 million in the
preceding quarter.

As a result of price increases
wage earners have been forced
to put forward more militant
wage demands and in many
cases they have been able to
win them.

But it is well-known truth
that when inflation hits the eco-
nomy it is the w2ge earner who
suffers. Rising wages, which can
only be won when old contracts
expire, can never keep up to ris-
ing prices and profits.

Does the present inflationary
trend signalize a new pattern of
development in the capitalist
economy?

Since the end of the Second

“Fhe Keynesian philosophy

the economy as a whole would

World War the capitalist eco- embraced so enthusiastically in be up by 12 percent. This has
nomy has generally resisted the Washington — government in- now been revised up to 19 per-
traditional boom-bust line of de- tervention to stimulate demands cent.

velopment of earlier times. The
most graphic example of the
boom-bust pattern is the furious
economic surge of the late
1920’s, followed by the stock-
market crash.in 1929 and the

depression and terrible unem- -

ployment of the 1930's.

Since the war, however, while
there have been ups and downs
in economic development, the
major capitalist countries have
always succeeded in re-estab-
lishing an approximate equili-
brium fairly quickly.

“Depressions” became “reces-
sions”. The last recession was in
the late 1950’s. A new upward
line of development began in

1961 and has continued until

now—the .longest line of con-
sistent upward development in
the post-war périod.

Now, for the first time since
the immediate post-war period,
business analysts, newspaper
writers, government economists
and university professors are be-
ginning to talk about a real
danger of inflation and the real

— worked weil in promoting ex-
pansion when there was slack in
the economy,” he wrote, “but
analysts wonder how pertinent
it will be to the problems of. ex-
cessive demand.”

A recent Canadian survey
looks at the problem from an-
other angle. It suggests that the
Canadian economy now may be
entering what it describes as a
“classical wage-price spiral’,

It should be noted that the
real demand forcing prices up-
ward is created by unprecedent-
ed capital expansion. Anyone
who is able to keep tab on the
financial journals will be aware
of this. :

Recent issues of the Financial
Post, for example, describe the
boom in British Columbia in
glowing terms. The expansion
includes extension of pulp and
paper facilities, new mines and
a furious search for new oil-
fields. Similar development is
underway in Saskatchewan and
in Quebec.

In the United States, a recent

“A rise in spending of this
magnitude does not only insure
boom levels of business activ-
ity,” says New York Times
writer M. J. Rosant, reporting
the survey. “It also means a big
increase in inflationary pres-
sure.”

Another factor forcing prices
upward is the spending tied te.
the escalation of the U.S. admin-
istration’s dirty war in Vietnam.

What is happening to the eco-
nomies of Canada and the U.S.
at the present time raises at
least two questions, one prac-
tical, the other theoretical.

What measures must be taken’
by the Canadian government to
combat inflation, to ensure at
the same time continued expan-
sion of the economy? The dan-
ger here is that the big business
oriented government will tend
to put the burden of measures
to bring inflation under control
on the backs of the working
class — i.e. wage restraints,
higher taxes, etc. (The increase
in Ontario’s sales tax is an ex-

danger that the boom may be survey of the Lionel D. Edie and ample). —-

getting out of hand.

Co. Inc. estimates that manu-

The second question is theore-

Last January, an article by facturers alone will spend 32 tical and needs. to be answered
Thomas E. Mullaney (New York Percent more this year than they by economists: is the traditional
Times) described the perplex- “id last year in business expan- hoom-bust pattern _reasserting

ities of a U.S. administration 810°

which has based its policies on
Keynesian economic
phies to encourage demand.

.

A similar survey six months

~*~

itself in the development of the
capitalist economy, with all the

philoso- earlier had shown the spending dangers of a Crash and depres-
on new plant and equipment in sion which this. would entail?

WILL the BOOM go

April 1, 1966—PACIFIC TRIBUNE—Page 5