‘ in

cerpts from this report

HE popular definition of in-
flation is “too much money
i chasing too few goods” at-
Bes to put the blame on con-
“ mers. Perhaps this would be
he if all sales were. auctions
€re buyers bid against each
peer. But in the real world of
Xchange of money for goods
and services this explanation is
Nidiculous,
It’s like putting the blame for
eft on the victim because he
se money in his pocket, in-
q €ad of on the pick-pocket who
tole it. Of course it helps in all
this if the seller can shift the
pone to someone else: claim-
4g, for example, that prices
ave to go up because wages
ave increased.
This argument, really that
ices are based on, cost. plus
a profit, sounds very plau-
e. The only trouble with it
S that this is not how prices are
etermined in the main today.
ya bygone days of many sel-
7 all competing with each
a; €r on price, it had some vali-
‘ly. Today, any farmer knows
3 at the prices he receives are
ot determined by him on the
Re of his costs plus a reason-
© profit. Rather they are im-
pared on him by the meat pack-
of Reiiing company, chain store
Dlg produce merchant on the
pe of the maximum spread
tween what the consumer can
© made to pay and what the
armer can be made to accept.
Onopoly corporations have
oe the old competitive eco-
oe Processes on their head.
a tead of demand being the au-
= ‘omous exercise of their pre-
meitive by all-powerful consu-
ats with money to spend, de-
ead is now produced almost
‘{Ynthetically. The price is all
Pa the consumer can be made
ee Pay.
Rove coercion is there although
Sguised with easy credit, mass
fee advertising, soft and hard
as : distinctive styling and de-
Dlive packaging and hidden by

Price leadership, price mainten- |

ae and price fixing agree-
. “Nts. Instead of cost-plus pric-
ae there is now  price-minus-
tinge
oe target pricing, without
impo vet relation to costs, is
co in concentrated manu-
Rot ring industries was clearly
Bec out in a Brookings In-
nea Study a few years ago.
com se giant manufacturing
oil panies in auto, chemical,
Be ccirical, steel, aluminum,
mat equipment and building
“erials were investigated, Nine

of. them were found to be the
price leader in the particular in-
dustry. Eight of these succeeded
in making their target rate of
profit or better over a nine-year
period...

Chain stores handle nearly 50
percent of food sales in Canada
and are often located where
there is little effective competi-
tion. They are big and powerful
enough to dominate food hand-
ling, dictating prices both to the
consumer and to their suppliers.
During the past five years, for
example, Dominion Stores has
held the reported stockholders’
return on net worth at approx-
imately 16 percent — an indica-

‘tion of the same kind of “profit

target pricing” as described for
other monopoly dominated in-
dustries ...

The history of price changes
in Canada since the war, as
measured by the government
consumer price index, lends sup-
port to the argument that big
business makes use of every
favorable opportunity to raise
prices. ;

From 1945-48, as. wartime
pent-up demand and elimination
of price controls created favor-
able conditions, prices. increased
by 29 percent. In the year 1951
alone, as the Korean War built
up, prices were boosted 10.5
percent. In the year 1957, at the
peak of the investment boom of
the 1950’s, prices increased by
3.1 percent. In the remaining 15
years since World War II, con-
sumer prices in Canada have
been increased by an average of
1.5 percent annually.

In only one vear, 1953 (at the
end of the Korean War), was
there a general price decline
amounting to less than one per-
cent. In the most recent years of
the current boom, however, the
“creening inflation” has been
accelerated, most conspicuously
in food prices. As a result, the
1946 dollar is only worth about
53 cents todav.

Whether inflation is creeping
or galloping there is always a
hare-and-tortoise chase going on
between wages and prices. Wage
gains achieved at the bargaining
table every two or three years,
in the endeavor to improve the
workers’ position, are continu-
ally being taken away by rising
prices before the food gets to
the dinner table.

Constantly rising prices cut
into living standards even more
drastically for those workers
who have been retired and have
only pensions to live on. For
them, there has been no periodic

The bogey of

Why do prices go up? Is the worker to
blame? Is it the consumer who is at fault?
The answers to these and other questions posed
by the present high prices in Canada are con-
tained in areport on Prices, Profits, Productivity
delivered to the National Council meeting of
the United Electric, Radio and Machine Work-
ers union in Hamilton last month. Below are ex-

opportunity through collective -
bargaining directly to recover
lost ground, let alone make any
progress towards a better liv-
Inf = =e

The fundamental policies of
monopoly are starkly simple —.
hold wages down; raise prices
where possible; result, maximum
profits. In the postwar years, as
we have seen, monopoly policy
has been quite successful. In-
stead of price competition in key
sectors of the economy we have
keen competition among the
giant concerns on increasing the
exploitation of labor.

Despite the increase in wages
which trade unions have been
able to win, unit labor costs in
the factory have actually been
forced down. The share of total
incomes going to farmers, pro-
fessionals and other  self-em-
ployed people has been consist-
ently squeezed. Government re-
distribution of incomes by
means of social security benefits
and welfare payments has been
bitterly opposed by monopoly,
although not always success-
fully, depending upon the
strength of the forces on the
other side...

Management never lets up
screaming that wages are going
up faster than productivity.
Usually they compare wage

rates. or average earnings, a
dollar value concept with some
price effect imbedded, to pro-
ductivity (output per man-hour),
a physical unit concept with no
price content whatever. This is
not really a proper basis of com-
parison. The wage rate index
must be put in terms of con-
stant dollars — that is, take the
price element out of the index
by deflating it for cost of living
changes."Then we have a com-
parison of real wages (i.e. of
constant purchasing power) with

real or physical output, like
this:
Manufacturing
Percent Increase Each Year
Year Real Real
Wages Output
1960 24% 3.5%
1961 1.6 4.5
1962 V.7 4.0
1963 1.4 3.9
1964 Lv 7
1965 2A) 5.0

In fact, on this basis, manu-
facturing productivity has in-
creased more than real wages
each year since 1949, with the
exception of 1952, 1953 and
LOST

It is worth recording also,
that productivity on the farm
has also been rising rapidly. In
1949, one Canadian farm work-

December 16, 1966—PACIFIC TRIBUNE—Page

er produced enough food and
fibre to support 16 others; by
1964 this figure had increased to
38. Over the same period the
part of the average retail food
dollar received by the farmer
declined from 58 cents to 41
cents.

: These very substantial produc-
tivity increases on Canadian
farms and in Canadian factories
have been fundamental to a
whole complex of postwar eco-
nomic developments we tend to
take for granted. Because of
mounting productivity it has
been possible to have — higher
living standards for employed
workers; increased social secur-
ity and welfare distributions;
much bigger profits; a quadru- _
pled tax bite and mushrooming
government activities; fantastic
social waste in frills, gimmicks,
advertising and what-have-you;
a continuous heavy burden of
military: spending, All these we
have had — whether we want _
them all or not — but paid for

by the productivity of working

peonle /..

Now the federal government
has nublicly announced a policy —
of additional taxes and wage re-_
Straint under the nretext of the
need to.control inflation. This is
the seme kind of anti-labor ac-_
tion that poes by the name of
“incomes nolicv” in Britain and
“ouideposts” in the United
States. It is an intesral nart of
the lons-term policy of stimulat-
ing ever ereater productivity and
attemnting to retain the major
benefits for -monopolv . .

The Ishor movement must
beat back this emrlover-covy-
ernment offensive. What is al-
ready hannening in Britain to
livine standards is the clearest
warning asainst falling for a nol-
icv of wace restraint allecedly
to ficht inflstinn. The working
class must fieht the incomes or
eridennst nolicy not onlv to ~-s_
fect its own livine stanc--4g
hut also to assure the pffertive
demand to keen the Comsdian
eronomvy = hummine, Already
there are nlenty of sions of the
Genoer of an imnerding slow-
down rather than the much-
tolked-out overheating and in-
flstinn,

Mononolv nrice goucine must
he stonned in the interests of
the vast msiority of the Can-
adian peonle.. With many un-
solved economic, political and
social problems on our doorstep,
and automation just around the
corner, this is no time to be-
come sidetracked on the phan- |
tom issue of inflation.