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BOOK REVIEW

Controls: dissent on both

Many people must be puzzled by
the unusual coincidence of left and
right wing views on wage and price
controls which have surfaced since
the proclamation of the Anti-
Inflation Act last October. Bank
presidents and trade union officials
have come down hard on the same
side of the issue. The coincidence,
however, is not too surprising if we
recognize that the ideology and
tactics of a class sometimes
conflict.

The latest instance is the
simultaneous release of two books
on wage and price controls, one by
the notoriously right-wing Fraser
Institute and the other by Cy
Gonick, editor of Canadian
Dimension and academic guru of
the non-party left.

The Fraser Institute’s The
Illusion of Wage and Price Controls
is, in keeping with the institute’s
customary format, a collection of
essays by a number of con-
servative academics under the
editorship of Dr. Michael Walker.

In a way, this right-wing
refutation — or right-wing policy —
is a delight to read, especially
Professor Jack Carr’s overview of
theory. Carr cogently and> suc-
cinctly demolishes all of the
fashionable theories of inflation —
cost-push, structural, sociological,
trade-off expectations — except, of
course, Milton Friedman’s
monetary theory. With most of this
one can agree.

It is in the prescriptive part of
the analysis that one finds oneself
floundering about in the ideological
morass of the Calvin Coolidge era.

Carr’s explanation of inflation is
contained in the following words:

“With moderate monetary
growth there was no inflation in
Canada. With expansionary
monetary growth there was
relatively mild inflation. When the
monetary growth rate fell, the rate
of inflation fell. When monetary
growth rates reached into the sky,
Canada experienced double-digit
inflation.”

Elsewhere, Carr approvingly
quotes Friedman’s dictum: ‘“‘In-
flation is always and everywhere a
monetary phenomenon.”

To say these things, however, is
about as useful as saying that we
have inflation because prices are
too high or that aviation is
everywhere a phenomenon of
altitude. Inflation is by definition
depreciation of the currency. To
say so is hardly to explain it.
Governments, after all, do not
expand the money supply out of
sheer malice nor out of ignorance.
Usually they do it under the
pressure of forces beyond their
control or as a result of policy
decisions made independently of
economic policy.

Carr rather timidly hints at this
latter case: ‘One can ask why the
U.S. money supply started to in-
erease. One contributing factor
may have been America’s _in-
creasing involvement in the
Vietnam war.”’ Precisely!

Believing as they do that in-
flation is merely a consequence of
the government printing too much
money and therefore that the
remedy is simply to stop the ex-
cessive printing, the Fraser In-
stitute economists reduce the’
whole problem to an incredibly
simplistic formula.

What they fail to do is to tell us
how to overcome the social
phenomena that lead governments
to expand the currency supply. If
Professor Carr were president of
the United States, would he refrain
from involvement in Vietnam (or
Angola or the Middle East)? If he
were prime minister of this
country would he let the Canadian

rather than with an

\N

EMIL BJARNASON . . . looks at two new books on wage and price

controls.

dollar float upward sufficiently to
cancel out the excess profits of
Canadian exporters when world
prices were rising? Would he allow
the economic cycle to bring about
10 per cent unemployment without
resorting to Keynesian stimulants?
Would he, like his mentor,
Friedman, go to Chile and advise
the junta to adopt policies which
have already brought about 20 per
cent unemployment without
noticeably reducing the inflation
rate (currently running at 350 per
cent)?

Cy Gonick’s book Inflation and
Wage Controls is a much more
satisfying work since it deals with
the real world of imperialism
idealistic

—Sean Griffin photos

model of an economy that does not
and never did exist.

Gonick certainly realizes that
excess money produces inflation
but unlike the Establishment types
of the Fraser Institute, he
recognizes that this is merely a
circular argument and sets out to
deal with real causes and effects. It
is refreshing, for instance, to hear
an economist say, ‘‘It is
noteworthy, but not surprising that
in all the denunciations about who
is responsible for inflation, the $250
billion worth of military ex-
penditures is never mentioned.”

Gonick analyzes the role of
monopoly in thwarting the
corrective processes which, in a
competitive economy, would tend

Sides

to stabilize prices. He outlines the
role of inflation in regulating the
economy in favor of the profit
makers and in averting the
disasters of the type experienced in
the thirties, Finally, he describes
the role of: U.S: imperialism in
producing a global glut of in-
flationary dollars.

In examining the anti-inflation
regulations, Gonick sees them —
correctly, I think — as a first step
in a new type of state monopoly
regulation designed to alter fun-
damentally the distribution of
income in favor of profits. The first
two years of double-digit inflation,
when profits were rising twice as
fast as wages, did not bother
Trudeau. But when, following the
expiration of long-term collective
agreements in 1975, labor got a
chance to start catching up, and
wages rose while profits actually
fell, the prime minister reversed
his position as readily as a
weathercock.

In one of his later chapters,
Gonick describes the close
parallels between the methods and

» objectives of Trudeau’s ‘‘new

society’’ and those of fascism and,
interestingly enough, gives
Manitoba premier Ed Schreyer full
marks for being the boldest ad-
vocate of such policies.

The warning may be useful but it
is accompanied by a leftist and
one-sided view that labor’s trade
unions and ‘“‘its” political parties
will play the role, in the absence of
rank-and-file revolt, of ‘‘con-
taining’ the opposition to the
fascist trend.

In view of the many good things
in Inflation and Wage Controls, it
might be a small point to say that
the editing is deficient. But there is
one rather long paragraph on page
six- that is reproduced in full on
page 28. In a number of other
places, good proofreading has been
sacrificed in favor of speed.

Notwithstanding the polar dif-
ferences in their analyses, both

books make it abundantly clear .

that the wage and price control
program will not work and, in
particular, will do far less to prices
than it will to wages.

The program is clearly a piece of
class legislation that will sharpen
the class struggle and go a long
way to politicizing it.

—Emil Bjarnason |

aa | | a
scene from The Great Dictatol

CHARLIE CHAPLIN

Chaplin film
now in Spaii

~~ After nearly 40 years the Spanis!
censor has finally approved tit
showing of the Charlie Chaplin§
1940 film classic The Great Dit
tator. An uncut version of the film
dubbed with Spanish dialogue, '
now showing to packed houses #
four. Madrid theatres.

Chaplin’s film, although #
comedy, was one of. the first @
address itself to the rise
European fascism and Chaplin’
closing appeal for the people of tht
world “to unite in the name
democracy’’ is still considered #
be one of the most. stirri
statements on film. Because of tht
film’s anti-fascist character
could never be shown during tht
lifetime of Spain’s fascist dictatoh
Francisco Franco. :

Though Franco is dead, Spall
remains under a fascist regimé
and many have been amazed tha
the new Spanish government woul
allow the showing of The Greal
Dictator. So far there has beél
little controversy surrounding tht
film, and there has been no official
reaction to its showing.

Crowd reaction has been ovel
whelming approval, wi
prolonged applause greetine
Chaplin’s closing appeal for the
defense of democracy.

For many of the audience it w®
a time to remember. “The mov
made me remember other times!
Spain,’’ said a 43-year-old man wht
worked for the army.

A housewife added, ‘‘I can set
why they banned it.” And a 5
year-old chemical engineer sal®
“The similarity to what we’ve
through was total.

i

With a charred house dramatizing the theme, “War destroys -

A

-\N 1976. THE NATIONS WILL SPEND
$300,000,000,000 PREPARING FOR WAR

We be | histhis he

Habitat,” Vancouver's Peace Action League focussed on the
arms race and the continuing threat of nuclear war for its booth

PACIFIC TRIBUNE—JUNE 4, 1976—Page 10

-

BITAT.

in the Habitat Forum. The display is in Hangar 8 on the Jerich?
site. The Forum is open until June 11 from 10 a.m. to 10 p-™