In the April edition of the Monthly Review John Bellamy Foster has a piece called Marx, Kalecki, and Socialist Strategy on the Polish economist Michal Kaleck that is well worth getting stuck into – particularly given the outright assault on worker incomes ongoing in Ireland at the moment. It’s also struck me as worth reading in light of Ken Livingstone’s comment today which correctly contrasts the viciousness and failure of Thatcherism with the Post-World War 2 settlement.

Foster first refers to the profit-squeeze theory which is often used to explain why capitalists try to resist full employment, as rising wages hurts profits. He refers to a 1974 article by Raford Boddy and James Crotty’s “Class Conflict, Keynesian Policies, and the Business Cycle” which was developed counter to Kalecki’s suggestion that the pressure from capitalists to reduce wages stemmed not from a concern for profits, but as a form of social control. Writing in the 1940s Kalecki said that with full employment profits would ultimately not be affected. However, what was more important was removing the opportunity for workers to exercise any form of power.

“Kalecki’s views on the profit-squeeze argument, the political business cycle, and socialist economic strategy were rooted historically in his close observation of the French Popular Front government led by Leon Blum in 1936–1937. Kalecki had spent the summer of 1937 in Paris witnessing developments there. In what came to be known as the “Blum experiment,” a concerted attempt was made to implement a forty-hour working week, two weeks of paid vacation time for all workers, and collective bargaining rights. As part of these reforms the Popular Front initiated a substantial increase in the money wages of manual workers, which rose by about 60 percent over the course of a year. This increase in money wages did not, however, have a negative effect on overall output and employment, since wholesale prices were raised proportionately. However it did produce substantial net benefits both for manual workers and large capitalists, and for the industrial sector in general—at the expense of rentiers and other income groups. Yet, despite the fact that big capital had significantly gained from the redistribution toward industry that the wage increase had brought about, it allied itself with rentiers to resist the wage increase, complaining of a profit squeeze. The Blum government eventually succumbed to these pressures, leading to a fatal dampening of the aspirations of workers.

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