Evening star., 1946-08-08
ClO Called Best Ally
Bio Business Ever Had
Consumer Price Policy Strikes
Blow at Marginal Producer
Bv David Laicrence

By David Lawrence
The CIO takes a different view from
the AFL on current economic eondi-
tions. While the AFL urges more and
more production and insists that the
wage Garner can get more by negotiation
than by strikes, the CIO puts its en-
phasis on the need for a consumer
resistance. movement and is not so sure
about the value of strikes as it was
few months ago.
The CLOS philosophy, as expressed
in It's monthly bulletin, is somewhat
contradictory in that it complains
against the OPA, on the one hand, for
raising prices and yet fails to note that
a substantial part OF the price increases
are due to the CLOS own campaign OF
strikes last autumn and winter. The
CLIO economic bulletin says:
THE OPA solution for the wage
price problem :. re-establishes for the
postwar economy the same high-profit,
low-output pattern of operation that
characterized American big business be-
fore the war High unit profits permit
industry to earn good returns on capi-
tai even though output is low. This
policy requires that prices be high with
respect to wages and insures that every
wage increase workers win will promptly
be capped with higher prices on the
products they make. Here Is the root
cause of continuous underemployment
and recurrent periods of unemploy-
ment"
Fallacy in Reasoning.
The fallacy in the foregoing is that,
II high unit profits are visible. COM
petition becomes extensive, and small
business has chance to operate.
Whether to increase production is not
within the control of the major pro-
ducers If the profit is attractive enough
for smaller competitors to enter the
market. That is precisely what is be-
hind the new profit formula of OPA-
an effort to furnish incentives for in
| creased production.
II, to be sure, wage increases are not
covered in the prices the producer can
charge, who is to pay for them? Maybe
| the top few producers can absorb the
| wage increases but this ignores the
high-cost marginal producers. who. un-
| der the American system of competi-
| tion, are entitled to a chance to pro-
/ duce.
No antitrust law apparently can stop
/ the big unions of today from aiding
and abetting big business. The CIO
appears from some aspects to be the
best ally big business ever had and its
price policy and consumer movement
! philosophy, II carried out, would be the
worst blow ever struck at smaller busi-
ness in America. Eventually, of course
that policy would bring "recurrent pc
riods Of unemployment"
Statement Called Frank.
The CIO economists deserve credit
for this frank statement:
Imitation as a wage cutting device
is more efficient and more swift than
any machinery we have yet discovered
for raising wages. At the present stage
of events we can accomplish more by
price action than by wage action tt
maintain the purchasing power OF oul
wage income. If consumer resistance
cracks imitation, the resulting fall o1
prices will reverse the universal wage
cuts that are now taking place
When the CIO says that imitation
cuts wages or what is known as 'rea
income" as distinguished from money
income" it is stating a well-recognizec
fact in economics. But the CIO doesn'
concede that Its own strike campaign.
played any part in forcing up the yer,
prices against which it now complains
Imitation is, of course, the creates
man. But there are various causes fol
it. One is the demand for wages with.
out corresponding increase in outpu
per man. The something for moth,
ing doctrine and the more pay-for.
less work" program of the CIO anc
other labor unions helped material,
to bring on the present imitation
Another vital factor today is tn,
Federal Governments excess OF expen.
ditures over receipts. Pressure groups
in exchange for votes. have persuaded
Congress to spend vast sums The un.
balanced budget is a menace to tn,
workingman, but the CIO never tell.
the workers much about this or get.
behind a program to cut the subsidie,
and special privileges out of the Fed
eral budget. Yet. this Is the duty. no
only of the CIO. but of all other organ.
izations If inf1ation's worst effects ar,
to be avoided.
The answer to the present dilemm;
Is more production at lower and lower
cost. This means an increase in eff.
flciency and output. The American
economic system cannot survive &
vicious circle in which wage increase.
are forced by the strike weapon anc
then consumer resistance is stimulated
to break up the producers market Sc
that many employers are forced out o.
business and their employees uprootec
at the same time. The present trenc
is toward bigger and bigger unionisn
and bigger and bigger business corpo-
rations, In the end public opinion will
demand that both be rigidly controlled
and that's the beginning of totalitarian.
ism.
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