The people's voice., 1958-09-26

war has meant increasing of fixed
charges for productive industry.
These continue, whether sales in
crease or decrease.
The slump in industrial production,
which has marked the recession, has
meant that a smaller volume of pro-
duction must bear a heavier burden
Of fixed charges. In order to main
tain profits and dividends, great
pressure upon management to in
crease prices has developed.
Great pressure also has developed
to increase the productivity of labor
by taking advantage of automation
and other improvements in produc-
ton practices. Automobile manufac-
turers, for instance, expect that many
of the auto workers laid off will
never return. To a lesser extent the
same condition exists in other indus
tries. If this creates a pool of unem-
ployed workers, many manufacturers
will not be too disappointed. 1t is a
condition which favors them in col
lective bargaining.
Escalator clauses in more and
more labor contracts are an addition
al pressure for increasing labor pro-
ductivity. They are also a built-in
excuse for manufacturers to increase
prices-provided they can continue
to sell their goods.
CONSUMER SPENDING HIGH
About year ago there were signs
of buyers strike against the con-
tinued upward creep in the cost of
living. This faded. One of the crucial
questions now is whether increased
government spending will be accom-
panied by an increase in private
spending. If it is not, a situation could
develop which would blight the infla-
ton expectation of investors, and
bring about crash in common stock
prices. Crashes in the stock market
are welcomed by no one, except those
with plenty of unemployed cash.
At the moment, however, it looks
as though the recession were coming
to an end without any important ad-
JuStment In prices.
Labor economists maintain that the
basic imbalance in today's economy
lies in the fact that purchasing power
has not risen as rapidly as the ability
of our productive plant to produce.
If the total power to consume were
roughly to equal the power to pro-
duce, they say, it would be possible
to have a constantly expanding econ
omy without undue pressure on prices.
There would be slight built-in ten
dency for prices to rise, they think;
but this would be compensated for
by an increase in money supply. "Real
wages"-the amount of goods and
services that days wage would buy
would not decline.
Orthodox economists do not believe
this would be so. When the economy
is expanding, they say, the enthusi-
asms of businessmen rise to great
heights. In a free economy they push
prices and plant expansion too hard
for their own good, and readjustments
must take place.
Labor economists also assert that
the dominance of our greatest cor
porations makes it possible for them
to administer prices to produce un-
considerable profit during good times,
and hold them high when markets
fade. The laws of supply and demand
may almost disappear under such
circumstances.
HEAD-ON COLLISION NEARER
There appears to be shaping up a
great conflict between the forces that
brought about passage of the En-
ployment Act of 1916, which estab-
lished a national economic policy
calling for full employment, and the
forces which desperately oppose al
most all government expenditures,
except for munitions, and all controls
of interest rates, prices, or produc-
ton.
The tensions are growing. But very
few are confident as to how the cat
will iump-just what economic events