Higher wages cause inflation..

[NewLeft]

I am already familiar with what syndicalists argue, but what about Marxists?

[Blake's Baby]

I'm a Marxist.

I think capitalists cause inflation.

[IndependentCitizen]

Inflation is the rise in prices of products/commodities. If wage increases, it's because corporations are rising prices to match that of the increase of the wage to make bigger profits.

Wage increases doesn't increase the monetary supply, so there's no argument from that perspective.

So, as Blake's Baby said; capitalists cause inflation.

I'd like to add. Wage increases are a very very good form of redistribution of wealth. As corporations will be forced to use their profits to increase the standard of work conditions and wage increases, meaning less will go on CEOs and the managers. Sounds obvious, but taxing the hell out of individuals themselves isn't great at all, and we shouldn't support mass tax increases, unless of course it's on those earning substantial salaries. But also, higher corporation tax and progressive taxing systems will mean that the public sector can also sustain a large public sector, deliver very decent services and offer good salaries without the need to print money in order to pay for their salaries. (Printing money = increase in monetary supply, therefore increases the price of importing, and decreases the value of your exports). Quantitative easing (The printing of money to inject into the economy) is only required when there's a downturn in the production within the economy, temporary printing will increase inflation, but as time goes by, it equilibrates and deflates.

But of course, external factors apply: Scarcity of commodity/product is a major factor. Oil prices rose because of the conflicts in the Arab revolution, but of course oil companies took advantage of this, and kept prices high as people became complacent of the prices. Climate change can dramatically affect harvest, which creates scarcity and alas prices increase.


Therefore, from my basic understanding of capitalist economics, wage increases don't cause an increase in inflation, but infact have no effect at all provided companies don't get greedy. But this is capitalism, capitalism is all about greed, so therefore it will continue to happen.

SOCIALISM NAO, PL0X