Die Neue Zeit
25th August 2008, 03:28
http://www.econ.barnard.columbia.edu/~econhist/papers/Hanes_sscale4.pdf
The Rise and Fall of the Sliding Scale or Why Wages Aren’t Indexed to Product Prices
Abstract:
Schemes that linked wage rates to product prices, generally referred to as sliding scales, were widespread in some industries and tried in others in Britain and the United States from the 1860s through the 1930s. I describe how sliding scales worked in practice and how they were viewed by contemporaries. I argue that sliding scales were not adopted for the reasons suggested by most theories of wage indexation, but rather in order to reduce the frequency of strikes in an institutional setting where there was no third-party enforcement of labor agreements. This helps to explain the disappearance of sliding scales since the 1930s.
Conclusion:
The potential advantages of sliding scales over continual bargaining subject to strikes are greater than the advantages of sliding scales over long-term fixed-wage contracts (or contracts indexed to consumption-goods prices alone). Thus, any special costs of operating sliding scales or limits on workers’ information could be enough to block the use of sliding scales in the postwar U.S., but not in the pre-1930s U.S. or Britain.
[...]
Though I have argued that pre-1930s sliding scales were not examples of long-term contract indexation, the historical experience with sliding scales does help explain the absence of sliding scales in postwar U.S. union contracts, as the factors that limited the use of sliding scales before the 1930s remained present despite the introduction of better wholesale price indexes.
I don't know off the top of my head what political ramifications this paper presents. With "the introduction of better wholesale price indexes," wouldn't that downgrade Trotsky's "transitional" demand to a dynamic minimum demand (thereby rendering a small part of my own "Program of a New Type (http://www.revleft.com/vb/program-new-type-t83818/index.html)" stuff wrong :lol: )?
The Rise and Fall of the Sliding Scale or Why Wages Aren’t Indexed to Product Prices
Abstract:
Schemes that linked wage rates to product prices, generally referred to as sliding scales, were widespread in some industries and tried in others in Britain and the United States from the 1860s through the 1930s. I describe how sliding scales worked in practice and how they were viewed by contemporaries. I argue that sliding scales were not adopted for the reasons suggested by most theories of wage indexation, but rather in order to reduce the frequency of strikes in an institutional setting where there was no third-party enforcement of labor agreements. This helps to explain the disappearance of sliding scales since the 1930s.
Conclusion:
The potential advantages of sliding scales over continual bargaining subject to strikes are greater than the advantages of sliding scales over long-term fixed-wage contracts (or contracts indexed to consumption-goods prices alone). Thus, any special costs of operating sliding scales or limits on workers’ information could be enough to block the use of sliding scales in the postwar U.S., but not in the pre-1930s U.S. or Britain.
[...]
Though I have argued that pre-1930s sliding scales were not examples of long-term contract indexation, the historical experience with sliding scales does help explain the absence of sliding scales in postwar U.S. union contracts, as the factors that limited the use of sliding scales before the 1930s remained present despite the introduction of better wholesale price indexes.
I don't know off the top of my head what political ramifications this paper presents. With "the introduction of better wholesale price indexes," wouldn't that downgrade Trotsky's "transitional" demand to a dynamic minimum demand (thereby rendering a small part of my own "Program of a New Type (http://www.revleft.com/vb/program-new-type-t83818/index.html)" stuff wrong :lol: )?