[OPE-L:6368] Re: (Monopoly) Rates of Profit?

Gerald Levy (glevy@pratt.edu)
Fri, 27 Mar 1998 23:19:19 -0500 (est)

Allin wrote on Fri, 27 Mar:

> > It matters (of course) what happens in the market for
> > labour-power. It also matters to workers what happens in the
> > markets where they spend their money wages.
> Given a customary standard of living, workers will tend to react
> to a rise in the aggregate price of wage goods by demanding a
> rise in wages to match. Under what conditions will they fail to
> achieve this? To my mind, the major possibilities are: because
> unemployment has increased for some reason; because there has
> been a shift toward a greater degree of monopsony in the labor
> market; because there has occurred, for whatever reason, a fall
> in the rate of profit that makes capitalists less "able" to
> "grant" the previous level of real wages... But I don't see a
> sound economic reason why an increase in the degree of
> product-market concentration, for wage goods, as such, should be
> on this list.

Consider an economy in which the firms producing means of consumption for
workers are monopolies or oligopolies. Now allow those firms to spend on
advertising and marketing. What is the effect of this? On the one hand, a
demand is created and reproduced for individual commodities (something
that we're familiar with from the reality of "brand loyalty"). On the
other hand, given the inelastic nature of demand, these firms can increase
profits by selling their commodities to workers at prices in excess of
value. This would be, as we noted before, a rent effect ... but the
rent in this case would be paid by workers.

Yes, of course, workers can demand higher wages. This doesn't mean that
their wage demands are going to be met. While I think that a given
real wage can be assumed for certain hypothetical purposes, don't we have
to include the possibility that real wages can increase or decrease and
that this is effected not only by their money wages and bargaining power
as workers (including the effect of fluctuations in the size of the
industrial reserve army on bargaining power) and the average price of
commodities (inflation or deflation), but also because of workers
bargaining power (or absence thereof) *as consumers* vis-a-vis capital?
If that is the case, then the bargaining power of individual capitalists
*as sellers* also matters ... and so does the process whereby firms can
influence the needs and wants of the working-class.

In solidarity, Jerry