than wages. On the contrary, prices have been going up more rapidly than wages. This has led to a fall in real wages (the amount that can be bought with a pay packet) of around 6 percent in eight monms. suen a situanon. as me neures show, cannot be created by wage increases but must be due to other developments Before looking at what wage controls can do, let us look further at the myth that it is wages which are the cause of inflation.
The first way of disproving the lie that it is wages which are responsible for innanon is simply to look ar miernaonal In ract, the nigures once again snow that this claim is a complete myth Most striking of all is the fact that in Britain take-home pay as a proportion of the economy actually fell from 60 per cent in 1957 to 56 per cent in 1970.4 But inflation rose from 4 per cent to 7 per cent in the same period of time. In short, while price rises were accelerating the share of wages in the economy was ac tually falling. This in itself is a clear refutanon or tue clam tartas excessive wage nises when are responsible for tauon however, exactly the opposite occurred.
Instead of prices being kept down as wages tell, prices actually soared with the rate of increase going from 2 per cent in August-November 1971 to 4 per cent in November 1971-January 1973, to 8 per cent in January-June 1973 and to 10 per cent in June-December 1973. in short, once again lt was snown clearly that wage increases are not responsible Finally, just to complete the picture, we can look at some of the most blatant examples of all. For instance, house prices in the South East of England rose by £700 in the first three months of 1972 but building workers never received a penny increase in their wages in this period. 8 urthermore between tuand the end of 1973 money earnings of workers rose on average by 49.9 per cent. But the average price of new houses mortgaged rose by 110 percent. Just let anyone try year, while The real effect and aim of holding down wages has already been seen in the massive olensive launcata ov me neat Government to hold down wages during its first years of office. A TUC report at the time showed that wage costs per unit or output in Britain in the period 1970-73 went up by 11 per cent but that prices went up by 14 per cent which incidentally shows once again that wages are not responsible for inflation. as this would not have occurred if wage increases were the cause of price rises. The result of being able to force down wage costs while letting prices rise was absolutely clear pronts rose by over 1s per cent in 1971, the first full year of this policy, and went up even further in 197211 In the present Government's assault on wages, the effects have if anything been even more dramatic. Already this year we nave seen urums such as oneve increase profits to an annual rate of Taylor Woodrow has seen profits go up by 41 per cent to £15 mill ion. No wonder that in a survey printed on 3 May, the Financial Times found that the number of firms expecting profits to increase this year had nearly doubled in January-April compared with October-January, while the Daily Telegraph predicted that this year profits obert hame son socia contract Cure-All or Con-Trick, p9 7. Debby Bustin & Maceo Dixon, A Socialist Programme to Beat Inflation. 8. Jack Woddis, Time to Change Course, 9. Gamble & Walton, ibid 10. Financial Times, 9 May 1976. 11. Jack Woddis, op. cit., p8. 12. Bustin & Dixon. ibid 13. The Economist, 22 May 1976.
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