Class Conflict and Macro-Policy: A Comment

Abstract

Raford Boddy and James Crotty attribute depressions to high wages causing a profit squeeze, leading to less investment. In my view (and Marx's view, in my interpretation) profit squeeze is actually a two-sided dilemma. There are rising costs, mostly raw materials' prices. There is also restricted demand, caused by the poverty and limited buying power of the masses. Inflation in the midst of depression is primarily caused by monopoly power, which restricts supply and raises prices. The U.S. government intensi fies depression by restricting wages at the expansion peak, but helps recovery at the bottom by increasing demand.