Deflation question

Jim Farmelant farmelantj at
Tue Jan 21 10:56:47 MST 2003

I would think that deflation is bad for workers because falling
prices puts enormous pressure on capitalists to cut costs,
if they are to make any profits, and given the fact that
capitalists under deflation still find themselves facing
fixed costs tover which they may have limited control,
they therefore will attempt to reduce those costs over
which they do have some control, namely over wages.
Therefore, capitalists will do whatever is in their power
to reduce their labor costs, whether by offshoring production
(as was done with autos and steel back in the '70s & '80s
and with software development today), busting unions,
institutiong speedups etc.

BTW under staglation, prices continue to rise while
economic activity as measured by GNP declines.

Jim F.

On Tue, 21 Jan 2003 12:43:58 -0500 Charles Brown <BrownBingb at>
> Charles B: I believe progressive economists hold that deflation is
> actually
> ultimately bad for the working class , too, ( like inflation) but I
> wonder if
> Michael Perelman or somebody could give a brief reiteration of why
> it is. I
> know how depression/recession is bad for workers, but why are drops
> in prices
> bad ? Wasn't stagflation worse than recession + prices falling ?
> Also, isn't the term "inflation" sometimes used to refer to an
> economic
> expansion , not just a general price rise ?  I believe Mark Jones
> uses it
> this way.
> &&&&
> From: Louis Proyect <lnp3 at>
> Subject: Deflationary pressures?
> NY Times Business Section, Jan. 19, 2003
> A Sinking Feeling at the Register
> ONE year ago, a 50-inch Hitachi television cost $1,400 at Circuit
> City. It
> costs $1,000 today.
> -clip-

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