The Socialist Countries

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The Socialist Countries

From brief observation, We would judge that the Chinese maintain a very close control both on theft wages and on their total demand.

Recently, you may have seen, they unfroze wages and allowed the first increase in fourteen years.

That kind of control over the work force could turn a lot of old-fashioned capitalists to Communism.

And unemployment is always less evident in an agricultural country; people divide up what work there is and work less hard.

Disguised unemployment replaces the open statistical unemployment of the industrial economy and the factory system.

The USSR and the socialist countries of Eastern Europe don't have much open unemployment, but they do have persistent inflation.

People press, as in the West, for higher wages, higher salaries and more public services. So costs press on prices as they do with us. And there is a continuing excess of demand in relation to the supply of goods and services that are available. But in these countries inflation shows itself in a different form. Prices are generally fixed. Accordingly, inflation manifests itself not in higher prices but in longer queues, longer lines waiting for scarce goods. You beat inflation by getting there first and standing longer than your neighbour. It's not a wholly desirable solution in a cold climate.

If we ever stopped trying to prevent inflation, we would surely have a lot of it. And this would be to accept grave injustice. One cause of inflation, we've seen, is that many people now have control or a measure of control over their incomes. Those with the best control can protect themselves by raising their prices and perhaps even improve their position. Those who have no control suffer and fall behind. Income distribution becomes increasingly lopsided in favour of the strong. The American figures are fairly good on this. With inflation, income is reallocated from the old to the people of middle years and from the poor to the rich. And, almost certainly, from workers who are not organized in unions to those who are. This isn't very compassionate or even very safe. We doubt that well ever have a violent revolt of the aged, but we know that we can have angry behaviour in city ghettos by the poor, the black and the young.

Next - Evaluating the Budget Proposals

Foreign Labour Forces

Germany and Switzerland park their unemployed labour outside their own borders; they then let workers in more or less as needed.

Nearly a quarter of the Swiss labour force is from southern Italy, Spain and other countries.

Almost 10 per cent of the German labour force comes from Yugoslavia, Turkey, and Italy.

By allowing in roughly the number for whom there are jobs and refusing entry to workers when there is a surplus, it is possible to keep German and especially Swiss unemployment at a very low level.

The people who do not get in are counted as unemployed in Yugoslavia, Italy,... see: Foreign Labour Forces

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