It is quite wrong to believe that wages are the sole cost involved in producing goods and that therefore if wages go up so prices must go up by the same amount. There are a whole series of costs other than wages-for example profits, depreciation (wearing out) of capital, import prices, etc.-involved in production. In fact on average wages only account for about 60 per cent of the cost of producing goods. As far as wages and prices are concerned this has two immediate consequences. Firstly, if wages do go up then there is no iron law which says that prices need go up at all-for example if an increase in wages were matched by a fall in profits then a wage increase would cause no price increase at all. Secondly, even if a wage rise were not compensated for by a fall in profit, then a wage rise of, for example, 10 per cent, should lead to a price increase of much less than 10 percent, something only greater than 6 per cent. Because wages are not the total cost of production the situation which exists today, where prices are actually going up faster than wages, cannot be caused by increases in workers'incomes but only by other factors. Above all, as we shall discuss below, these price rises are caused by capitalist refusal to invest and capitalist attempt to force up profits.
The figures which show that wage increases are not responsible for inflation are in fact so obvious to all who are prepared to look at them objectively that even some members of the ruling class are embarrassed by the transparent lies of the media. For example the Ubserver on 20 July reported that: One Tory backbencher says that if he is called to speak (in the debate on inflation in Parliament) he will emphasise that only 56.4 per cent of national income currently goes into wages and salaries against 59 per cent in 1948 and therefore it is inaccurate to blame wage earners instead of successive governments for the present runaway inflation', Such Tories are however violently anti-working class. Instead of blaming wage increases the other ruling class strategists, known as 'monetarists, blame inflation on extension of bank credit and on massive state spending. They recommend that the way to deal with inflation is by slashjng the health service, education, housebuilding and creating mass unemployment. Some choice that instead of wage cuts!