CAPITAL, INFLATION, AND THE MULTINATIONALS

In this unsystematic study of current economic problems, Levinson sets out to prove, in an implicitly Ricardian fashion, that higher wages do not cause price increases. Instead it is the failure of industry to ""replace"" labor with capital that has caused the present stagflation in the world economy. A leading official of an international chemical workers' union, Levinson buttresses his argument with an examination of the chemical and petroleum industries -- which are both capital-intensive and high-profit. His considerable discussion of the multinational growth consists of little more than a review of current wisdom, to which he adds the notion that multinationals are dominated by concern for their ""cash-flow cycles"" stemming from old-fashioned capitalist greed. Apparently unsure why the multinationals fail to invest properly, he nonetheless casts random aspersions on the banks and other credit institutions. The book's strength lies in debunking the ""wage-push"" theory of inflation and puncturing the poses of many economists by quoting them against themselves in their twists and turns to explain current economic crises. Indicating that for every point of inflation a worker needs a 2-3% wage hike (depending on the country) just to maintain his standard of living, Levinson advises governments not to impose wage restraints and foment labor upheavals, but instead to encourage capital investment. Despite the title's sweeping implications, the book adds little of theoretical note to the analysis of either multinationals or inflation.