8 - Toward social control
Published online by Cambridge University Press: 07 October 2011
Summary
The preceding chapters have sought to develop the analytical framework necessary for understanding the causes of inflation in a technologically advanced economy such as that of the United States. From the explanation just offered of how prices, along with wages and dividends, are determined in the oligopolistic sector of the American economy only one conclusion is possible – that inflation results not from any ‘excess’ of aggregate demand but rather from the efforts by powerful groups in society to maintain their own relative income position in the face of the redistributional effect which the inevitable change in the aggregate growth rate is certain to have. This struggle over relative income shares can be seen most clearly in the frequently observed wage-price spiral, with first trade unions and then megacorps seeking to regain whatever ground has been lost.
Were the price level the only casualty, the periodic jousting between labor and management, most directly over wages but indirectly over prices as well, would hardly warrant the attention it has received in this treatise. After all, what more harmless way is there for releasing pent-up social tensions than for the GNP deflator to take a beating? While it is true that the chief victims of the conflict are generally the less organized groups in society, even this untoward effect is a minor one compared to the actual consequences which the post World War II inflation has had for the United States.
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- The Megacorp and OligopolyMicro Foundations of Macro Dynamics, pp. 271 - 287Publisher: Cambridge University PressPrint publication year: 1976