Conflict, inflation and money

Abstract

Conflict is endemic in the capitalist system and concerns all aspects of economic life : the techniques of production to be used, the length and intensity of the working day, and the distribution of income. Naturally, these are all interconnected and what happens in one sphere influences what happens in the rest, and all in some way affect the behaviour of wages and prices. So much is obvious, but, in view of the complexity of the inflationary process, the present article focuses on just one particular area, namely how conflict over the distribution of income affects the general level of prices in advanced capitalist economies. A formal model is constructed in which the following factors are combined in a coherent fashion : taxes, the terms of trade, expectations and money. In writing this article I have drawn on a wide variety of past writing on the subject of inflation, although usually without explicit acknowledgement. Amongst the works which influenced me most were: Marx's writing on the reserve army of labour, Keynes' How to Pay for the War, Maynard's Economic Development and the Price Level, Phillips' famous article on unemploy ment and wages, Wilkinson's contribution to Do Trade Unions Cause Inflation? and, finally, monetarist writing on expectations.!