Convergence on inflation and divergence on price control among post Keynesian pioneers: insights from Galbraith and Lerner

Abstract

This article proposes a historical and analytical reconstruction of a debate that never happened between John Kenneth Galbraith and Abba Lerner over the issue of price controls. While they adopted a similar analysis of underemployment inflation, shared by many post Keynesians, Lerner and Galbraith remained fundamentally opposed as to the effectiveness of price controls. Indeed, while both agreed on the relevance of price controls in the specific context of World War II, they disagreed over including price controls within the conventional framework of economic policies, as illustrated by their respective stances in the debate surrounding the stagflation of the 1970s. Throughout the paper, we provide the rationales behind their divergence on price controls by investigating its theoretical, epistemological, and normative roots. Finally, we put into perspective the contemporary debates about price control in the context of resurgent inflationary pressures with some salient points drawn from our reconstruction of the debate that opposed these two pioneering post Keynesians economists.