Organizational theory and the problem of the shift in the Phillips Curve

Abstract

During the 1970s and 1980s the trade-offs between unemployment and inflation-the Phillips Curve-have appeared to have shifted to the right.c5,“) Although there is some evidence that the high rates of inflation and of unemployment, what was labeled as stagflation, have subsided somewhat, current evidence indicates that the trade-off is now higher than it was in the 1960s.’ The objective of this paper is to suggest a number of organizational, market and societal pressures that encourage both firms and customers to break the connection between inflation and unemployment, exerting pressure on the curve so that it moves to the right. Recently, Etzioni(‘s) has published a book that argues that in socioeconomics there is both the pursuit of economic gain and of moral commitment, both at an individual level and a collective level. This paper attempts to contribute to this debate about the assumptions of socio-economics in two ways. First, by arguing that there is a new rationality appropriate for postindustrial society and second, by suggesting that with a given set of structural conditions, the commitments between managers and workers and between customer and producer are quite different from what they have been during the first and second stages of industrial capitalism. In practice, it may be difficult to separate enlightened self-interest from new moral