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Inflation and Employment in capitalist countries, in my own view, the change is the other way around: the constraints on the pressure of demand tend to be excessive, with the result that unemployment is much greater than can be justified by the needs of resource-allocation, and the rate of economic growth is appreciably less than it could be.
The main reason for this is that the distribution of power and, ultimately, the distribution of incomes, changes in favor of labor the faster the economy grows and the nearer it is to full employment, and over a longer period it changes in favor of capital the greater the volume of unemployment. This is the real reason why the continuance of Keynesian policies after the war led to a recrudescence of long-discredited ideas that go by the name of “monetarism.” The main attraction of monetarism was not its intellectual simplicity— inflation is a matter of the money supply, period— but that it elevated the fear of inflation to the unique position which could not be justified by the experience of numerous countries who habitually suffer from it. (en) |
