A CRITIQUE OF THE RELATIVE DEPRIVATION HYPOTHESIS OF WAGE INFLATION
| DOI | http://doi.org/10.1111/j.1467-9485.1977.tb00408.x |
| Published date | 01 February 1977 |
| Date | 01 February 1977 |
| Author | John Burton |
Scottish Journal
of
Political
Economy,
Vol.
24,
No.
1,
February 1977
NOTES AND COMMUNICATIONS
A CRITIQUE
OF
THE RELATIVE DEPRIVATION HYPOTHESIS
OF
WAGE INFLATION
JOHN BURTON*
I
INTRODUCTION
A
number of economists and others maintain that the roots of the current
inflation lie not in monetary disturbance, but in the existence
of
conflicting
notions of social equity amongst diverse groups in the labour market. Thus,
for instance, Turvey
(1971)
has hypothesised that “a very important driving
force behind the current wage explosion, in other countries as well as this,
is strong feelings of social injustice, feelings about the appropriateness
of
differentials,
. .
it is a question of relative deprivation and the perception
of
social justice which is the key to understanding what has happened.”
But
whilst this idea recurs constantly as either a major or minor theme in
many contemporary analyses
of
inflation,l little effort has in fact been
devoted by its proponents to the task
of
transforming it from the guise of an
interesting but vague conjecture into
a
precise and testable hypothesis of
wage inflation. Recently, however, an attempt has been made by Baxter
(1974)
to specify the hypothesis in such
a
form, by drawing upon a frame-
work of analysis originally developed within the disciplines of sociology and
social psychology and which is known
as
reference group theory. Important
concepts that have emerged from this latter area of social research are those
of “relative deprivation” and “reference group comparisons”, and Baxter
argues, like Turvey, that these notions provide a valuable insight to the
cause
of Contemporary wage inflation. Empirical studies have also appeared that
claim to provide some corroboration for such a contention.
The purpose of this note is to critically evaluate this “sociological”
analysis of inflation, which will here be labelled as the “relative deprivation
hypothesis”.
11
THE RELATIVE DEPRIVATION HYPOTHESIS
The concept of relative deprivation has been popularised by Runciman
(1966,
1972)
in particular. Despite the now widespread usage of the concept
*
The author would like
to
thank Mike Chapman,
Bob
East, George
Zis
and the Editors
of
the
Scottish Journal
for their comments on earlier drafts
of
this critique.
Any
errors
remaining are the
sole
responsibility of the author.
See
for
example,
Hicks (1974), Jones (1973), Kahn (1975), McCarthy
et
a/.
(1975),
Phelps Brown (1971) and Wiles (1973).
67
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