THE INADEQUACY OF RECENT WAGE THEORISING1
| Published date | 01 June 1958 |
| Author | H. A. TURNER |
| Date | 01 June 1958 |
| DOI | http://doi.org/10.1111/j.1467-9485.1958.tb00365.x |
THE INADEQUACY
OF
RECENT
WAGE
THEORISING’
THIS discussion seems concerned primarily with the relation of wage-
policy to inflation. Now the merit of an expert’s policy-recommenda-
tion depends on his superior understanding of causal connections.
He
knows (and
you
don’t), that
A
is caused by B,
so
that if you
do
C
to
it,
D will follow. But Mr. Robertson assumes ‘without
discussion
’
that our inflation has been
‘
wage-induced
’.
His col-
league, Mr. Parkinson, seems equally clear that inflation’s main cause
is
‘
excess demand
’.
And to
Mr.
Flanders
‘
.
.
.
the problem
.
.
.
can
be expressed as the absence of institutional restraints on
all
types
of wage-competition
’
(i.e. economic, social and institutional). The
confusion is all
too
familiar. The question, in fact, becomes one
of
valid theory. Without that, any proposal embodies preference rather
than prescription.
One
might
doubt whether labour factors, whether on the supply
or
demand side, play
a
central r6le
in
inflation at all. For instance,
Mr.
H.
P.
Minsky has recently made a very interesting theoretical
analysis of certain connections between growth, employment and
prices.’ Practically, its implications seem to be that, given current
monetary institutions and attitudes to money, the investment required
to maintain
a
steady growth
is
likely also to involve an expansion of
the money supply exceeding the resultant output yield,
so
prices rise
automatically. But
if
you try to stop this by monetary restriction
you either fail because the growth
of
output is similarly reduced,
or
you actually set
off
a recessionary ‘downturn’.
Mr.
Minsky’s
model, though originally abstract, would fit
so
well the Western
economy’s recent history that it now conveys a disquieting realism3
[This contribution by Mr.
H.
A.
Turner arrived at the last moment and
there was
no
opportunity to discuss amendments to it before publication.
Some
of
Mr. Turner’s comments invite
a
rejoinder either
on
matters of fact
or
because he appears
to
do less than justice to the contributions under discussion.
I
was neither able
nor
willing
to
permit rejoinders
:
but
I
did see some
advantage
to
the reader in resolving any unnecessary disagreements
on
matters
of
fact.
1
therefore allowed one footnote each
to
the three authors under
criticism,
so
that they could accept or reject correction
on
points
of
fact,
without at the same time defending themselves
,on
other matters.-Ed.]
‘
Monetary Systems and the Price Level
,
American
Econornic
Review,
Vol.
XLVII,
No.
6,
1957.
It also seems
to
accord with the empirical analysis
of
C.
F.
Roos
(’
Dynamics
of
Economic Growth: The American Economy 1957-75
’,
Econo-
metric Insrirure.
1957-particularly pp. 89-91) and with his comment
on
the
consequences of the Fedcral Reserve attempt
to
suppress
‘
wage-inflation
’
by
credit restriction.
168
To continue reading
Request your trial