Inflation, Wages & Profits

There are different kinds and degrees of inflation at different times and in different places. The search for a universally applicable, simplistic and workable solution must therefore prove elusive.

Attempts to explain the causes of inflation simply by mechanical, mathematical comparisons of changes in unemployment, workers’ wages, and the price level tell us little, if anything, about business pricing policies, income distribution, social forces, and changes in the economy’s structure. They frequently also contain strong elements of hostility or bias against workers. And comparisons of inflation in the U.S. with other countries neglect substantial economic and social differences. The U.S. is certainly not a developing country like Brazil. Nor is it like Sweden, Holland, or Germany. Despite similarities among industrial countries, the highly productive and continental-sized American economy—with its diverse, decentralized nature and heterogeneous society—is si...