Tax- and Market-Based Incomes Policies: The Interface of Theory and Practice

Abstract

Inflation is everywhere and always a full circle — prices rise because wages rise because aggregate demand increases because wages rise …. While questions of what is the cause and what is the effect may well serve the purpose of employing unemployed philosophers, they will always, like the chicken-and-the-egg conundrum, go unanswered. For those interested in policy questions rather than conundrums, it is useful to finesse the question of what ultimately causes inflation by concentrating, instead, on that aspect of the circular causation for which something can be done, an approach I have elsewhere called the realitic approach to economics.¹