Prices-and-Incomes Policy

Abstract

Prices-and-incomes policies as the cure for inflation are espoused by the sociological school who lay the blame for inflation at the door of the trade unions. During the post-war period the majority of governments in power have seen considerable merit in such policies despite a growing volume of evidence as to their inability to reduce the rate of inflation in anything other than the very short term. Both the current Labour administration and the ‘Opposition’ appear at long last to have learnt the lessons of history in this respect, although as a matter of political expediency the Labour Party, in particular, continues to cling to prices-and-incomes policies as the ‘least undesirable’ method of containing inflation. In the course of this chapter we seek to review past policies and to assess their effectiveness. This will then enable us to draw certain conclusions as to the desirability of continuing with such policies in the future.