Rationalizing Incomes Policy in Britain, 1948-1979

Prices and incomes policies, aimed at directly controlling the rate of growth of prices, wages and profits, were a central element in British macroeconomic policy making from the Second World War until 1979. This paper revisits the operation of such policies and the rationales offered during this period. The only argument that makes sense in terms of modern orthodox theory, that an incomes policy can lower expectations of inflation, was very rare. The rationales more often suggested related closely to the institutional details of wage bargaining in oligopolistic labour markets. Virtually no one perceived labour markets as competitive with the wage determined by the marginal product of labour. But this argument gave the policy a significant and later forgotten rationale.

Parole chiave:Incomes policy, inflation, Phillips Curve, labour markets

Jel codes:B2, E31, E62

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Roger E. Backhouse, James Forder, Rationalizing Incomes Policy in Britain, 1948-1979 in "HISTORY OF ECONOMIC THOUGHT AND POLICY" 1/2013, pp 17-35, DOI: 10.3280/SPE2013-001002