ABSTRACT
An overwhelming majority of academic economists holds that there is a functional relationship between the rate of wage inflation and the level of unemployment. The view of unemployment which complements the foregoing view of wage determination is less fully developed, and its specific public policy implications are less clear. The view of the inflationary process suggests that wage policy must be directed at controlling the initial shocks and the process through which the shocks spread within fixed wage contours. The central issue of economic policy is the upward mobility of discontented low-wage workers. Economic policy is the outcome of a political process. The important actors in the process are, on one side, the trade union movement and organized minority groups pushing for expansion and a low rate of unemployment and, on the other side, the business and banking communities which have been infinitely more cautious and conservative.
