ABSTRACT
Mainstream theories of inflation are misguided, and so are mainstream monetary and fiscal policy prescriptions. Inflation is the result of conflict over income distribution. Mainstream, neoclassical economists believe that unemployment is necessary in order to keep the income distribution unchanged. They call this supposedly “necessary” unemployment rate the “Non-Accelerating Inflation Rate of Unemployment,” NAIRU, or the “Natural Rate” of unemployment. This is what Karl Marx analyzed so thoroughly in Capital and called the Reserve Army of the Unemployed.
