ABSTRACT
It has come to be fairly widely accepted that ‘conventional’ economic policies have been discredited by the experience and that we are faced with a choice between the hard-line monetarism of the Thatcher Government and an ‘alternative strategy’ based on import controls. Much monetary expansion is due to government borrowing to pay for public sector wage increases: public sector pay settlements probably determine the growth of the money supply rather than vice versa. Traditionally we have had to worry about inflation, the balance of payments, unemployment and slow growth. The 1974–79 Labour Government initially succeeded but finally failed in its attempt to use incomes policy as a device to restrain real living standards as well as to reduce inflation. The problem is that to make import controls work we should have to have the same sort of counter-inflation policy or incomes policy as we would with a devaluation because import controls also make imports scarcer and costlier.
