ABSTRACT
Inflation has its origin in social and political quite as much as in economic factors. The forces at work in the monetary system and in commodity markets were reinforced by inflationary forces in the labour market. Other sources of cost inflation have also to be considered. Recent events have brought home the powerful inflationary influence that can be exerted by an exogenous rise in the price of foodstuffs and materials. Inflation is understandable in Tudor England or Latin America or post-war Hungary. Governments were blaming inflation on the sudden rise in international commodity prices as if they had no hand in it. The weakness of the incomes policy approach is that it makes it impossible to deal with inflation without transforming collective bargaining from top to bottom either voluntarily or by statutory regulation. Domestic influences in those major countries the half dozen or so largest members of the OECD then become the focus of attention.
