ABSTRACT
This chapter explains the concept of an anti-inflation program as part of the effort to build a political base in cities and states on political strategy. As pointed out by economist Arthur Okun, former member of the president's Council of Economic Advisors, society demands a greater equality and stability of income than the market delivers. In the Keynesian view of public policy, forms of government intervention such as taxation and public expenditures for steady growth and income distribution are meant to correct the injustices and inefficiencies of market capitalism. The development and implementation of a new demand-management/labor-market policy in Sweden after World War II was principally a response to increasingly serious problem inflation. The very structure of union bargaining in Sweden was largely responsible for continued inflation. Economist Assar Lindbeck claimed that the comparatively high progressivity of the Swedish tax system has led to violent wage increases; it is a powerful mechanism that reinforces inflation once it has started.
