A recent op-ed (paywall) in the Financial Times about inflation stated that (emphasis mine):

Across the developed economies, the Phillips curve has gone ignominiously flat. The world's leading central bankers are scratching their heads.


Rather than a response to tightness in the markets for products and labour, [in earlier theories] inflation was understood as a barometer of the political system’s ability (or lack of it) to resolve struggles over the distribution of income and wealth. Workers and bosses, creditors and debtors, fought one another for a larger slice of the pie. When negotiations failed, the path of least resistance was the excessive expansion of credit.


Stop dreaming of mythical beasts like the global output gap and the natural rate of interest, they would say. Wake up to the political realities.

Globalisation and the march of technology have strengthened the hand of employers and weakened that of workers. So it is no surprise that though unemployment has relentlessly fallen, wage growth remains in the doldrums.


What these unfashionable theories of inflation see — that the central bankers’ current models do not — is simply put. It is the dirty secret of economics: the central importance of power.

The author is referring to "old" political theories of inflation. I have struggled to find references about them. I wonder if someone has come across some of these political theories of inflation?

  • 2
    $\begingroup$ Have you googled or scholar-googled "Political Economy of inflation"? $\endgroup$ – Alecos Papadopoulos Aug 18 '17 at 17:58
  • $\begingroup$ @AlecosPapadopoulos found some books in my univ library. No, I found "new political economy" models (like this one), but these are not "old political theories" of inflation. The author seems to be aware of some "well-known" (almost self-evident that do not need mention) theories. Not like the paper I linked, or "new political economy" models. I found some historians and also Kalecki. There is always a limit of how deep you want to search before asking a question here, imo. A general question might benefit others too. $\endgroup$ – luchonacho Aug 19 '17 at 14:51
  • $\begingroup$ I would suggest to contact the author and ask for a reference. $\endgroup$ – Alecos Papadopoulos Aug 20 '17 at 16:35

One book that may help you out is Macroeconomics and the Phillips Curve Myth by James Forder. His narrative is similar to the one you refer to, but the terminology is a little different. He argues that pre-1968, the economic literature had a more nuanced understanding of inflation that incorporated factors like profit and union power to a greater extent. I'm not sure the ideas would be completely new to you, and their authors probably wouldn't have described them as "political theories", but Forder argues that there is a great deal of academic work, including empirical work, that quite suddenly fell out of historical accounts of the literature. If nothing else, I think his reference list could get you started.


Post-Keynesian economics generally describes inflation as an outcome of a struggle between capital and workers, which is inherently political. One of the most comprehensive overall descriptions of PK economics is “Post-Keynesian Economics: New Foundations” by Marc Lavoie. It is senior undergrad/post-grad level, with comprehensive citations. Chapter 8 is “Inflation Theory”.

The “conflicting claims model” is the usual description; you could search on that to find initial references.


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