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Richard C. K. Burdekin & Paul Burkett, Distributional Conflict and Inflation: theoretical and historical perspectives (St Martins, New York, 1996), pp. 300, $59.95 cloth, ISBN 0-333-62914-0.
This excellent book proudly runs counter to the economic mainstream, singling out conflict as the primary source of inflation. Are the authors cranks? Absolutely not! Instead, they show that reframing the analysis of inflation in terms of conflict offers a richer interpretation than the conventional treatment of the subject.
They work with the same data that Milton Friedman interprets as evidence that `Inflation is always and everywhere a monetary phenomenon' (p. 15, citing Friedman, 1966, p. 18), but do so without rejecting Friedman out of hand. Instead, they point out how Friedman goes wrong.
For example, the authors translate Milton Friedman's claim, that `inflationary pressure can be interpreted to mean an aggregate nominal demand in excess of the value of prior (or potential) output at prior prices' (p. 23, citing Friedman, 1966, p. 18, fn. 2). They suggest instead merely to substitute the words `aggregate nominal claims' for `aggregate nominal demand'; that is, if we merely switch from the expenditure to the income side of the circular flow we can understand inflation in terms of conflicting claims.
This switch to the income side sets the stage for all that follows. We no longer have to demonize the inflationary process. Inflation ceases to be merely destructive behavior of central bankers printing too much money. Instead, as this book demonstrates, we can embed inflation within a...