Wage-Fixing (Routledge Revivals)

APPENDIX A

The Inflationary Implications of Orthodox Keynesian Demand Management for Full Employment Combined with Wage Settlements Designed to Achieve an Over-Ambitious Real Wage

I

This appendix describes a simple model in which wage rates are fixed not so as to promote employment, but so as to attain a certain real standard of living which is in some sense over-ambitious, given the real productivity of labour and given the profit mark-up used in setting selling prices and so in determining the cost of living. Given any level of wage and other costs, the price level can be reduced by a reduction of the profit margin. For this reason it is important for the control of inflation as well as for other reasons that the profit margin should not exceed ...