On Controlling Inflation

Under the theoretical hegemony of monetarism, and serving the interests of the capitalists, the government's anti-inflationary policy seeks to lower real wages and reduce employment to achieve its objective, this even as the level of aggregate demand falls short of the available supply. This paper suggests an alternative method of inflation control which uses transfer payments to the working population to bring down the rate of inflation by increasing aggregate output. Indeed, real wages and employment go up and post-tax profits do not suffer, even as the government balances its budget by taxing the capitalists to obtain the additional revenue to make the transfer payments. The method however requires capital controls to be in place.