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Published online by Cambridge University Press: 20 December 2023
The purpose of this chapter is to bring together a small number of questions for further enquiry and research. Inevitably, the (brief) answers will be incomplete or not adequately developed. On some, debate is still fierce. But, having revisited post-Keynesian theory this far to establish the point that it is worth revisiting, it would be remiss not to mention what would be worth exploring further, even though it may not be immediately and as cogently connected to the core of monetary post-Keynesian theory as outlined in the preceding chapters.
Inflation
The first question is obviously that of inflation, which has not featured at all in the preceding analysis. Keynes does talk about inflation, but it does not form a major part of the analysis of the General Theory. As suggested in Chapter 1, post-Keynesians have addressed this question repeatedly, however, and it is perhaps this area where greatest consistency and established thought can be found. Because the quantity theory of money has really “ruled the roost” in terms of explanations for inflation, particularly of episodes of hyperinflation, it is somehow vital for post-Keynesian theory to establish an explanation that will not give an opportunity for another resurrection of the quantity theory. The student of such matters will be better off starting with Robinson's review of the German hyperinflation of the 1920s (Robinson 1938). The essential answer she gave, which was carried further by later writers, is that inflation arises from an irreconcilable conflict on the supply side, whereby workers and employers cannot come to an agreement on how to share the proceeds of the sales of production and have to resort to inflation to mask the relative gains and losses, as time progresses.
The more detailed analysis is given by Weintraub (1978: 45), with a basic pricing equation being set to describe how prices relate to unit wage costs:
where P stands for the price of the good, W for the nominal wage, y for output per worker and μ is the mark-up that monopolistically competitive firms are able to charge over the cost of production.
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