The basic thesis of this paper is that a necessary condition for the re-establishment of full employment without a runaway inflation is a change of attitudes and institutions concerning wage-fixing which puts more emphasis on the effects of rates of pay on the expansion of employment opportunities and much less emphasis on their effects on the real incomes of those already in employment. A necessary condition for such changes would be to develop further fiscal and social welfare measures to promote an acceptable distribution of income. Unfortunately it is possible that two very desirable developments — namely, labour participation in decision-making in industry and the introduction of new technologies — may make this particular wage-fixing problem more, rather than less, acute. The reforms discussed to meet this problem cover: the use of Keynesian demand-management policies to keep the money national income on a steady but moderate growth path; measures to restrain the setting of monopolistic practices by trade unions; a system of national arbitration and a possible inflation tax to curb excessive wage increases; an integrated reconstruction of social benefits and direct taxation; the substitution of expenditure instead of income as the basis of a progressive direct tax; the possible introduction of an annual wealth tax; and the reform of capital transfer tax to fall progressively on the beneficiaries of gifts and bequests.