Inflation and Distributive Conflict: a theoretical perspective

Conflicting claims models have stressed the race between prices and money wages, in the struggle among capitalists and workers, as the main inflationary pressure. We discuss how conflicting-claims inflation models describe conflict inflation and the related outcome for income distribution. The paper therefore contrasts alternative theoretical perspectives underlying conflicting claims models. We also discuss how these approaches provide a criticism to the New-Keynesian Phillips curve. We also explore the relations between demand-pull and cost-push inflation and endogenous money theory. A deeper understanding of distributive conflict requires an analytical exposition of the relation between prices and distribution. In general, conflicting claims models rely on Kaleckian explanation of distribution, based on the notion of mark-up pricing according to the degree of monopoly. Conflict inflation allows wage bargaining to affect income distribution and, thus, the real mark-up level. However, this theory contains unsolved theoretical shortcomings, lacking an ultimate explanation for profits and overlooking input-output relations. An alternative theory of distribution can be found in modern appraisals of the Classical surplus approach. We examine how this approach has been extended to the study of inflation, providing a consistent relation between inflation and distributive conflict