The Conflict Theory of Inflation Revisited

Abstract

This article develops ideas contained in a previous paper on conflict inflation (Rowthorn [1977]. ‘Conflict, Inflation and Money.’ Cambridge Journal of Economics 1 (3): 215–239). It begins with a summary of that paper, stressing the importance of staggered markets, conflicting aspirations and unanticipated inflation. It then examines three recent articles that share a similar perspective. In the light of this discussion, it makes some general observations about the nature of conflict inflation. Finally It concludes with an application of conflict theory to the recent cost of living crisis in the UK. It argues that private companies have used their market power to defend their profit margins and ensure that the entire burden of higher world prices is borne by consumers, in particular wage and salary earners.