Phase II: The U.S. Experiment with an Incomes Policy

Barry P. Bosworth

Barry P. Bosworth Senior Fellow Emeritus - Economic Studies

THE TERM “INCOMES POLICY” refers to a wide range of government
measures for coping with what has been a major dilemma of western market
economies in the post-World War II period-the need to reconcile a
politically acceptable minimal rate of unemployment with a politically acceptable
minimal rate of inflation. These policies have developed out of
growing disillusionment with the ability of aggregate demand management,
through traditional fiscal-monetary policy, to provide acceptable performance
in both areas simultaneously. The incomes policies used have ranged
from limited attempts to improve the functioning of individual markets
through relatively mild voluntary programs (such as the wage and price
guidelines that were introduced in the early 1960s in the United States) to
complete government control of all wages and prices, such as has been applied
during wartime.