抄録
Stagflation is not a pure economic phenomenon but a socio-economic problem which cannot satisfactorily be explained by traditional economics. An application of the theory of public choice and externality will be helpful to elucidate the recent stagflation in the highly industrialized countries. Just as the increase of deficit in the public sector is explained by the public choice theory, stagflation can be analized by it. Cost-push stagflation may also be interpreted as a problem of negative externality or social costs as is suggested by Laurence S. Seidman, etc. If the joint decision agreed upon by both sides of industry causes serious externality, the social costs caused by it must be prevented or internalized.
The main procedures to prevent or internalize the social costs caused by excessive wage and price increases may be classified into the following categories which correspond to those of the anti-pollution policy.
1) Collective bargaining and “social contract” betweenn both sides of industry.
2) Giving incentive to wage restraint by subsidizing workers through income tax reduction, the improvement of social security benefits, etc.
3) Tax-based incomes policy-taxation on the excess wage increase above the guide line.
4) Direct incomes policy.
When 1) is not successful, procedures 2) and/or 3) or the combination of 2) and 3) are required to prevent or to internalize the possible social costs which will be caused by the excessive wage and price increase. Those procedures will also be helpful to prevent the zero-sum game and/or “prisoner's dilemma” into which collective bargaining tends to fall.
The rational expectation hypothesis assumes that economic agents behave rationally, while the “prisoner's dilemma hypothesis” assuumes that economic agents tend to fall into the most irrational situation. However, if there is sufficient communication and mutual interest betweenb oth sides of industry, it is reasonable to assume that “enlighted rational expectation” will be created. Incentive systems to induce“enlightened rational solutions” should also be introduced.
