Conflict Inflation as an Analytical Approach

The general perspective of the present book is in basic agreement with Tobin’s conception of conflict inflation, albeit with three important qualifications. First, the inflationary pressure deriving from an excess of ex ante income claims over the real income available to satisfy these claims ex post is only realized as an actual inflation of the price level insofar as aggregate claims are accommodated by increases in the stock and/or velocity of money.2 The conflict approach thus posits that inflation is both a real and a monetary process, but that the real side – the excess of real income claims – is the fundamental causal factor in the sense that, without dissatisfaction over the existing level and/or distribution of national income, the basis for inflationary growth of the supply and/or velocity of money simply would not exist.