Incomes policy revisited

<p>The attraction of these other methods is that they require no administrative intervention. They only have to shape a market environment in which the freely taken decisions will be non-inflationary. For this, it used to be thought, it will be enough to control the quantity of money. The victims of the correlation pitfall believed that changes in the rate of increase of the monetary stock would be followed systematically after about two years by changes in pay: there were certain 'inbuilt adjustments' that could be relied on to bring this result about. But when this belief is applied to the here and now it puts too much strain on the credulity of the victim: the Government can say nothing and need do nothing about the desireable behaviour of pay in the present round, for what will actually happen now was decided two years ago.</p>