Full text: Distribution and Growth

extraordinary profits, by innovation for example, the workers 
of this firm pushed forward with demands for a share in the 
extra profit. These demands were usually successful in view 
of the scarcity of labour and of the interest of management 
in a satisfied and hence permanent and stable work force. 
This process of piece meal advance of real wages is called 
wage drift, in contrast to the centralised collective agreements. 
The wage drift may (will) cause some inflation, in so far as 
workers in other (protected) branches manage to draw level 
and cause a shift of their wage increase to the prices. However, 
the degree of inflation under full employment, as seen from 
present standards, was modest, and there were no signs of 
profit inflation. What prevented a more or less permanently 
booming economy from slipping into profit inflation? 
In any investment (or export) induced boom there is a kind of 
automatic control (quite apart from the safety valve of the 
foreign balance) which restrains the boom once it approaches 
the ceiling of available resources. Bottlenecks make it 
impossible for the real investment to increase above a certain 
volume, and via the multiplier the rest of the economy is 
restrained too. This is the basic reason why the boom does 
not get out of hand. The growth rate is bounded by the saving 
at full utilization and the productivity increase which makes 
this saving increase annually.

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