| Abstract: | It is argued that Keynes consciously sought incomes policy, first, in 1925, and, secondly, during the second world war. The first occasion concerned the need to keep costs down in the wake of the revaluation of sterling. The second instance concerned the difficulties of financing the war effort that would arise from a chronic excess demand for labour leading to greatly increased wages. Keynes came to recognize that cost push wage inflation was a serious potential threat to the maintenance of full employment. However despite his specific proposals then it is uncertain what he would have advocated for contemporary circumstances, as he increasingly came to view this as a ‘political’ rather than an ‘economic’ problem. |
