What causes inflation in the advanced industrial countries is not so much shortages of goods but a sort of struggle between different classes and groups to shift the distribution of income in their favour. When workers try to increase wages beyond what may be justified in terms of the increase in their productivity, when farmers or manufacturers try to improve the terms of trade in their favour, or even when the Government tries to increase its share of total national income, the other sectors or groups retaliate, and we get a struggle which results in rise in prices. The prices, incomes and wages policy is nothing more and nothing less than a policy whereby the Government arbitrates between the various claimants for a larger share in the national cake. A conscious distribution policy has thus become a vital necessity even in industrially advanced countries.
In the short-run, our policy must aim at holding the scales even between different sections of the community and at the same time emphasise the need for a more rational and egalitarian distribution of income in the country. But we must go beyond a prices, wages and incomes policy. With our extreme poverty and the inequalities reinforced by a variety of historical and cultural factors, we have also to aim at basic or fundamental changes in the social and economic structure. Opportunities for education and employment for all, ceilings on urban and rural land and on incomes and wealth in general, reduction in barriers of caste and creed, alterations in laws relating to inheritance or property, the part played by the State in industrial and trading activity are all aspects of long-term changes we have to bring about to achieve that distribution of income and wealth over a time which would correspond to the notions of social justice our people have and which is, therefore, essential for bringing forth the best contribution that all citizens can make for the economic advance of the country. That is why in India we often refer now-a-days to an incomes and wealth policy which emphasises these long-term aspects of social justice, social solidarity and peaceful progress rather than merely of a prices, incomes and wages policy which has only short-term connotations.
There is often a temptation to consider the distribution of income merely in terms of the minimum and the maximum. A simplistic solution is often suggested in terms of the maximum being a certain multiple of the minimum. This might be a rough and ready way of explaining one's thinking on the subject, but it would be an unreal way of seriously approaching the problem of distribution of income.
