Abstract
An underappreciated aspect of the so-called golden age of social democracy was the degree to which governments and unions sought to restrain wage increases—in the apogean moment of labor’s economic and political power—to manage the era’s inflationary process. While economic growth through tight labor markets, trade union rights, and entrepreneurial freedom defined the strategy of postwar economic policymakers, these three goals were often incompatible. Price stability could be achieved with the combination of any two. But so long as wages and prices continued to be set “freely,” indiscriminate of any national considerations, the pursuit of tight labor markets threatened inflation. Democratic countries unable to abandon one or more of these goals therefore began to redefine them in labor law, price regulation, and fiscal policy. The history of national wage policies offers one of the more prevalent and enduring attempts to adapt labor rights to the politics of social democracy’s golden age. Bringing wage determination under public oversight, however, proved a politically demanding and volatile exercise in national labor unity. As wages drifted away from policy targets, the very legal foundations of the postwar mixed economy came under heightened employer and congressional scrutiny, radicalizing the very question of reform.
