a1 Massachusetts Institute of Technology
This study examines postwar patterns in macroeconomic policies and outcomes associated with left- and right-wing governments in capitalist democracies. It argues that the objective economic interests as well as the subjective preferences of lower income and occupational status groups are best served by a relatively low unemployment-high inflation macroeconomic configuration, whereas a comparatively high unemployment-low inflation configuration is compatible with the interests and preferences of upper income and occupational status groups. Highly aggregated data on unemployment and inflation outcomes in relation to the political orientation of governments in 12 West European and North American nations are analyzed revealing a low unemployment-high inflation configuration in nations regularly governed by the Left and a high unemployment-low inflation pattern in political systems dominated by center and rightist parties. Finally, time-series analyses of quarterly postwar unemployment data for the United States and Great Britain suggests that the unemployment rate has been driven downward by Democratic and Labour administrations and upward by Republican and Conservative governments. The general conclusion is that governments pursue macroeconomic policies broadly in accordance with the objective economic interests and subjective preferences of their class-defined core political constituencies.
* This article is taken from my longer monograph Economic Interest and the Politics of Macroeconomic Policy. Earlier versions of the paper were delivered to the Econometric Society World Congress, Toronto, Canada, August 1975, and the Annual Meeting of the American Political Science Association, San Francisco, August 1975. The research has been supported by National Science Foundation Grants GS 33121 and SOC75–03773. The Computer Research Center of the National Bureau of Economic Research provided computational support. I am indebted to Hayward Alker, Suzanne Berger, Bob Brito, Randy Forsberg, J. David Greenstone, David Held, Mike Intriligator, Robert Jackman, Peter Lemieux, Frank Lerman, Andrew Martin, Benjamin Page, Adam Przeworski, Martin Rein, William Schneider, Robert Solow, and Paolo Sylos-Labini for comments on an earlier draft. The research assistance of Warren Fishbein, Marilyn Shapleigh and especially Nick Vasilatos is gratefully acknowledged. I retain the usual responsibility for errors of fact and judgment.