The purpose of this volume is to provide a theoretical understanding of how prices are determined in the oligopolistic sector of the American economy and how those prices, so determined, affect the growth and stability of the economy as a whole.

The need for such an understanding would appear to be unquestionable. Persistent inflation in the period after World War II, manifested as a continuing rise in the various price indexes, has thwarted the application of the Keynesian insights to assure steady economic growth at full employment. In the process the pre-war business cycle has been replaced by what Joan Robinson (1962b), following Michal Kalecki (1943), has termed the political trade cycle. This involves the deliberate suppression of aggregate demand by the government, once high levels of employment have been attained, to meet the complaints of rentier groups that the value of the dollar is being eroded – followed by the deliberate stimulation of the economy, once the rise in the price level has been halted, to calm fears of spreading unemployment. Forced to choose alternatively between full employment and price stability, the government has been unable to achieve either with consistency.

Why the American economy should find itself caught on the horns of this Phillipsian dilemma cannot be adequately explained by recourse to the existing body of economic theory.