Towards a Marxian critique of inflation targeting

The whole corpus of the economic establishment has reached a consensus that independent central banks should target inflation. Using the base rate of interest, aggregate demand should be set to ensure that there is an equilibrium level of employment and unemployment. The upshot is that any attempts either by workers to increase wages, or by government to stimulate higher employment, are futile - resulting in spiralling wage and price inflation. In this paper, a Marxian critique of inflation targeting is suggested. Using Marx's theory of exploitation, wage labour can be shown to eat into the vast pool of profits, without any impact on inflation.