Central Banks' Reliance on the Phillips Curve Is a Political, Class-Biased Policy Rather Than a Neutral Technocratic Tool
Source: Silas Xuereb. "The Philips Curve Is a Tool for Waging Class War on Workers." October 12, 2026. jacobin.com
The Gist
The author says central banks fight inflation by letting unemployment rise, based on an old economic idea that was never a solid cause-and-effect rule. Recent inflation came from supply problems and corporate pricing, not from workers demanding too much, so this approach hurts workers without fixing the cause. Treating interest rates as neutral science hides the fact that these are political choices that favor the wealthy.
Conclusion
Using higher unemployment as the default tool to control inflation, justified by the Phillips curve, is a political choice that harms workers and benefits capital. Monetary policy should be recognized as political, not treated as apolitical technocratic management.
Premises
- The Phillips curve rests on an empirical correlation between unemployment and inflation that was extended into a universal causal claim, but no direct one-to-one causal relationship ever existed.
- Inflation has varied causes. Post-pandemic inflation was driven by supply-chain shocks and corporate price increases that used market power to pad margins, not by workers bidding up wages, so interest-rate hikes aimed at labor markets are poorly targeted.
- Central bank anti-inflation policy has concrete class costs. The Volcker shock and the post-pandemic rate hikes in Canada raised unemployment and hurt workers.
- Monetary policy, like fiscal policy, has major distributional consequences and shapes class outcomes, and fiscal tools such as taxation could also be used against inflation. Treating monetary policy as the natural tool is therefore an arbitrary, political distinction.
- Depoliticizing central banking removes decisions from democratic control, which benefits wealthy people and corporations that already hold disproportionate influence over government and investment.
- The weakening empirical Phillips curve reflects reduced labor bargaining power, not a neutral economic law, so economic relationships must be analyzed through class and power.
Assumptions
- Central bank rate-setting could be made democratically accountable without serious economic costs.
- The distributional effects of monetary policy are a reason to treat it as political, and to prefer alternatives, rather than an unavoidable side effect of price stability.
- Elite beneficiaries of depoliticization actively or structurally sustain it, so its persistence is explained by class interest.
- Fiscal policy, such as taxation, is a viable and less harmful substitute for fighting inflation.
- Correlation between rate hikes and rising unemployment indicates that the policy causes the job losses.