What would a return to the “1970s economy” entail?

We examine the likelihood of OECD economies returning to a very different functioning, akin to what we term the “1970s economy”. It would be characterised by: Much greater bargaining power for wage earners, skewing income distribution in their favour; As a result, inflation linked to conflict for income distribution and companies’ desire to lift their profitability; Numerous bottlenecks contributing to driving up inflation; High commodity prices, which point in the same direction. Could this type of economy make a comeback after the very different period of 1985-2020? Indeed, there will be pressure from public opinion to increase low wages, which would also be a way for governments to gain acceptance of wealth inequality; after the COVID crisis, this may conflict with companies’ determination to restore their profitability; Indeed, today there are numerous bottlenecks: electronic components, container ships, skilled labour; Commodity prices are rising on the back of the recovery in demand and the shortfall in supply; And the disinflation resulting from the opening up of trade with emerging countries will dissipate. So it should not be denied that some economic characteristics today may resemble those of the “1970s economy”, while of course being less drastic.