This year's Nobel Prize winner in economics, James Tobin of Yale University, speaks for a school of economic management that is out of political fashion today: wage-price controls, better social programs and full employment. But he thinks that time (and what he foresees as the painful results of Reaganomics) will bring the country back his way. I paid a visit to Mr. Tobin last week. Herewith, excerpts from our conversation (some remarks abridged):

On the source of our problems: "Our present inflation is commonly blamed on too much government spending and too much money creation during the 1970s. But that's putting the blame in the wrong place. A lot of the responsibility rests with the severity of the shocks that rocked the economy during the decade. For example, it is unprecedented in peacetime economic history to have two huge increases in oil prices. Economic policy couldn't reverse them or avoid the loss of real income involved. (There was also the grain shortage and big price increases in other commodities.) So it's misguided to say that everything has gone wrong merely because certain policies were followed in those years."

On inflation: "Inflation is greatly exaggerated as a social evil. Most people attribute to inflation the bad things that happen to themselves and to the nation--things which reduce the growth in their standard of living--when in fact they may have been caused by quite different events.

"Take the oil price increases. They reduce purchasing power and contribute to inflation. People then think that inflation is the reason that their wages don't buy as much as they used to. But that's an optical illusion. It's really the fault of the fact that we have to work harder to buy the same amount of oil from overseas. As far as internal inflation is concerned, one man's price is another man's income, so we can't all become worse off by inflation. It is when we have to pay higher prices to someone outside the country, like OPEC, Organization of Petroleum Exporting Countries that there is a real consequence."

On stopping inflation: "We are not going to have a successful disinflation without some kind of wage and price controls. Right now, we are just relying on tight money and on the natural desperation of disaster--such as we see in Michigan in the automotive industry--to moderate the wage demands of workers, stiffen the backbones of employers and induce price discounting. That will work eventually, but it is a very painful way to do it and very costly to the economy."

On work incentives: "The irony is that the administration is putting a lot of emphasis on the importance of incentives for work and savings at the high end of the income range by cutting marginal tax rates. But at the low end, its policies effectively raise marginal tax rates and reduce work incentives. By abruptly cutting off social benefits at a certain income level instead of reducing them by a sliding scale, the administration is reducing the incentive for low-income people to earn more money for themselves."

On reducing income inequality: "Competitive market capitalism is very efficient, very progressive. It has worked over the centuries to produce more goods and services, innovations and so on. But at the same time, it has the tendency to create a highly unequal distribution of wealth and income that perpetuates itself from one generation to the next. Every democracy has reached for a compromise that would modify the unequal consequences of competition in order to make things tolerably less unequal in the next generation."

On American attitudes toward the poor: "I think that the American people are basically in favor of the war on poverty. They may have gotten tired of it because of their gripes about what went on in the 1970s. But if cutting food stamps and school lunches doesn't solve the big problems of the economy, there will be disillusionment with this approach. I think there is a tendency in this country to think that there is a kind of American standard of living that no person can decently be left without. That tendency will reassert itself."

On our once and future country: "Things have not been as bad as they're painted. Most people are better off than they were 10 years ago. Real incomes have been rising and real standards of living are higher than they were at the beginning of the 1970s, so the idea that everything has gone to rack and ruin during the last 10 years is an illusion. If we could just get stagflation solved, the stage would be set for a decade of progress.