Fetter didn’t like Taussig’s book, Wages and Capital

Well, he didn’t like the first half of it.

The first essay in Frank Fetter’s Capital, Interest, and Rent is a review of Frank W. Taussig’s 1896 book Wages and Capital. Fetter favorably reviews the second half of the book, in which Taussig presents the history of the wages fund doctrine from its beginnings in the Classical school to what were then contemporary thoughts on the doctrine and competing capital and income distribution theories.

Fetter criticizes the first half, however, in which Taussig constructs causal-realist capital theory and evaluates the old wages fund doctrine in light of the separately developed theory.

Taussig reformulated the wages fund doctrine based on his own discussions, but was hesitant even to call his reformulation a “wages fund theory” because of the evident possibility for readers to confuse his (dramatically different) version with that of other economists. “The wages fund theory—if that name can be given to the form in which it has here been set forth […]” (Taussig, p. 123).

Fetter seems to miss Taussig’s point from the start, even when he introduces the task of his review essay: “This review, however, must be confined to the author’s ‘positive theory’ as contained in the first 125 pages of the volume” (Fetter, p. 26). Although Fetter set “positive theory” in quotation marks, Taussig never explicitly admits or even implies that his purpose was to defend or promote the wages fund doctrine, especially as formulated by the Classical school economists.

In fact, in the preface to Wages and Capital, Taussig expressed that his intention for the first five chapters was to give “a statement at large of [his] own views on the relation of capital to wages, and on the wages fund doctrine” (Taussig, p. iii).

Taussig reformulated the wages fund doctrine based on his own discussions, but was hesitant even to call his reformulation a “wages fund theory” because of the evident possibility for readers to confuse his (dramatically different) version with that of other economists. “The wages fund theory—if that name can be given to the form in which it has here been set forth […]” (Taussig, p. 123).

Also, in a 1932 introduction to the same book, Taussig admits that “Some things which are in this volume could certainly be said in a better way. […] Especially as regards the continued use of the term ‘wages fund,’ I should change what I wrote forty years ago” (Taussig, Introduction).


I presented this at AERC 2015, as a small part of a presentation on some post-marginalist views on the wages fund doctrine.

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