A Neglected Classic That Demolishes Classical Production Theory

by Jonathan Newman

F.W. Taussig is most famous for his 1888 Tariff History of the United States and his 1911 Principles of Economics. Less well known is a book he wrote in the interim, Wages and Capital: An Examination of the Wages Fund Doctrine (1896).

In Wages and Capital, Taussig poured the old wages fund doctrine through a Böhm-Bawerkian sieve and collected the valuable insights, all the while discarding the useless, off-the-mark, or plainly wrong ideas of the classical economists and others before him. It is this process that makes the book shine. Taussig’s unbiased and objective scholarship is on display—his careful isolation of good ideas amidst a crowd of bad ideas and explanation of the reasons for each choice.

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