-35- 
IV. CLASSICAL ECONOMIC THEORY: 
THE WAGES OF LABOR 
How did the classical economists' conceptions of the deter- 
mination of wages shift over the lifespan of classical political 
economy? 
All the classical economists began their analyses of wages 
from the ground set out by Adam Smith in Book I, Chapter 5 of the 
Wealth of Nations~ the chapter "Of the Wages of Labour." In fact, 
all the theoretical ideas later laid out by classical political 
economists are present, at least implicitly, in Smith's analysis. 
Smith begins in Locke's state of nature, in which "the whole 
produce of labour belongs to the labourer,,,l and his wage is thus 
equal to his productivity. This state of things, however, "could 
not last beyond the first introduction of the appropriation of land 
and the accumulation of stock," and so Smith concludes that it is irrelevant to his economic analysis except as a limiting case.2 
In the real world, the reward of labor is what is left of the worker's 
product after the deduction of rent and profit.3 "Rent" thereupon 
drops out of Smith's analysis; he considers the division of total 
product~rHssrent. This sum is divided between wages and profits 
on the basis of "the contract usually made between workers and mas- 
ters.,,4 
Solidarity on the part of the masters and the workers' lack 
of the financial resources necessary for an extended contest together 
imply that "masters must generally have the ad·vantage." But there is 
a limit below which wages cannot permanently fall: "A man must always 


-36- 
live by his work, and his wages must at least be sufficient to maintain him. ,,5 
Smith makes one major exception: when national wealth is increasing, the competition of masters for workmen would break down their tacit combination and push wages up. Wages depend explicitly 
on girowth: 
"It is not • . . in the richest countries • • . but in 
the ones that are growing rich the fastest, that the wages of labour are highest. ,,6 This high level of wages does not last indefinitely beyond the cessation of economic growth. If the funds destined for the payment of wages "have continued for several centuries of the same . • . extent, the number of labourers employed every year could easily supply ..• the number wanted the following year.,,7 Hence the tacit combination of the masters would reassert itself. Further- 
more, "the hands .. would... naturally mUltiply beyond their employment." Thus, in a stationary economy wages would be reduced 
to "the lowest rate consistent with common humanity." And in a nation undergoing absolute economic decline things would be even worse.8 
Smith's chapter then turns to empirical analysis, as Smith demonstrates that in Great Britain wages are above the level of physical subsistence. He also goes to lengths to dispell the proposi- 
tion that a nation is more prosperous if its lower classes are less: 
"No society can surely be flourishing and h~ppy, of which the far greater part are of the members are poor and miserable.,,9 
In the process of constructing his theory of wages, Smith 
has drawn on all the theoretical concepts later used by classical economists. The Malthusian population principle, the tendency of wages toward subsistence levels, the superior bargaining position of the cap- 


-37- 
italists, and the dependence of the level of wages on the size 
of the wages fund--these are the concepts classical political eco- 
nomy used in its analyses of the determination of wages. The 
only point in Smith's argument that does not appear again and 
again is Smith's conclusion: the explicit determination of the 
wage rate by the rate of economic growth.10 
Smith also gave an economic interpretation of wage differ- 
entials. According to Smith, 
(l) Wages vary with the agreeableness of the employment. • . • (2) Wages vary with the cost of learning the business • . . (3) Wages vary with the constancy of employment. . . . (4) Wages vary with the trust to be reposed. . . . (5) Wages vary with the probability of success. 
Smith's presentation was the last word on the subject of wage dif- 
ferentials for a hundred years. Not until Cairnes set forth his 
theory of non-competing groups did any economist claim to improve 
	. , 	. 	f .. 	11 
on Smlth s presentatlon a thls lssue. 
Smith had advanced a complex and sophisticated analysis of 
wages. By contrast, most of the economists of the first generation 
advanced very simple, one-dimensional explanations. They acted 
as though they were hypnotized by Malthus's Essay on Population. 
It seemed to offer a quick and natural way to get at the underly- 
ing essence of the laws that regulated wages and population. 
Of all the classical economists, the one most transfixed 
by Malthus's Essay and its implications was James Mill. 
The elder Mill begins his analysis with the proposition 
that "~he share of the two parties [workers and capitalist4 is 
the subject of a bargain." And "all bargains, when made in free- 


-38- 
dom, are determined by competition, and the terms alter accord- 
ing to the state of supply and demand."l2 The supply of labor is 
the population; the demand is the amount of capital--here expli~ 
citly thought of as being synonymous with the funds available 
for the support of labor. If capital tends to increase faster 
than population, the condition of the working class will be "easy 
and comfortable"; if population tends to inc~ease faster than 
capital, "the condition of the great body of the people is poor 
and mis~rable." Wages drop to subsistence, and only the increase in mortality that results keeps wages from dropping further.13 
History shows James Mill that population tends to increase 
faster than capital. Whether this has been true by nature or by 
accident is, of course, "an inquiry of the highest importance." 
Physiology and diminishing returns together show Mill that this 
disaster occurs by nature.14 The wages of workers are doomed by 
psychological laws to never rise far from subsistence levels. 
This, indeed, is the Dismal Science. 
Even Ricardo himself is less pessimistic than the elder 
Mill. True, Ricardo says that labor', "like all other things . . • 
sold. 	• has its natural and its market price," that'·lIhowever 
much the market price of labour may deviate from its natural 
price, it has. 	. a tendency to conform to it," and that "the 
natural price of labour is that price which is necessary to enable 
the labourers. 	to subsist."lS But this "tendency" of the mar- 
ket price of labor toward the level of subsistence is not clearly 
relevant, for "notwithstanding the tendency of wages to conform to 
their natural rate, their market rate may, in an improving society, 
for an indefinite period, be constantly above it.,,16 Ricardo consi- 


-J~- 
ders his England such an improving society--albeit one already 
dangerously close to the stationary state.17 
Yet when Ricardo turns to an actual application of his 
political economy, he seems to forget the the market rate of wages 
may be "constantly above" the natural rate, and remembers only 
that in general deviations of market from natural price are "ac- 
cidental and temporary" and thus not important. For one example 
of this, consider Ricardo's analysis of the effects of a tax on 
18 raw produce. 
Ricardo establishes first that the tax would, immediately, 
reduce neither rent, profit, nor wages, but would be "p~id, in an 
increased price, by the consumer. ,,19 He then goes on to consider 
the full equilibrium effect of the tax, the feedback that occurs 
because consumers are also workers: 
A tax, howe'l[er,~, on raw produce, and on the necessities of the labourer, would have another effect--it would raise wages. From the effect of the principle of population on the increase of mankind, wages of the lowest kind never continue much above that rate which nature 
and habit demand for the support of the labourers. This class is never able to bear any considerable portion of taxation, and consequently, if they had to pay 8s. per quarter 
in addition for wheat and in some smaller proportion for other necessaries, they would not be able to subsist on the same wages as before, and to keep up the race of labourers. Wages would inevitably and necessarily rise; and in proportion as they rose, profits would fall.20 
Ricardo's applications ignore all the qualifications present in 
his explicit theory. 
It is certainly true that this problem of tax incidence is 
complex. 
It cannot be fully handled without detailed knowledge of 


-40- 
the preferences of the workers. In order to make any progress at all, Ricardo must make simplifying assumptions. 
His first simplifying assumption is that after-tax real wages are fixed. He knows that this is not true: he says as much on page eighty-eight. Yet he nowhere indicates th~t his assumption~'is dubious in the chapter on the taxation of raw produce. 
Ricardo's analysis is only valid if the actual variations in after-tax real wages occasioned by the imposition of the tax are small compared to the variations induced in before-tax wages. In conducting his analysis in this fashion, Ricardo is at least implicitly claiming that this is the case, that the level of after-tax real wages changes only minimally in response to changes 
in economic circumstances. 
Like Ricardo, Robert Torrens conducts his analysis as if the level of real wages were always fixed at the psychologicallydetermined level of customary subsistence. Torrens begins by claiming that psychological subsistence furnishes a permanent lower bound. He goes on to say that wages settle at this permanentlower bound: "the real wages of labour have a constant tendency to settle down to that quantity of the necessaries of life which climate and custom render necessary to support the labourer while at work.,,2l 
The reason for this constant pressure on wages is, of course, that population increases faster than subsistence. But for Torrens, it is not the aggregate population that outruns the means of subsistence. Instead, individual families outrun the quantity of subsistence available to them. "All those amongst the labouring 


-4l- 
classes whose families exceed • 
. the number sufficient to keep 
up the supply of labour" have incomes too small to be away from 
the edge of starvation; all those labourers who are unmarried, 
or who have "less than the average number of children," are "in 
easy circumstances," being "healthy and strong.,,22 Since Torrens 
believes that the Malthusian doctrine operates explicitly on in- 
dividual families, his attachment to it is somewhat easier to 
understand than is the attachment of Mill or Ricardo. 
By far the least Malthusian of the first'generation of 
classical economists was Thomas Robert Malthus himself. 
He sneered 
at Ricardo's "hatural price of labour": 
This price I should really be disposed to call 
a most unnatural price. • If this price be really rare, and, in an ordinary state of things, at so great a distance in point of time, it 
must evidently lead to great errors to consider the market prices of labour as only temporary deviations above and below that fixed price. 
to which they will very soon return. The natural or necessary price of labour in any country I should define to be, "that price which, 
in the actual circumstances of the society, is necessary to occasion an average supply of la- 23 bourers, sufficient to meet the average demand. 
The answer returned by the others of the first generation was that 
they were not convinced that the natural rate of wages was so rare 
or so distant, that the theoretical qualifications to the hypothe- 
sis that wages were fixed at subsistence turned out to be unimpor- 
tant in the real world. 
Malthus therefore attacked the mechanism through which 
wages were supposed to move rapidly toward' subsistence levels. 
He stressed that the supply of labor is fixed in the short run: 


-42- 
it is not possible to, in "under 16 or l8 years, materially affect the supply of labour in the market.,,24 And it is not foreordained 
that the mass of the population will breed like rabbits. In the 
long run, from wages higher than subsistence levels 
two very different results may follow; one, that of a rapid increase in population . the other, that of a decided improvement in the modes of subsistence ... without a proportionate acceleration in the rate of increase2S 
of population. Which consequence occurs depends on the morals of 
, 26 the natlon. 
Since Malthus does not believe that wa~es are even approxi- 
mately fixed, he advances an explicitly economic theory of their 
determination. The supply of labor is fixed in the short run and 
determined by moral causes in the long run. Given that "the prin- 
ciple of demand and supply is the paramount regulator of the price 
of labour," the cause of short run variations in wages must lie in 
the demand. The rate of increase of the demand for labor is "oc- 
casioned by, and proportioned to, the rate at which the whole 
value of the capital and revenue of the country increases annually.,,27 
This is, in embryo, the theory of the wage fund. 
To sum up, the theories of the first generation reveal a 
puzzling attitude toward Malthus's principle of population. Both 
Malthus and Ricardo expressly believed that, in theory at least, 
wages tended toward subsistence levels only in the long run. All 
four authors accepted that the concept of "subsistence" they em- 
ployed was a psychological, cultural, aDd social--not a physical-- 
datum. All--except possibly Mill--stated that the England in which 


they lived was an "improving society," and thus implied that the principle of population was not strictly applicable. 
Yet all except Malthus conducted their actual analyses 
as if wages were fixed at subsistence, as if the labor force grew instantaneously in response to changes in capital. Malthus became shrill. He spoke as if he had been butting his head against a stone wall for years. He fruitlessly tried to convince his peers that they were misapplying what was, after all, his own theory. 
Ricardo and his peers could have made an enormous and elementary logical blunder; they could have neglected to notice that Malthus's population principle required at least a generation to operate. But this dangerously underestimates Ricardo, James Mill, 
28 and Torrens. 
Ricardo and his peers saw a world in which the short~run assumption that wages were fixed made considerable sense. First, they lived in an economy that was not yet the dynamic, rapidlygrowing economy of an industrial nation. Historical experience indicated that the nation's capital stock, the real resources available to be consumed by the workers, grew only slowly--far more slowly than population could potentially grow. Given that the possible rate of growth of population was orders of magnitude greater than the historical rate of growth of capital, the classical economists' reliance on Malthus's principle of population made considerable sense. 
Second, there was not yet any set of institutions that could have been interpreted as a large-scale labor market. There- 


-44- 
fore it made little sense to consider wages as set in the aggregate 
by economic forces, by the equilibration of demand and supply in 
the market. And if wages are not determined by economic forces 
then, for the purposes of economic analysis, they should be taken 
as fixed. What could have been more natural than to identify the 
fixed, culturally-determined level of avera~e wages with the the- 
oretical construct of "psychological subsistence" of the Malthus- 
ian population theory? With the exception of Malthus himself-- 
who saw an economy in constant turmoil and disequilibrium--the 
classical economists of the first generation developed a theory 
of wages that appears to make eminent sense in the context of 
their time. 
For the economists of the second generation, the identifi- 
cation between "psychological subsistence" and the short-run level 
of wages was at best dubious. The members of the second generation 
spent much of their time constructing explicit theories of the 
short-run determination of wages. 
And some of the members of the second generation tried to 
overthrow even the long-run version of the Malthusian hypothesis. 
George Scrope accused Malthus and Ricardo of having "in their 
theory of population. 	. absolved governments from all respon- 
sibility for the misery of the people committed to their care." 
Since Scrope held "Misery the Result of Crime and Folly, not of 
any Natural Law," he found Ricardo, Malthus, James Mill, et ale 
guilty "not merely of errors, but of crimes.,,29 Mountifort Long- 
field lectured that the (in Lassalle's phrase) Iron Law of Wages 
was simply absurd: "The expression 	'cost of production' 


-45- 
is merely metaphorical when applied to [labor] 
. and no ar- 
gument can be drawn from it, since the analogy is deficient in 
the very circumstance through which the cost of production affects 
the price of articles of commerce.,,30 
But McCulloch and Senior, the other two Principles authors 
of the second generation, believed strongly in the long-run truth 
of the Iron Law. The second of Senior's "Four Elementary Propo- 
sitions of Political Economy" is: 
That the population of the world, or, in other words, the number of persons inhabiting it, 
is limited only by moral and physical evil, 
or by fear of a deficiency of those articles of wealth which the habits of the individuals of each,cla~i of its inhabitants lead them 
to requlre. 
And McCulloch talks of a "rise of wages 
. counteracted by the 
increased number of labourers it may be supposed to be the means 
of bringing into the market," and of the "cost of producing labor" 
as the "lowest amount to which . 
wages can be permanently re- 
duced . 
32 . the natural or necessary rate of wages." 
No matter what his opinion on the long-run truth of the 
Malthusian population principle, each economist of the second 
generation did believe that the Iron Law of Wages did not hold 
ln the short run--and for the same reason Malthus had given, that 
in the short run the supply of labor was fixed by the size of the 
population. 
With the supply fixed, an economic explanation of the fluc- 
tuations of wages must depend on variations in the demand. The 
economists of the second generation took hints and asides in Ri- 
cardo and Malthus and developed them into the doctrine of the wage 


which production'is divided must be clearly separate: 
if they 
-46- 
fund. They concentrated their attention on elaborating it and other theories of the short-run determination of wages; "a huge 'short run' practically replaced the long run.,,33 
The wage fund theory is based on the lapse of time between the production of a good and its subsequent consumption. The aggregate real wages of labor--the value received by workers, that is to say the goods consumed by them--at any time T are nothing but the amount of wage goods produced at time T minus one. No matter what the mean level of money wages, the mean level of real wages has been fixed before employer and employee even begin to bargain over the level of wages to be paid in the present. 
For the theory of the wage fund to be even approximately 
true several conditions must be met. First, the periods into 
are not, then the stock which is the wage fund is not uniquely defined. Second, the period of production must be longer than the lapse of time between the workers' receiving their wages and the workers' final consumption. Last, the amount of wage goods to be consumed by workers in the present period must be fixed; consumer goods must be perishable. Any economist who believes in the theory of the wage fund must at least implicitly believe in the rough truth of the three proposit~ons above. 
The picture of economic life behind the theory of the wage 
fund is that of an agrarian economy. 
Implicit in the theory is 
the notion of an annual harvest, the produce of which is then eaten 
over the course of the ensuing year. 
This agrarian bias is clearly 
present in the mind of McCulloch: 
"Before 
. soil can be cul- 


-47- 
tivated, capital must be provided for the support of the labourers 
employed upon it." Capital is taken to be advances to workers in 
agriculture, wage goods that the workers consume over the year that 
they work. This conception of economic life is carried over to 
other sectors, where capital also "must be provided for the support 
of those engaged in manufactures, or in any other department of in- 
dustry." Thus, 
It is . • . on the actual amount of the accumulated produce of previous labour, or of capital, devoted to the payment of wages, in the possession of a country, at any given period, that 
the power of supporting and employing labourers must wholly depend.~4 
Given that agricultural production is typical and that the average 
level of wages is indeed determined by economic forces, then the 
theory of the wage fund is a natural result. 
"The rate of wages 
must depend on the proportion which the whole capital bears to the whole amount of the labouring population.,,3S 
McCulloch leaves the doctrine at this point. 
Senior, how- 
ever, develops it further. He gives a full taxonomy of the deter- 
minants of the wage fund. This period's wage depends on last per- 
iod's production of wage goods. Last period's production of wage 
goods is a function of average productivity in the wage-good in- 
dustries and of the relative size of those industries "employed 
in the production of things for the use of labourers.1l36 Average 
productivity depends on the quality of the laborer, the natural 
agents that assist him, the increase in productivity given by the 
use of capital (by means of "implements and the division of labour"), 
and the degree of laissez-faire adopted by the government.37 The 


-48- 
relative size of the wage good industries depends "partly on the 
rate of profit, and partly on the time for which the capital employed in the production of wages must be advanced. ,,38 This taxo- 
no my is sufficient to indicate at least the direction in which 
Senior believes short-run wages will move in response to changes 
in circumstance. 
George Scrope's complete rejection of the principle of 
population and his failure to pick up the wage fund doctrine to- 
gether leave him largely without a theory of the average level 
of wages. Scrope believes they must rise over time: "the more 
productive labour is rendered by the subdivision of employments 
and facilitation of exchanges 
the greater must be the ag- 
gregate quantity of the good things of life produced. Hence the 
worker's "recompense or wages. 	. ought to be proportionately 
39 augmented." 
Scrope relies on the invisible hand to appropriate the 
products of labor justly, and claims that "no after-analysis . 
could pretend to discover 
the degree in which" land, labor, 
and capital may have cooperated in the production of wealth. 
"This can be ascertained only at the time . . . by no other 
judge than the interested parties . 
. by no other means than 
their voluntary settlement of terms with 'each other.,,40 In Scrope's 
eyes, whatever distributions of wealth are arrived at through vol- 
untary contract are just. Since they are just, why care what they 
are? And at this point Scrope leaves the level of aggegate analy- 
sis; he spends most of his chapters on wages indicating the differ- 
ential rewards given to various professions. 


-49- 
Mountifort Longfield advances a theory of average wages 
all his own. The wage fund theory held that profits were a resi- 
dual, what remained of the product after the deduction of rent-- 
determined by the fertility of land--and wages--determined by the 
size of the wage fund. Longfield reversed this order of determin- 
ation: wages, rather than profits, became the residual. The theo- 
ry "adopted by most of the English writers on Political-Economy" 
from Ricardo to Senior determined distributive shares in the order 
"1st. Rent. 2nd. Wages. 3d. Profits." Longfield instead con- 
sidered "1st. 
Rent. 
2nd. 
Profits. 
3d. 
wages.,,41 
Longfield adopts the Ricardian theory of rent. Longfield 
has his own view of the determinants of profit: fixed and circu- 
lating capital both earn the marginal revenue product of fixed 
capital,42 The residual, the wages, can also be interpreted as 
"the value of his labour . 
. discounted for him by his employer, 
who keeps the work, .. and 
43 . charges the full value of the labour," 
where the rate at which the capitalist discounts labor is the pre- 
vailing rate of profit. While the profit made on fixed capital 
is the added value created by fixed capital, the profit made on 
circulating capital is "as it were, the discount which the labourer 
pays for prompt payment.,,44 Wages are thus determined by the period 
of production, the rate of profit, and tne productivity of labor. 
Thus Longfield shed all trappings both of the wage fund theory and 
of the population theory of wages. 
The theories of wages of the second generation all reject the 
short-run versions of the population principle. But no complete 
agreement emerges on what should replace it. The wage fund theory 


r 

-50- 
was clearly the most popular replacement. But it was not clearly 
a new orthodoxy among the economists of the second generation. 
Many of the best of them--Scrope, Longfield, West, Thompson, and 
Jones--argued against the wage fund. 
And then John Stuart Mill elevated the wage fund to the 
		' 	d 	" 	f 	"1 	,,45 

status of "one of t e undlspute verltles 0 polltlca economy 
Wages, then, depend mainly upon the demand and supply of labour; or, as it is often expressed, by the proportion between population and capital. By population is here meant the number only of the labouring class, or rather of those who work for hire; and by capital only circulating capital, and not even the whole of that, but the part which is expended in the direct purchase of labour. To this, however,must be added all funds which, without forming a part of capital, are paid in 
	exchange for labour. 	46 
The qualifications Mill made to the original clean idea of the 
wage fund were substantial. And he eventually retracted the en- 
	, 	'd 	h 	f 	47 
tlre doctrlne un er t e pressure 0 Thornton. 
Mill's abandonment of the wage fund theory appears to have 
been intended primarily to make a political point. The review 
article in which he recants is most concerned to point out that 
trade unions could be effective: 
The doctrine hitherto taught by all or most economists (including myslef), which denied it to be possible that trade combinations 
can raise wages, or which limited their operations in that respect to the somewhat earlier attainment of a rise which the competition of the market would have produced without them, --this doctrine is deprived of its scientific foundation, .and must be thrown asied. The right and wrong of the proceedings of Trade Unions becomes a common question of prudence and social duty, not one which is peremptorily decided b~ unbending necessities of political economy. 4 

h

-51- 
It is logically impossible to believe both that unions 
can be effective and that the wage fund theory is true. For 
if the level of real wages is determined before the making of 
the labor contract, unions can have no economic purpose. This 
did not mean that classical economists who believed in the wage 
fund were expressly anti-union: many accepted unions as a nec- 
essary part of the operation of the competitive market which set wages at the rate predetermined by the size of the wage fund.49 
Still, to believe in the wage fund and to support unions was at 
best awkward. 
Mill did not rewrite the section of his Principles that 
discussed wages after his retraction of the wage fund, even though 
he himself edited the seventh edition which came out two years 
after his recantation. The wage fund, in its qualified form, 
remained in the Principles. And no alternative was advanced 
alongside it. Its abandonment would have left a substantial the- 
oretical hole in Mill's presentation of political economy. 
Not that this would have greatly troubled Mill. He con- 
centrated his main attention in the area of wages on the Malthus- 
ian hypothesis and its long run implications. He strongly believed 
in the population principle. He was careful to state his recanta- 
tion of the wage fund doctrine in a way ~hat ensured that "the 
population principle and its consequences are in no way touched."SO 
For Mill's belief in the long-run population principle was at the 
center of his economic thought. In shorthand: "the habits and re- 
quirements of the labouring classes being given (which determine 
"Sl 
their real wages) 


-52- 
J.S. Mill believed that it was vital to recognize the nec- 
essary connection between high wages on the other hand and the 
limitation of population on the other. For Mill, "high wages 
imply restraints on population" and conversely "due restriction 
of population the only safeguard of a labouring class.,,52 Nothing 
is as important for the happiness of the nation as the long run 
limitation of fertility. So Mill does not worry too much about 
the short run. The emphasis on the short run of McCulloch and 
Senior disappears ~nd is replaced by pleas for the education of 
the working classes in order to teach them of their vital interest 
, 	1 	,53 
ln mora restralnt. 
Mill's two major colleagues among the third generation, 
Cairnes and Fawcett, followed with enthusiasm the line Mill had 
laid down before his retraction of the wage fund. Fawcett does 
not cross Millon a single point: in fact, he finds empirical evi- 
 		' 	d' 	1 h' 	"S4 

ence or an lmpen lng Ma t USlan crlS1S. 
Cairnes made one major correction to Mill's schema; Cairnes 
stressed the segmentation of the labor market, the existence of 
"non-competing groups" as a cause of differentials in occupational 
rewards. But Cairnes was also pleased to be able to relate the 
final triumph of classical political economy, the complete accep- 
tance of the Malthusian population principle, which 
result may be attributed partly, we may perhaps assume, to the gradual progress of sound reason getting the better of the strongest prepossessions; but it has of late been powerfully helped forward by the influence of Mr. Darwin's great work, in which the obnoxious principle--the tendency of human beings to increase faster than subsistence, which had been denounced as at once demoralizing 

d
f

-53- 
to man and discreditable to the Author of the Universe--was shown to be merely a particular instance of a law pervading all organic existence.55 
Not only does Cairnes fully back the long-run application 
of the Malthusian population principle, he attempts to resurrect 
the wage fund, to undo the damage done it by J.S. Mill's recantation.56 He restates it with many qualifications, but the idea 
is the same as in Senior forty years before. 
The third generation of classical political economy saw the 
establishment of an orthodoxy in the theory of wages that was closer 
to the beliefs of the members of the first generation than the 
theories of the second generation had been. In the thought of 
J.S. Mill, the Malthusian theory of population regained its ori- 
ginal importance. And the orthodoxy of the wage fund is closer 
to the agrarian conceptions of the production process present in 
every member of the first generation than to the spread of theo- 
ries advanced in the second generation.