John Elliot Cairnes and the ‘Rehabilitation’ of the Classical Wage Fund Doctrine

Abstract

John Elliot Cairnes is primarily remembered for his defence of the classical wage fund doctrine, and for his attempt to revive the classical system of economic thought in the mid-1870s. In contrast with this standard textbook appraisal of Cairnes, the Jevons–Marshall–Vint thesis contends that, in attempting to revitalize the doctrine, Cairnes in fact explained away so much of what characterized it that its final form bore little resemblance to the doctrine held by his classical predecessors. In this paper we dispute the Jevons–Marshall–Vint thesis and argue that Cairnes’s recasting of the doctrine did fit entirely within the classical framework. Why Cairnes should have rallied in support of a doctrine by then widely condemned, partly because of Mill’s alleged retraction of it and partly because of newly emerging ideas on wages and unions, is not difficult to explain. The recurring economic stagnation in Ireland, which acted as a bulwark against industrialization there, together with the social, moral and economic dilemma created by the growth of trade unionism in Britain, presented political economists with a particular set of problems. For these, as Cairnes saw it, classical political economy, as a coherent method of analysis, provided the best hope of showing the way towards possible remedies.