Capital and Wages: A Lakatosian History of the Wages Fund Doctrine.

• Author: Ekelund, Robert B., Jr.

Episodes in the history of economic thought are sometimes subjected to radical evaluations from those who wish to analyze past theory and theoretical developments from historiographic and methodological perspectives. Much of what attempts to pass as "analysis" revolves around the "paradigmatic" approach of Thomas Kuhn and the "methodology of scientific research programs" (MSRP) of Imre Lakatos. Unfortunately the application of this method has yielded little in the way of understanding the nature of particular episodes in the analysis of the "progress" of economics. This book on the wages fund - one of the key theoretical underpinnings of classical economics - and the "reasons" for Mill's ostensible "recantation of it" is only one of the most recent in the genre. This comment is not meant to imply that Vint has not taken his subject seriously, for he has. He seeks to apply the Lakatosian "theory" to the wages fund alone and not to the classical "paradigm" of which the wages fund theory was an inextricable part. And in his workmanlike "review of the troops" strewn throughout the book Vint shows considerable attention to detail. Unfortunately Vint's discussion is adrift in the sea of relativism that is part and parcel of attempts to apply such methodologies to the development of economic theory. Vint's so-called discoveries simply do not stand up to better and more cogent alternative explanations.

The central problem is the following. Lakatosian concepts, which Vint adopts, include a hard core of theory (in this case wages fund theory), a protective belt (which, due to lack of empirical testing, are factors which protect the hard core) and "monsters" - mainly questions that the theory cannot answer. Unfortunately, identification of the hard core, the protective belt or "monsters" is totally vacuous exercise with equally vacuous results. It uses selective "facts" from history, selective historical interpretation and (in this case) selective "rational reconstruction" of classical wage theory as a research program [p. 29]. The exercise, in short, is subject to severe selection bias (other scenarios are reasonable and observationally equivalent). More importantly, such an exercise contains far more bias than any theoretical or empirical test in modern economics. The method, in effect, substitutes anarchical interpretation for motivations based on self-interested explanations founded on factors (some of them technological) internal to the...