The Abandonment of the Wages-Fund Doctrine Made Possible the Acceptance of Keynesianism

According to this famous critic, the wages fund theory is a cornerstone of the classical system, not merely a part of it that could be erased or replaced at will. Also modern economists will see from this quote that, if George is correct, the wages fund theory is central to economic questions that are still of importance today. In the words of Reisman, “the abandonment of the wages-fund doctrine […] made possible the acceptance of Keynesianism and the policy of inflation, deficits, and ever expanding government spending.” Whether one shares Reisman’s opinion concerning Keynesianism or not, the wages or subsistence fund theory seems to be pivotal to economics.

--Eduard Braun, "Financial Markets and Economic Growth" (PhD diss., Université d'Angers, 2011), 113.