Wage Theories in Economics

Paper Summary:

Economic theory takes into consideration the social and political milieu, as well as the economic realities of any given time period and place. Different economists reflected the realities of their era. Through the 18th, 19th, and 20th centuries, theories on wages differed because of economic circumstances, as well as the prevailing organization of thought. This paper examines theories presented by economists such as Adam Smith, John Bates Clarke, and John M. Keynes.

From the Paper:

"Clark's theory proposed that there was a "permanent" fund of capital that entered into a production function like any other factor. It was assumed that product value was assessed in terms of costs. This allows the product to gain value through the auspices of the skill of the maker as well as the materials used in the production. Benefits are determined by the circumstances of production, such as, the skill of the workmen, the level of technology, and the degree of utility. A product increases in value as a result of an increase in production time, so that time and skill become instruments of determining cost."

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