Iron law of wages

The theory that wages tend toward subsistence because higher wages encourage population growth, expanding labor supply and pushing wages back down.

Subsistence theory of wages: A theory that wages tend over time toward the income needed to maintain workers and their families. The iron law is a population-based version of this broader account of wage adjustment.
Thomas Robert Malthus: An English cleric and political economist whose work argued that population growth could outstrip food supply. His account of population pressure helped shape the iron law’s central feedback.
Wage fund doctrine: A theory that wages depend on a fixed fund of capital set aside to pay workers. It explains wage limits through available capital rather than population’s response to higher pay.
Karl Marx: A German philosopher and political economist whose critique of capitalism influenced socialist and communist movements. Marx engaged with classical subsistence theories while developing his own account of wages and labor.
Malthusian population theory: Thomas Malthus’s theory that population tends to grow faster than food production, checking living standards. Its population pressure supplies the key mechanism linking higher wages to a larger labor force.
David Ricardo: An English political economist whose theories of rent, distribution, and international trade shaped classical economics. Ricardo gave the subsistence tendency a prominent place in classical wage theory.
Marginal productivity theory: A theory that a worker’s wage is determined by the value of the worker’s marginal contribution to production. It replaces the subsistence anchor with employers’ demand for workers’ productive contribution.
Iron law of wages (Ferdinand Lassalle): Ferdinand Lassalle’s popular political formulation of the claim that wages tend toward a bare minimum of subsistence. Lassalle’s slogan made the theory a rallying point in nineteenth-century labor politics.
Labor supply: The amount of labor workers are willing and able to provide at different wage rates. The theory predicts that population growth expands the number of workers competing for jobs.
An Essay on the Principle of Population: Thomas Malthus’s 1798 work arguing that population tends to press against available resources. It presents the population argument that later wage theories adapted.

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Ferdinand LassalleRelated: Lassalle used this doctrine to argue that isolated wage bargaining could not secure lasting improvement.