But in practice, the wage fund theory was "shown to be a fallacy by the end of the 19th century," Szymanski said.
According to the economic concept, known as the wage fund theory, adding more people to the labor pool theoretically meant less money available per person (or in the NCAA's case, giving some people a raise means less scholarship money for others).
Despite these telling criticisms, however, the wages-fund theory remained influential until the end of the 19th century.
The last of the classical economists, John Stuart Mill, was forced to abandon the wages-fund theory.
Statements such as these foreshadowed the wages-fund theory, which held that a predetermined "fund" of wealth existed for the payment of wages.
The wage-fund theory held that wages depended on the relative amounts of capital available for the payment of workers and the size of the labour force.
After 1865 the wages-fund theory was discredited by W.T. Thornton, F.D. Longe, and Francis A. Walker, all of whom argued that the demand for labour was not determined by a fund but by the consumer demand for products.
The bargaining theory is very attractive to labour organizations, for, contrary to the subsistence and wages-fund theories, it provides a very cogent reason for the existence of unions: simply put, the bargaining strength of a union is much greater than that of individuals.
Still, the A.F.L.-C.I.O. did not explicitly vow to oppose the bill, and people on both sides said they expected negotiations to continue, mainly because both businesses and labor view a trust fund, in theory, as good for both sides.
If such vanity projects can secure funding, the theory goes, financial markets must be out of control and will soon suffer a sharp correction.
Referring to the basic idea introduced by Georgescu-Roegen with the fund-flow theory (Georgescu-Roegen 1969), one more argument is raised for the increased efficiency obtained by separating the different operations.
