John Bates Clark's Defense of Mandatory Arbitration and Minimum Wage Legislation

Abstract

The ideal of Political Economy is not unrestricted competition, but competition that is truly free, because controlled by justice and by law. The distinction between freedom and license needs to be preserved in this department of political philosophy. With that distinction clearly maintained, we may still retain, in economics as in politics, our beautiful watchword, liberty (John Bates Clark 1879, p. 167).John Bates Clark has had a formidable impact on the development of economic theory and the theory of income distribution. In addition, Clark's marginal product theory of distribution has often played an instrumental role in the defense oflaissez-fairepolicies. His theory has been used to criticize a wide variety of market interventions, including minimum wage legislation. As a result it is not surprising that Clark's theory of income distribution, and Clark himself, have drawn more than a few critics.