“The principles of political economy, though often quoted, are little understood.” Fleeming Jenkin on trade unions and the law of supply and demand

The paper proposes a rational reconstruction of Fleeming Jenkin's 1868 analysis of wage determination in labour markets characterised by the presence of trade unions. Jenkin intended to show that the supply and demand theory of market price determination did not support the thesis sustained by the opponents of trade unions that the latter are unable to permanently achieve a market-clearing wage higher than that which would be obtained in their absence. Starting with a definition of "demand" and "supply" of a given commodity as functions of a few economic variables, Jenkin elaborated a fresh critique of the wages fund theory and highlighted the impact of trade unions on both supply and demand for labour.