CHAPTER 6: “Protection and Real Wages”: The History of an Idea

Few economics articles have achieved the celebrity that still attaches to the paper, “Protection and Real Wages,” by Wolfgang Stolper and Paul Samuelson in (1941). In this chapter, I discuss how the Stolper–Samuelson theorem has been re-interpreted over subsequent decades, and how attempts to generalize the theorem to higher dimensions have met with qualified results. The theorem leads to a simple proposition in political economy: In competitive models any productive factor can have its real return increased by a nontransparent policy whereby relative commodity prices are altered if there are enough commodities and joint production is not too severe.