Nassau William Lao, a British economist, revised this theory in the middle of19th century. He distinguished monetary wages from real wages, and denied that wages depended on the part of total capital used to pay workers. He believes that wages should be the part of the products and services produced that are distributed to workers. The amount of wage fund depends on two factors: one is the production efficiency of workers who directly or indirectly produce products and services; The other is the number of labor employed directly or indirectly in the process of producing these goods.
According to this theory, in any country, the funds used for wages in the short term are limited. This fund is a part of capital, and the rest is used for depreciation of fixed assets, expansion of reproduction investment and payment of management fees. Salary funds are distributed among all employees, so the total salary of employees cannot exceed the number of salary funds. This theory also means that only when the capital increases or the number of employees decreases can the general wage level of employees rise.