John Stuart

Mill
CLASSICAL POLITICAL ECONOMY
economics {context}

⦿ England
☛ trade
◇ Napoleonic wars are over
◆ back to convertibility
◆ Lasseiz-faire policies
⁃ Corn Laws repealed (1846)

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politics {context}

⦿ England
☛ political participation
◇ second wave of Reform Acts (1867-1884)
☛ distribution
◇ Poor Laws amended
◇ Increased sensitivity towards inequalities
◆ Trade Unions
◆ Chartist movement
◆ cooperative movement
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philosophy {context}

⦿ England
☛ utilitarianism
◇ Jeremy Bentham (1748-1832)
◆ ‘the principle of utility’
◇ Auguste Comte (1798-1857)
◆ sociological positivism
☛ wider spread of political economy ideas
◇ Jane Marcet (1769-1858)
◆ Conversations on Political Economy (1816)
◇ Harriet Martineau (1802-1876)
◆ Illustrations of Political Economy (1832)
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John Stuart Mill (1806-1873)

Born: 20 May 1806. Pentonville (Middlesex,

England)
Died: 8 May 1873. Avignon (Vaucluse. France)
⦿ Tradition: Classical Economics

⦿ School: Classical Political Economy

⦿ Notable Work:
☛ Essays on Some Unsettled Questions of Political
Economy (1844)
☛ The Principles of Political Economy: with some of
their applications to social philosophy (1848)
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Mill [labour]

⦿ productive vs unproductive
☛ transmission of skills
◇ productive under certain conditions
◆ if material products ultimate consequence
☛ government services
◇ not all unproductive
◆ police officers, courts of justice
☛ some ‘productive’ labour
◇ not productive
◆ lacking ‘utility’ and ‘demand’ considerations
◆ ‘wasted’ if produced with outmoded techniques
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Mill 1

«If one of two things commands, on the average, a greater value than the other,
the cause must be that it requires for its production either a greater quantity of
labour, or a kind of labour permanently paid at a higher rate; or that the capital,
or part of the capital, which supports that labour must be advanced for a longer
period; or lastly, that the production is attended with some circumstance which
requires to be compensated by a permanently higher rate of profit.»
[J.S. Mill, Essay on Some Unsettled Questions, 1844]

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Mill [value]

⦿ relative prices
☛ justifying the ratio
◇ reflecting characteristics of the production process
◆ capital-labour ratios (Ricardo)
◇ searching for invariant measure of value (criticism)
◆ neglecting Smith’s index-number problem

☛ prices
◇ ‘natural’ = long period equilibrium
◆ cost of production
◇ competition
◆ not always an effective force
⁃ public utilities
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Mill [income]

⦿ economic laws
☛ production laws
◇ fixed by nature and technology
◆ cannot amend them
◆ can adapt to these
☛ distribution laws
◇ socially determined
◆ subject to human control
⁃ education
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Mill 2

«It appears to me impossible but that the increase of intelligence, of

education, and of love of independence among the working classes, must be
attended with the corresponding growth of the good sense which manifests
itself in provident habits of conduct, and that population, therefore, will bear a
gradually diminishing ratio to capital and employment.»
[J.S. Mill, Principles, 1848]

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Mill [growth]

⦿ economic expansion
☛ as goal
☛ stationary state
◇ not necessarily a grave social ill
☛ approach to stationary state
◇ profit seeking (negative economic effects)
◆ declining rates of profit ⇒ more high-risk ventures
◆ oscillations between boom and bust
◇ affluence (negative social effects)
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Mill 3

«I know not why it should be matter of congratulation that persons who are
already richer than anyone needs to be, should have doubled their means of
consuming things which give little or no pleasure except as representatives of
wealth. […] It is only in the backward countries of the world that increased
production is still an important object.»
[J.S. Mill, Principles, 1848]

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Mill 4

«I cannot […] regard the stationary state of capital and wealth with the unaffected
aversion so generally manifested towards it by political economists of the old school. I am
inclined to believe that it would be, on the whole, a very considerable improvement on
our present condition. I confess that I am not charmed with the ideal of life held out by
those who think that the normal state of human beings is that of struggling to get on; the
trampling, crushing, elbowing, and each other’s heels, which form the existing type of
social most desirable lot of human kind, or anything but the most disagreeable symptoms
of one of the phases of industrial progress.»
[J.S. Mill, Principles, 1848]
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Mill ⟨policy⟩

⦿ opposition to government intervention

☛ self-regulating market system
◇ defense of Say’s law
◆ gradual abolition of poverty relief (Poor laws)
☛ sympathy for social change
◇ evolution of social institutions
◆ private property

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Mill 5

«We were now much less democrats than I have been, because so long as education continues to be so wretchedly
imperfect, we dreaded the ignorance and especially the selfishness and brutality of the mass: but our ideal of
ultimate improvement went far beyond Democracy, and would class us decidedly under the general designation of
Socialists. While we repudiated with the greatest energy that tyranny of society over the individual which most
Socialist systems are supposed to involve, we yet looked forward to a time when society will no longer be divided
into the idle and the industrious; when the rule that they who do not work shall not eat, will be applied not to
paupers only, but impartially to all; when the division of the produce of labour, instead of depending, as in so great
a degree it now does, on the accident of birth, will be made by concert on an acknowledged principle of justice; and
when it will no longer either be, or be thought to be, impossible for human beings to exert themselves strenuously in
procuring benefits which are not to be exclusively their own, but to be shared with the society they belong to.»
[J.S. Mill, Autobiography, 1873]

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Mill ⟨policy⟩

⦿ more active government intervention

☛ state as a ‘civiliser’
◇ education (culture)
◆ elevation in tastes and aspirations
⁃ distribution of income
◇ better use of tax revenues
◆ finance socially beneficial projects

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Mill ⟨policy⟩

⦿ more active government intervention

☛ state as a ‘stabilizer’
◇ speculative rashness (‘wastage of capital’)
◆ taxing profits
⁃ reducing the volatility of the economy
◆ redirecting profits
⁃ overseas investment (development in lending countries)

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Mill |final remarks|

⦿ classical tradition
☛ consolidation
◇ “loyal to the classical tradition” (Mill)
◆ contributions
⁃ cost of production
⁃ social consequences
◆ synthesis (since Smith)
☛ revisionism
◇ amended premises
◆ instability
◆ progressive views
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