Andrew's Wiki
Principles Political Economy

John Stuart Mill, Principles of Political Economy, 1848 (and revised periodically, last revision 1871): most signif P E of mid-19th c (taught in Oxford as the principle textbook till 1919; was the most basic till Alfred Marshall 1890, Principles of Economics

Basic

• Supports laissez-faire, not mercantilism (state interfering w/economy to help itself)
• He was lumped in w/Ricardo, Marshall (seen as the halfway point between those two), as classical political economy
  • Even Keynes tried to lump Mill into places he couldn’t truly be lumped into
  • for example, didn’t believe in the Malthusian general glut (you won’t get to a glut in the economy b/c in the process the pool of capital will dwindle, keeping demand alive)
    • for Mill overproduction is temporary
  • Mill is NO LONGER just a halfway house or a figure “just like” Ricardo
    • he combined his love of social justice with his economic analyses: “distributive justice” (income redistribution plans)
• Style
  • His grandiose, philosophical style, unlike modern economic-ese with all of its graphs (Marshall started that)
• Content
  • Survey of contemporary P E, plus application to social concerns, as a part of a social whole
  • �not a book merely of abstract science, but also of application, and treated Political Economy not as a thing by itself, but as a fragment of a greater whole.�
• Books 1, 2, and 3: technical stuff about nature of production, distribution
• Books 4 and 5: the social stuff, still useful today
  • Social stuff: similar worries about effects of I R as Coleridge, Southey
  • Coleridge: “The permanency of the nation�and its progressiveness and personal freedom�depend on a continuing and progressive civilization. But civilization is itself but a mixed good, if not far more a corrupting influence, the hectic of disease, not the bloom of health, and a nation so distinguished more fitly to be called a varnished than a polished people, where this civilization is not grounded in cultivation, in the harmonious development of those qualities and faculties that characterize our humanity. We must be men in order to be citizens.” (Coleridge 1839, 46).

Production

• “requisites of production are two: labour, and appropriate natural objects.”
• “The conditions and laws of Production would be the same as they are, if the arrangements of society did not depend on Exchange, or did not admit of it….exchange is not the fundamental law of the distribution of the produce, no more than roads and carriages are the essential laws of motion, but merely a part of the machinery for effecting it.”
  • Marx would NOT agree

Value

• Value = scarcity
  • Why is land valuable? Unlike Smith before him, says that it’s because land is scarce
  • “as soon as there is not so much of the thing to be had, as would be appropriated and used if it could be obtained for asking; the ownership or use of the natural agent acquires an exchangeable value.”
• Types of value
  • “Adam Smith, in a passage often quoted, has touched upon the most obvious ambiguity of the word value; which, in one of its senses, signifies usefulness, in another, power of purchasing; in his own language, value in use and value in exchange.”
  • “The word Value, when used without adjunct, always means, in political economy, value in exchange; or as it has been called by Adam Smith and his successors, exchangeable value”

Price

• “The words Value and Price were used as synonymous by the early political economists, and are not always discriminated even by Ricardo. But the most accurate modern writers, to avoid the wasteful expenditure of two good scientific terms on a single idea, have employed Price to express the value of a thing in relation to money”
• “All commodities may rise in their money price. But there cannot be a general rise of values.”
  • Changes in value only b/c it can exchange for a greater quantity of other goods
• Thus price and value are reciprocal
  • Notice how value DOES appear as a social relation between things

Capital

• “the accumulated stock of the produce of labour”
• “The distinction, then, between Capital and Not-capital, does not lie in the kind of commodities, but in the mind of the capitalist—in his will to employ them for one purpose rather than another; and all property, however ill adapted in itself for the use of labourers, is a part of capital, so soon as it, or the value to be received from it, is set apart for productive reinvestment.”

Right Kind of Work

• “In an essay on the French historian Michelet, Mill praises the monastic associations of Italy and France after the reforms of St. Benedict: �Unlike the useless communities of contemplative ascetics in the East, they were diligent in tilling the earth and fabricating useful products; they knew and taught that temporal work may also be a spiritual exercise.� (CW, XX.240). It was the desire to transform temporal work into a spiritual and moral exercise that led Mill to favor socialist changes in the workplace.”
  • Source: http://www.iep.utm.edu/m/milljs.htm#SH2g
  • This is more monk stuff like Carlyle’s Past and Present
• Mill Has a Sort of Socialism
  • “industrial co-operatives” will make people feel like they work for a greater whole, instead of supporting prevailing selfishness
    • either owned by workers or have system of profit-sharing
  • it’s not regular socialism b/c he realizes that you need competition to keep up production; so his groups would also compete with traditional businesses
  • can’t do it immediately b/c of the educational and moral level of the workers, but we can take small steps—such as limited liability—the encourage steps of more and more responsibility
• “The restraints of Communism would be freedom in comparison with the present condition of the majority of the human race.”
• At the end of his life we was writing essays about socialism: its types, its pros and cons
  • “Flirtation” with socialism, partly occurred b/c of his wife Harriet
  • Coleridge, Saint-Simon, Carlyle, Comte (Mill and Comte wrote each other quite a bit)
  • Everyone should start out with the same opportunities, so economic liberty must sometimes yield to individual liberty
    • In practice? advocates certain tax policies (b/c the poor pay disproportionate taxes b/c of the taxes on commodities), limit on inheritance, creation of minimum subsistence income (esp for non able-bodied, while using incentives to make the able-bodied work)
    • Saw a future in public-controlled production and distribution, but not under present social frameworks b/c would only give a different hierarchy of “rich men with coercive power” rather than merely make the capitalists go away