John Stuart Mill
John Stuart Mill (1806-1873) was the British economist and philosopher whose Principles of Political Economy was the standard English text for a generation. He is the pivot on which classical liberalism turned toward the interventionist liberalism of the twentieth century, and Austrians read him chiefly to understand how that turn was made from inside the classical tradition rather than against it.
Mill was raised by his father James Mill and Jeremy Bentham to be a utilitarian and an advocate of laissez-faire. What he produced instead was a synthesis that kept the classical apparatus while removing the barrier that had made intervention look economically incoherent.
The separation of production from distribution
The decisive move is in Book II of the Principles. The laws of production, Mill wrote, partake of the character of physical truths and there is nothing optional about them; the distribution of wealth is a matter of human institution alone, and society can dispose of it on whatever terms it pleases.[1]
Austrians regard this as the central error rather than a nuance. On the Austrian account there is no separate distributional stage: shares in the product are determined by the same price process that determines what gets produced at all, because a factor's value is imputed to it from the anticipated value of what it helps make. Detach distribution from production and redistribution becomes an adjustment with no consequences upstream, which is exactly the assumption every later welfare state argument needs.
The wages fund and its recantation
Mill had taught the wages fund doctrine, on which the sum available for wages is fixed in advance so that unions can raise one group's pay only at another group's expense. In an 1869 review of W. T. Thornton's On Labour he publicly abandoned it.[2]
The recantation is often read as a defeat for classical economics, and it was, though not the defeat it is taken for. What was wrong with the wages fund was its aggregation: there is no lump of capital fixed in advance, because capitalists decide continuously how much to bid for labour against expected revenue. Mill did not replace it with a better theory of wage determination but with nothing, and the vacuum was filled by the view that wages are set by bargaining power. The marginal account that would have answered Thornton properly arrived two years later in Carl Menger's Principles of Economics.
On Liberty and its limits
On Liberty (1859) supplies the argument libertarians still borrow: the only purpose for which power can rightfully be exercised over a member of a civilised community against his will is to prevent harm to others, and a person's own good is not a sufficient warrant.[3]
The difficulty is that the principle is doing utilitarian work. Because liberty is defended by its consequences rather than as a property right, the boundary of "harm to others" is settled by whatever counts as a cost, and almost anything can be made to count. Murray N. Rothbard pressed exactly this objection: a rights-based defence tells you in advance what may not be done, while a utilitarian one is hostage to the next calculation.[4] Ludwig von Mises, himself a utilitarian, differs from Mill in refusing to let the calculation range over ends at all.
The drift to socialism
Mill's sympathies moved leftward across the seven editions of the Principles and further after them. He described himself and Harriet Taylor as belonging under the general designation of Socialists,[5] proposed taxing unearned increments in land value, and left behind the unfinished Chapters on Socialism, published posthumously in 1879, which examines the socialist objections to private property at length before declining to endorse an immediate transition.
Rothbard's history treats Mill as the great syncretist, a writer whose eclecticism and personal prestige carried interventionist conclusions into a body of theory that had been built to resist them.[6] Ellen Frankel Paul made the same case in narrower compass, arguing that the utilitarian turn Mill gave political economy is what dissolved the presumption in favour of laissez-faire rather than any new empirical finding.[7]
See also
- Utilitarianism
- Classical economics
- Laissez-faire
- Liberalism
- Labor theory of value
- Natural rights
- David Hume
- John Locke
References
- ↑ John Stuart Mill. Principles of Political Economy, 1848, Book II, ch. 1.
- ↑ John Stuart Mill. "Thornton on Labour and its Claims", Fortnightly Review, May 1869.
- ↑ John Stuart Mill. On Liberty, 1859, ch. 1.
- ↑ Murray N. Rothbard. The Ethics of Liberty, 1982, ch. 26.
- ↑ John Stuart Mill. Autobiography, 1873, ch. 7.
- ↑ Murray N. Rothbard. Classical Economics: An Austrian Perspective on the History of Economic Thought, Volume II, 1995, ch. 8.
- ↑ Ellen Frankel Paul. "J. S. Mill: The Utilitarian Influence in the Demise of Laissez-Faire" (pdf), Journal of Libertarian Studies 2:2, 1978.
Links
- J. S. Mill: The Utilitarian Influence in the Demise of Laissez-Faire (pdf) by Ellen Frankel Paul, 1978
- John Stuart Mill on Liberty and Control by Joseph Hamburger, 2000
- John Stuart Mill and the Religion of Humanity by Linda C. Raeder, 2002
- The Impact of Transfer Payments on Economic Growth: John Stuart Mill versus Ludwig von Mises (pdf) by Lowell Gallaway and Richard Vedder, 2002
- John Stuart Mill, works at the Online Library of Liberty
- John Stuart Mill at Wikipedia