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Princípios de Economia Política - Stuart Mill (Coleção Economia Política)
The standard economics textbook for more than a generation, John Stuart Mill’s Principles of Political Economy (1848) was really as much a synthesis of his predecessors’ ideas as it was an original economic treatise. Heavily influenced by the work of David Ricardo, and also taking ideas from Adam Smith and Thomas Malthus, Mill systematically demonstrated how important economic concepts could be applied to real-world situations. In his emphasis on realism, Mill thus took economics out of the realm of the abstract and placed it squarely within the context of society.
For instance, he made a convincing case that wages, rent, and profit are not necessarily the expression of immutable laws that are independent of society. Rather, they are in actuality the results of social institutions and as such can be changed if the members of a society move to break traditional institutional habits. Reflecting his utilitarian social philosophy, Mill suggested that social improvements are always possible. He thus proposed modifying a purely laissez faire system, advocating trade protectionism and regulation of employees’ work hours for the benefit of domestic industries and workers’ well-being. In such features he displayed a leaning toward socialism.
In summing up his objective for this massive work, Mill said later in his Autobiography (1873) that he wished "to unite the greatest individual liberty of action, with a common ownership in the raw material of the globe, and an equal participation of all in the benefits of combined labour." For anyone with an interest in the history of economics or the history of ideas, this landmark work of classical economics makes for stimulating and in many respects still very relevant reading.
For instance, he made a convincing case that wages, rent, and profit are not necessarily the expression of immutable laws that are independent of society. Rather, they are in actuality the results of social institutions and as such can be changed if the members of a society move to break traditional institutional habits. Reflecting his utilitarian social philosophy, Mill suggested that social improvements are always possible. He thus proposed modifying a purely laissez faire system, advocating trade protectionism and regulation of employees’ work hours for the benefit of domestic industries and workers’ well-being. In such features he displayed a leaning toward socialism.
In summing up his objective for this massive work, Mill said later in his Autobiography (1873) that he wished "to unite the greatest individual liberty of action, with a common ownership in the raw material of the globe, and an equal participation of all in the benefits of combined labour." For anyone with an interest in the history of economics or the history of ideas, this landmark work of classical economics makes for stimulating and in many respects still very relevant reading.
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Published August 12, 2019
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About the author
John Stuart Mill
2,008 books1,947 followersJohn Stuart Mill, English philosopher, political economist, civil servant and Member of Parliament, was an influential liberal thinker of the 19th century. He was an exponent of utilitarianism, an ethical theory developed by Jeremy Bentham, although his conception of it was very different from Bentham's.
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October 19, 2022
I know not why it should be a 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 representative of wealth…
Many times in my life, I have overestimated my interest in a subject. Books accumulate this way—usually big, dry, dense books, which have a great deal more to say than I want to hear. It was doubtless during such an episode that, thinking myself a great scholar, certain that I was going to complete my education, I ordered this volume. Luckily for me, this book turned out to be a rather engaging work of philosophy, rather than (what I thought at the time) a nineteenth-century economics textbook. Sometimes, self-delusion pays off.
It certainly helped that the book was abridged. In his introduction, the merciful abridger, Stephen Nathanson, recommends this seldom-read volume for shedding light on the supposed incompatibility between John Stuart Mill’s two most famous works: “On Liberty” and “Utilitarianism.” In short, Mill’s ethical philosophy (the greatest happiness for the greatest number) seems to contradict his libertarian political philosophy (people’s individual rights should be inviolable), as there are many situations in which total happiness could be increased by disrespecting an individual’s autonomy (by, say, killing someone to harvest their organs—or, less dramatically, through taxing a wealthy person to help the needy).
Now, Mill does not exactly resolve this contradiction in the book, but the reader is able to see his social philosophy in action. Mill is no enemy of taxation, and is especially keen on taxing large inheritances. He is also clear that the distribution of wealth is something that is not natural, but which exists as a result of laws and social norms; and he thinks that the government can legitimately redistribute wealth. On the other hand, he is very wary of government restrictions on trade and commerce, and has a habit of seeing economic competition as a school of moral growth, where individual responsibility breeds good character.
It is clear, then, that Mill was not dogmatic in his application either of his liberal or his utilitarian principles. Yet this is not to say that his use of these ideas is entirely consistent. If the two great principles can be harmonized, I think it is this way: The ultimate measure of goodness is human happiness. Yet it is very difficult to know beforehand what will make a given person happy. Thus, most of the time, the best course of action is to let people govern their own lives, since they are likely to be the best judges of their own happiness. On the other hand, it is legitimate to prevent crime and to distribute alms, as the happiness gained by thieves, murderers, and hoarders of wealth does not offset the misery of the victims.
This is my best shot—but, of course, many sharp philosophers are ready to point out the many situations in which such a formula will fall short. Such is life. In any case, this book is also interesting for the many subjects that Mill touches upon in passing. For this book, even in abridged form, is hardly a focused treatise, but rather a kind of sprawling omnibus of social philosophizing.
In many ways Mill appears ahead of his time. He advocates for women’s rights, for example, and sees the equality of the sexes as not only a good in itself, but also as a crucial way to control overpopulation. He is also concerned with environmental destruction (another result of population growth)—which, characteristically, he bemoans for the ever-dwindling spaces where a person can be alone in nature with her thoughts. He responds to several critics of capitalism (though not Marx), sympathetic with their goals but doubtful that their socialist or communist systems could be put into practice—or whether they would be desirable at all (presciently, he was wary of government tyranny). He is in favor of unions, but he also puts forward many of the utopian arguments that would be used a century later by advocates of free trade (that it unites economies, it makes war obsolete, it provides a net benefit for everyone).
(The one subject in which Mill is most definitely not ahead of his time is colonialism, which he views as rather a jolly good thing.)
In sum, I must conclude that this is a rather rewarding book indeed. Its only real flaw is Mill’s stilted prose style, which I often found irritating. Here is an example (about cruelty to animals, another subject he pioneered): “The existing laws of England on the subject are chiefly defective in the trifling, often almost nominal, maximum, to which the penalty, even in the worst cases, is limited.” But if you could make it to the end of that sentence, then you can make it to the end of this book—at least, the abridged version. Now, I have to get back to my history of science in Spain, another purchase of my overly-optimistic former self.
October 12, 2014
Good heavens what a slog. But, it's done now. Important intellectual history, and all that jazz. Four stars because it's more readable than most of its ilk.
This particular edition is the 1865, if that concerns you.
This particular edition is the 1865, if that concerns you.
August 2, 2022
This review concerns John Stuart Mill’s “Principles of Political Economy with some of their Applications to Social Philosophy”. It is about a 1996 Brazilian edition in two volumes: the first with 494 pages; the second one with 560.
It is divided in 2 parts: (i) an overview of the work; and then (ii) a more detailed review for those interested (though also very summarized - the book has more than 1,000 pages after all!).
(i) BOOK OVERVIEW
In this 1848 book (with later editions), John Stuart Mill, like other authors of Classical Economics, writes in a very verbose way about all the economic topics of his time. Mill’s writing distinguishes itself by its clarity; it is quite analytical and sober.
The work in general is not characterized by complex philosophical, abstract statements and elaborations. Its focus is the economic analysis of practical topics, though some ideological considerations appear here and there. This includes the author’s overall inclination toward - though moderate - Liberalism, but also his sympathy for Socialism, and also his defense of equal rights for women with those of men.
Mill’s “Principles” can be considered being between the Labor Theory of Value, until then espoused by Adam Smith, David Ricardo and Karl Marx, and the Subjective Utility Value Theory, later developed by Menger, Jevons and Walras. It was published in the same year as Marx & Engels’s “Communist Manifesto”.
Of the various topics dealt with in the first volume, it is worth mentioning the following briefly: (1) application of the principle of utility in the economic realm; (2) production and distribution; (3) the role of productive and unproductive professions and education; (4) competition, customs, and monopolies; (5) the law of diminishing returns to labor and production; (6) criticism of environmental protection in the face of the need to produce; (7) slavery; (8) large property versus small property; (9) in defense of Malthus: the poor and his reproduction; (10) the economic status of women; (11) defense of two of David Ricardo’s ideas.
The second volume is dedicated to (12) Mill’s definitive theory of value, which is used until today, (13) considerations on economic crises, (14) international trade versus protectionism, (15) advantages of cooperatives, (16) importance of competition versus the harms of monopolies, (17) flirting with socialism, (18) taxation, (19) political ideological appreciations on State interventions and regulations, and finally (20) his moderate exaltation of the laisser-faire principle - subject to several exceptions.
The following is a more detailed review of each topic for those interested.
(ii) SUMMARY OF VOLUMES #1 AND #2
Volume #1:
1. Utility Principle
For Mill, wealth comprises all useful or pleasant things that have exchange value; or, in other words, all things useful or pleasant, except what can be obtained, in the desired quantity, without work or sacrifice.
2. Production and Distribution
Nature and humans interact in production. The distribution depends essentially on human laws. It is not possible to determine how much Nature acts in production. Human beings have no control over natural aspects. But much of the wealth of nations is determined by institutions, principles of human nature, and human relationships. In this way, its investigation belongs to moral and social science, being the object of what is called Political Economy.
3. The role of productive and unproductive professions and education
Unlike Adam Smith and Jean-Baptiste Say, Mill makes some concessions in what counts as unproductive work. Work does not create objects, but utilities. Productive work is work that produces wealth. Productive is all work that is employed in creating permanent utilities, whether embodied in human beings or in any other animate objects — hence why education must also be considered productive work. This is even of paramount importance in reducing poverty and plays an important role in wage differences.
The expression “unproductive work” should not be understood as pejorative: it covers everyone who only consumes and ends up in immediate pleasure, and does not generate an increase in material products or stock. Unproductive work can be useful (even if it only consists of the feeling of pleasure) or useless. In any case, it does not enrich any society or humanity, but it makes them poorer. But it can enrich the individual.
4. Competition, customs, and monopolies
Mill emphasizes the role of competition in market practices and their results more than his predecessors Smith and Ricardo. It is especially important in rental of land, for example. However, unlike previous and later authors, Mill sees customs as another relevant factor in determining market practices and gives examples of this, such as when analyzing doctors’ and lawyers’ fees. Mill sees entities that congregate these professionals as hindering the entry of new professionals and maintaining the fees charged. He also maintains that the contractors of these services seek to pay higher amounts than would be determined only by competition due to the trust in these professionals — just as employers pay household employees better to see them working with a smile due to their daily relationship with them.
In an important passage that is sure to make the most radical liberals shudder, Mill argues that competition doesn't always work. Analyzing large retailers, which tend to reduce prices compared to smaller ones, Mill applies the same reasoning to infrastructure services, such as water and gas supply. Though framing the latter as a public function. Rather than having several private companies, as there were in London at the time, the population would be better served if there were a monopoly. If the activities did not prove to be profitable for the government, a single private company or entity should carry them out. The same reasoning Mill uses in the example of railroads. For Mill, the costs of duplicating infrastructure would not make sense, as they would be too high. The presence of few competitors would lead them to settle their businesses together, suppressing competition, as always happens, even when a new competitor enters the market: if they do not attack it via severe price reduction, they ally with it once it is established.
5. Law of diminishing returns to work and production
Mill argues that, either in agriculture or in manufacturing, the more proportionate employment of labor obtains less than proportionate production. However, innovations are more constant in manufacturing, which reduce costs (demand less labor) and increase productivity. The division of labor and its skillful and economic distribution depend on the extent of the market and the possibility of producing on a large scale. The reduction of costs and prices has manifested itself in the progressive fall in prices and values of almost all types of manufactured goods in recent times of that era. Mechanical inventions can be extended and expanded and it is not possible to predict when they will have a limit.
6. Criticism of environmental protection in the face of the need to produce
The attempt by two dukes to close off part of Upper Scotland to people to protect wild animals is abusive. If one is not going to plow the land, one shouldn't claim private property.
7. Slavery
Mill attacks slavery as a monstrous practice, mentioning that, at the time, it remained practiced only in Brazil and Cuba. However, were it to be abolished, the owners must be compensated.
8. Large property versus small property
Small properties can produce as much or more and better than large estates — exemplified by Switzerland and Germany, which operated with small properties, in contrast to England.
The form of leasing and whether it occurs on small or large properties does not necessarily influence income.
Being a sharecropper or a tenant does not determine whether they will necessarily be more or less productive. But in general cottiers are miserable.
9. In defense of Malthus: the poor and his reproduction
Mill points out that Malthus' passage that production grows arithmetically while population grows geometrically was unfortunate and critics paid too much attention to it. But the background idea is correct. Mill, in this aspect, argues that society should not tolerate the uncontrolled reproduction of the poor if they are unable to support their children, leaving them in the care of others. There must be laws that punish those who break this precept.
10. The economic condition of women
Mill was one of the pioneers of the defense of equal rights for women, and develops reasoning at this point more focused on the economic aspect of the issue. He points out that there are activities in which women and men earn equal pay, but only prejudice explains disparity against women in others. First, Mill criticizes the greater burden of working-class women especially in the fact that it is customary to have many children. This should be an object of awareness of the working class. Women would applaud if that changed. If women also have families with children to support, their wages should be the same as men's. For single women, although the salary need not be as high as for married women with children, it should also be decent enough to support themselves.
11. Defense of two of David Ricardo’s ideas
Volume #1 ends with the defense of two ideas by David Ricardo.
As for Ricardo’s formulation that the rate of profit depends on wages, Mill claims that Ricardo really meant that profits depend on the cost of labour, which is a function of the efficiency of labour, wages and the cost of producing or buying goods that make up this remuneration.
In another passage, Mill defends Ricardo again, when the latter maintained that the cultivation of inferior land is the cause of the rent that he engraves on land of superior quality. Ricardo, according to Mill, does not claim that the cause is the cultivation of inferior land, but the necessity of cultivating it, due to the insufficiency of the land of superior quality to feed a growing population.
Volume #2:
12. Theory of value
Mill clarifies that “utility” for Political Economy should have no moral appreciation. The utility of anything relates to its capacity to satisfy desires and purposes. Exchange value is the result of competition and scarcity in an environment where each party zeals for its own interest. Mill establishes clearly that prices are a function of supply and demand — each one has its own characteristics, and prices result from the encounter of both functions. “[D]emand and supply always eagerly seek an equilibrium”. The price of a product may never meet its “natural value”, which is the cost of production; though it orbits it.
13. Considerations on economic crises
Mill recognizes the irrational component in economic crises: from super optimism to panic. He illustrates his reasoning with good examples of actual crises especially in the 19th century.
14. International trade versus protectionism
Mill criticizes Mercantilism and elaborates on Ricardo’s theory of comparative advantages, emphasizing the upsides of a free international trade and slamming protectionism; though in exceptional circumstances some specific protectionism may be positive, as in the case of basic agricultural products to protect the country from hunger in production crises, to form a domestic naval squadron, and to nationalize an industry which is important for the national economy in developing countries.
15. Advantages of cooperatives
Cooperatives are positive for workers, as they can secure some of their interests, which would not be possible individually. Mill acknowledges though some of the evil aspects of the cooperatives which grow too much and move them away from their principles.
16. Importance of competition versus the harms of monopolies
Mill complains about the concession of some public services like gas and water to the private initiative — which tends to worsen the experience of the public even when compared to the performance of the same service by the government. Some monopolies though are justifiable, as is the case of patents, which tend to reward innovation and competitive behavior.
17. Flirting with Socialism
Mill assumes an overall stance of defense of Liberalism, though shows some sympathy for Socialism. He criticizes those who support everlasting economic growth as this is a source of antisocial behavior, and defends a stationary state of the Economy.
He agrees with socialists that society is already mature enough to implement socialism, but he strongly disagrees with their criticism of competition.
18. Taxation
Mill dedicates long chapters to taxation, which include remarks on taxation in the international trade, of individuals and landowners. In one of them, he manifests his concern on the need for a fair taxation, in which the rich and especially those who did not work to earn fortunes should pay more.
19. State interventions and regulations
The last two chapters are really clear and pleasant to read. Mill points out some wrongful theses on State interventions according to his view. He slams protectionism in the international trade (with exceptions - see #14 above) and defends associations of workers to pursue their interests, like the right to strike.
20. Moderate exaltation of the laisser-faire principle - subject to several exceptions
Mill clearly defends laisser-faire as the guiding principle of Political Economy, though he raises several exceptions:
(A) cases in which the consumer is incapable of judging goods properly: importance of education and lack of incentives to pursue it individually; (B) cases of people exercising power over others: protection of children, youngsters and inferior species. He once again emphasizes the need for emancipation of women against their unfair subordinate position in the society; (C) cases of long term contracts: like marriage, in which inexperience operates against parties under excessively compromising obligations; (D) cases of delegated management: private companies performing important services to the public (conceded monopolies) may be even more poorly managed and unreachable to the public than public companies; (E) cases of the need for collective action: associations of workers can better defend their interests; workers would be better off if they were allowed to buy colonial properties only after they work the land for some years instead of buying it immediately and uncoordinatedly; (F) cases of acts performed for the benefit of people other than those concerned (lack of enough incentives to practice charity - Laws of the Poor); (G) other enterprises, such as scientific expeditions and building lighthouses at sea; (H) “Government intervention may be necessary in the absence of private initiative and in case it is more convenient”: he acknowledges that there are few activities which completely dispense State intervention; the demand of a society for more presence of the State depends on its wealth and intellectual level. So the more interventionist a State is, the more authoritarian tends to be its society.
It is divided in 2 parts: (i) an overview of the work; and then (ii) a more detailed review for those interested (though also very summarized - the book has more than 1,000 pages after all!).
(i) BOOK OVERVIEW
In this 1848 book (with later editions), John Stuart Mill, like other authors of Classical Economics, writes in a very verbose way about all the economic topics of his time. Mill’s writing distinguishes itself by its clarity; it is quite analytical and sober.
The work in general is not characterized by complex philosophical, abstract statements and elaborations. Its focus is the economic analysis of practical topics, though some ideological considerations appear here and there. This includes the author’s overall inclination toward - though moderate - Liberalism, but also his sympathy for Socialism, and also his defense of equal rights for women with those of men.
Mill’s “Principles” can be considered being between the Labor Theory of Value, until then espoused by Adam Smith, David Ricardo and Karl Marx, and the Subjective Utility Value Theory, later developed by Menger, Jevons and Walras. It was published in the same year as Marx & Engels’s “Communist Manifesto”.
Of the various topics dealt with in the first volume, it is worth mentioning the following briefly: (1) application of the principle of utility in the economic realm; (2) production and distribution; (3) the role of productive and unproductive professions and education; (4) competition, customs, and monopolies; (5) the law of diminishing returns to labor and production; (6) criticism of environmental protection in the face of the need to produce; (7) slavery; (8) large property versus small property; (9) in defense of Malthus: the poor and his reproduction; (10) the economic status of women; (11) defense of two of David Ricardo’s ideas.
The second volume is dedicated to (12) Mill’s definitive theory of value, which is used until today, (13) considerations on economic crises, (14) international trade versus protectionism, (15) advantages of cooperatives, (16) importance of competition versus the harms of monopolies, (17) flirting with socialism, (18) taxation, (19) political ideological appreciations on State interventions and regulations, and finally (20) his moderate exaltation of the laisser-faire principle - subject to several exceptions.
The following is a more detailed review of each topic for those interested.
(ii) SUMMARY OF VOLUMES #1 AND #2
Volume #1:
1. Utility Principle
For Mill, wealth comprises all useful or pleasant things that have exchange value; or, in other words, all things useful or pleasant, except what can be obtained, in the desired quantity, without work or sacrifice.
2. Production and Distribution
Nature and humans interact in production. The distribution depends essentially on human laws. It is not possible to determine how much Nature acts in production. Human beings have no control over natural aspects. But much of the wealth of nations is determined by institutions, principles of human nature, and human relationships. In this way, its investigation belongs to moral and social science, being the object of what is called Political Economy.
3. The role of productive and unproductive professions and education
Unlike Adam Smith and Jean-Baptiste Say, Mill makes some concessions in what counts as unproductive work. Work does not create objects, but utilities. Productive work is work that produces wealth. Productive is all work that is employed in creating permanent utilities, whether embodied in human beings or in any other animate objects — hence why education must also be considered productive work. This is even of paramount importance in reducing poverty and plays an important role in wage differences.
The expression “unproductive work” should not be understood as pejorative: it covers everyone who only consumes and ends up in immediate pleasure, and does not generate an increase in material products or stock. Unproductive work can be useful (even if it only consists of the feeling of pleasure) or useless. In any case, it does not enrich any society or humanity, but it makes them poorer. But it can enrich the individual.
4. Competition, customs, and monopolies
Mill emphasizes the role of competition in market practices and their results more than his predecessors Smith and Ricardo. It is especially important in rental of land, for example. However, unlike previous and later authors, Mill sees customs as another relevant factor in determining market practices and gives examples of this, such as when analyzing doctors’ and lawyers’ fees. Mill sees entities that congregate these professionals as hindering the entry of new professionals and maintaining the fees charged. He also maintains that the contractors of these services seek to pay higher amounts than would be determined only by competition due to the trust in these professionals — just as employers pay household employees better to see them working with a smile due to their daily relationship with them.
In an important passage that is sure to make the most radical liberals shudder, Mill argues that competition doesn't always work. Analyzing large retailers, which tend to reduce prices compared to smaller ones, Mill applies the same reasoning to infrastructure services, such as water and gas supply. Though framing the latter as a public function. Rather than having several private companies, as there were in London at the time, the population would be better served if there were a monopoly. If the activities did not prove to be profitable for the government, a single private company or entity should carry them out. The same reasoning Mill uses in the example of railroads. For Mill, the costs of duplicating infrastructure would not make sense, as they would be too high. The presence of few competitors would lead them to settle their businesses together, suppressing competition, as always happens, even when a new competitor enters the market: if they do not attack it via severe price reduction, they ally with it once it is established.
5. Law of diminishing returns to work and production
Mill argues that, either in agriculture or in manufacturing, the more proportionate employment of labor obtains less than proportionate production. However, innovations are more constant in manufacturing, which reduce costs (demand less labor) and increase productivity. The division of labor and its skillful and economic distribution depend on the extent of the market and the possibility of producing on a large scale. The reduction of costs and prices has manifested itself in the progressive fall in prices and values of almost all types of manufactured goods in recent times of that era. Mechanical inventions can be extended and expanded and it is not possible to predict when they will have a limit.
6. Criticism of environmental protection in the face of the need to produce
The attempt by two dukes to close off part of Upper Scotland to people to protect wild animals is abusive. If one is not going to plow the land, one shouldn't claim private property.
7. Slavery
Mill attacks slavery as a monstrous practice, mentioning that, at the time, it remained practiced only in Brazil and Cuba. However, were it to be abolished, the owners must be compensated.
8. Large property versus small property
Small properties can produce as much or more and better than large estates — exemplified by Switzerland and Germany, which operated with small properties, in contrast to England.
The form of leasing and whether it occurs on small or large properties does not necessarily influence income.
Being a sharecropper or a tenant does not determine whether they will necessarily be more or less productive. But in general cottiers are miserable.
9. In defense of Malthus: the poor and his reproduction
Mill points out that Malthus' passage that production grows arithmetically while population grows geometrically was unfortunate and critics paid too much attention to it. But the background idea is correct. Mill, in this aspect, argues that society should not tolerate the uncontrolled reproduction of the poor if they are unable to support their children, leaving them in the care of others. There must be laws that punish those who break this precept.
10. The economic condition of women
Mill was one of the pioneers of the defense of equal rights for women, and develops reasoning at this point more focused on the economic aspect of the issue. He points out that there are activities in which women and men earn equal pay, but only prejudice explains disparity against women in others. First, Mill criticizes the greater burden of working-class women especially in the fact that it is customary to have many children. This should be an object of awareness of the working class. Women would applaud if that changed. If women also have families with children to support, their wages should be the same as men's. For single women, although the salary need not be as high as for married women with children, it should also be decent enough to support themselves.
11. Defense of two of David Ricardo’s ideas
Volume #1 ends with the defense of two ideas by David Ricardo.
As for Ricardo’s formulation that the rate of profit depends on wages, Mill claims that Ricardo really meant that profits depend on the cost of labour, which is a function of the efficiency of labour, wages and the cost of producing or buying goods that make up this remuneration.
In another passage, Mill defends Ricardo again, when the latter maintained that the cultivation of inferior land is the cause of the rent that he engraves on land of superior quality. Ricardo, according to Mill, does not claim that the cause is the cultivation of inferior land, but the necessity of cultivating it, due to the insufficiency of the land of superior quality to feed a growing population.
Volume #2:
12. Theory of value
Mill clarifies that “utility” for Political Economy should have no moral appreciation. The utility of anything relates to its capacity to satisfy desires and purposes. Exchange value is the result of competition and scarcity in an environment where each party zeals for its own interest. Mill establishes clearly that prices are a function of supply and demand — each one has its own characteristics, and prices result from the encounter of both functions. “[D]emand and supply always eagerly seek an equilibrium”. The price of a product may never meet its “natural value”, which is the cost of production; though it orbits it.
13. Considerations on economic crises
Mill recognizes the irrational component in economic crises: from super optimism to panic. He illustrates his reasoning with good examples of actual crises especially in the 19th century.
14. International trade versus protectionism
Mill criticizes Mercantilism and elaborates on Ricardo’s theory of comparative advantages, emphasizing the upsides of a free international trade and slamming protectionism; though in exceptional circumstances some specific protectionism may be positive, as in the case of basic agricultural products to protect the country from hunger in production crises, to form a domestic naval squadron, and to nationalize an industry which is important for the national economy in developing countries.
15. Advantages of cooperatives
Cooperatives are positive for workers, as they can secure some of their interests, which would not be possible individually. Mill acknowledges though some of the evil aspects of the cooperatives which grow too much and move them away from their principles.
16. Importance of competition versus the harms of monopolies
Mill complains about the concession of some public services like gas and water to the private initiative — which tends to worsen the experience of the public even when compared to the performance of the same service by the government. Some monopolies though are justifiable, as is the case of patents, which tend to reward innovation and competitive behavior.
17. Flirting with Socialism
Mill assumes an overall stance of defense of Liberalism, though shows some sympathy for Socialism. He criticizes those who support everlasting economic growth as this is a source of antisocial behavior, and defends a stationary state of the Economy.
He agrees with socialists that society is already mature enough to implement socialism, but he strongly disagrees with their criticism of competition.
18. Taxation
Mill dedicates long chapters to taxation, which include remarks on taxation in the international trade, of individuals and landowners. In one of them, he manifests his concern on the need for a fair taxation, in which the rich and especially those who did not work to earn fortunes should pay more.
19. State interventions and regulations
The last two chapters are really clear and pleasant to read. Mill points out some wrongful theses on State interventions according to his view. He slams protectionism in the international trade (with exceptions - see #14 above) and defends associations of workers to pursue their interests, like the right to strike.
20. Moderate exaltation of the laisser-faire principle - subject to several exceptions
Mill clearly defends laisser-faire as the guiding principle of Political Economy, though he raises several exceptions:
(A) cases in which the consumer is incapable of judging goods properly: importance of education and lack of incentives to pursue it individually; (B) cases of people exercising power over others: protection of children, youngsters and inferior species. He once again emphasizes the need for emancipation of women against their unfair subordinate position in the society; (C) cases of long term contracts: like marriage, in which inexperience operates against parties under excessively compromising obligations; (D) cases of delegated management: private companies performing important services to the public (conceded monopolies) may be even more poorly managed and unreachable to the public than public companies; (E) cases of the need for collective action: associations of workers can better defend their interests; workers would be better off if they were allowed to buy colonial properties only after they work the land for some years instead of buying it immediately and uncoordinatedly; (F) cases of acts performed for the benefit of people other than those concerned (lack of enough incentives to practice charity - Laws of the Poor); (G) other enterprises, such as scientific expeditions and building lighthouses at sea; (H) “Government intervention may be necessary in the absence of private initiative and in case it is more convenient”: he acknowledges that there are few activities which completely dispense State intervention; the demand of a society for more presence of the State depends on its wealth and intellectual level. So the more interventionist a State is, the more authoritarian tends to be its society.
July 10, 2021
This is Mill's comprehensive work laying out his understanding of then current economic thought and including here and there some of his original conclusions. As with Mill's style in general it can be a bit ponderous and verbose, but is generally clear and easy to follow. Mill exhibits both many of the prejudices of his day and in some instances an ability to transcend them and offer innovative and humane responses to problems.
I had this weighty tome sitting on my bookshelf for over a decade before I began to read it. Much of it is Mill's dry explication of various standard economics doctrines using minor variations on well worn examples. It begins with definitions of terms and concepts like economics, labour, capital and rent sketching some of their basic relations and then proceeds to more complicated particular phenomenon of economic, social and political life. A central conceit of Mill's conception of economics is that while the laws of production of wealth are iron immutable laws based on physical necessity, the laws of distribution of wealth are based on mutable human habit, custom and law. Hence he divides the work into 5 books the first book discussing production and the second distribution, before discussing exchange, the trends in the progress of society that reflect on production and distribution and finally the proper role of government. While some of his constructions have the whiff of rigid formula, his assertions and conclusions are often less strict or definitive as for example when he discusses the role of the government in the economy and concludes that there is no single simple abstract principle to decided such questions rather there are some general principles that must be applied on a case by case basis in actual situations.
Some of Mill's opinions remain at least moderately idealistic and challenging to conservative traditions as his championing of cooperatives as the model for the engine of economic life in a more equitable society, his advocacy for high estate taxes and mass public education. On the other hand his views contain various retrograde tedencies: his Malthusian views on the structure of human population growth and its relation to wages is reductive and liable to reinforce prejudices about the poor that amount to blaming them for their own lot; his view of colonization that takes it to be the development of uninhabited land rather than the theft of land from existing people ignores a great deal of injustice and suffering; and his tendency to characterize human intellectual and cultural achievement into a narrow hierarchy with the British gentlefolk of his own time at the top again leads to a lack of due concern for some powerful historical and current injustices. One of the more stark example of Mill choosing cold elitist economic theory over humane sentiment is that while he considers slavery an unjustifiable institution contrary to justice and human fellowship, yet he thinks that its abolition in places it was long legal and sanctioned calls also for compensation for the slave holders, praising the British Empire's abolition of slavery along these lines of 1833.
The book has nuggets of wisdom or at least interesting ideas here and there. Also occasionally Mill's phrasing is suggestive, apt or ironic (at least to me). Those without the time or inclination to read the weighty tome might content themselves with some of the more novel sections. The Preliminary Remarks at the start of the book contain Mill's thesis contrasting the laws of production and distribution of wealth. His optimistic view of the previously dreaded stationary state (the no growth economy) is found in Book 4 Ch. VI (the aptly titled "Of the Stationary State"), the next chapter (VII) is his case for the potential for the cooperative movement as a new basis for economic development, "On the Probable Futurity of the Labouring Classes". Finally the last Chapter of the last book (Book 5, Ch. XI) "Of the Grounds and Limits of the Laisser-faire or Non-Interference Principle" contains some interesting ideas applicable to perennial debates in economic policy, I was particularly interested in Mill's recognition of legal stricture as a potential resolution for some of the problems now called "collective action problems".
This edition was edited with extensive notes by one W J Ashley. The notes include footnotes to indicate changes in the text, including all the original text excised in subsequent editions. The Appendices at the end are of course now more out of date then Mill was when the appendices were written, but they are often an interesting reflection of the state of play in economics through the end of the 19th and into the 20th century.
I had this weighty tome sitting on my bookshelf for over a decade before I began to read it. Much of it is Mill's dry explication of various standard economics doctrines using minor variations on well worn examples. It begins with definitions of terms and concepts like economics, labour, capital and rent sketching some of their basic relations and then proceeds to more complicated particular phenomenon of economic, social and political life. A central conceit of Mill's conception of economics is that while the laws of production of wealth are iron immutable laws based on physical necessity, the laws of distribution of wealth are based on mutable human habit, custom and law. Hence he divides the work into 5 books the first book discussing production and the second distribution, before discussing exchange, the trends in the progress of society that reflect on production and distribution and finally the proper role of government. While some of his constructions have the whiff of rigid formula, his assertions and conclusions are often less strict or definitive as for example when he discusses the role of the government in the economy and concludes that there is no single simple abstract principle to decided such questions rather there are some general principles that must be applied on a case by case basis in actual situations.
Some of Mill's opinions remain at least moderately idealistic and challenging to conservative traditions as his championing of cooperatives as the model for the engine of economic life in a more equitable society, his advocacy for high estate taxes and mass public education. On the other hand his views contain various retrograde tedencies: his Malthusian views on the structure of human population growth and its relation to wages is reductive and liable to reinforce prejudices about the poor that amount to blaming them for their own lot; his view of colonization that takes it to be the development of uninhabited land rather than the theft of land from existing people ignores a great deal of injustice and suffering; and his tendency to characterize human intellectual and cultural achievement into a narrow hierarchy with the British gentlefolk of his own time at the top again leads to a lack of due concern for some powerful historical and current injustices. One of the more stark example of Mill choosing cold elitist economic theory over humane sentiment is that while he considers slavery an unjustifiable institution contrary to justice and human fellowship, yet he thinks that its abolition in places it was long legal and sanctioned calls also for compensation for the slave holders, praising the British Empire's abolition of slavery along these lines of 1833.
The book has nuggets of wisdom or at least interesting ideas here and there. Also occasionally Mill's phrasing is suggestive, apt or ironic (at least to me). Those without the time or inclination to read the weighty tome might content themselves with some of the more novel sections. The Preliminary Remarks at the start of the book contain Mill's thesis contrasting the laws of production and distribution of wealth. His optimistic view of the previously dreaded stationary state (the no growth economy) is found in Book 4 Ch. VI (the aptly titled "Of the Stationary State"), the next chapter (VII) is his case for the potential for the cooperative movement as a new basis for economic development, "On the Probable Futurity of the Labouring Classes". Finally the last Chapter of the last book (Book 5, Ch. XI) "Of the Grounds and Limits of the Laisser-faire or Non-Interference Principle" contains some interesting ideas applicable to perennial debates in economic policy, I was particularly interested in Mill's recognition of legal stricture as a potential resolution for some of the problems now called "collective action problems".
This edition was edited with extensive notes by one W J Ashley. The notes include footnotes to indicate changes in the text, including all the original text excised in subsequent editions. The Appendices at the end are of course now more out of date then Mill was when the appendices were written, but they are often an interesting reflection of the state of play in economics through the end of the 19th and into the 20th century.
June 13, 2015
This book is actually a better textbook for political economy than some of the more modern ones I've read or used, though obviously it is a bit outdated in some areas.
December 29, 2024
Very clear exposition on the 3 agents, labor, landlord and capital which interact towards production and distribution of material wealth. Mill does seem to be developing what has already been known by previous economists such as Smith, Fourier, Owen. Bertrand Russell in an essay on him finds that his theory was in line with predecessors such as with Ricardo's theory of value, itself superseded by Jevon's introduction of the concept of marginal utility. Nevertheless, Mill style is so engrossing and to the point and most of the time following logically from his argument that one can only be in awe of the wide erudition on display. This book was released in 1848, the same year of the communist manifesto, yet Mill seems to be unaware of the ideas of Marx, and is only concerned with socialism and communism as envisioned by french utopian from the saint Simeon school and Owen/Fourier. A great read so far, with many ideas to ponder about in our age of big corporations!
This entire review has been hidden because of spoilers.
June 23, 2024
John Stuart Mill's "Principles of Political Economy" is a seminal work that has had a profound impact on the field of economics. Published in 1848, this comprehensive treatise covers a wide range of economic topics, showcasing Mill's deep understanding and analytical prowess.
The Requisites of Production
Mill begins by outlining the three essential factors of production: labor, capital, and land. He delves into the nature and characteristics of each, emphasizing their interdependence and the importance of their efficient utilization for economic progress.
Definition of Productive and Unproductive Labor
One of Mill's key contributions is his distinction between productive and unproductive labor. He argues that productive labor directly contributes to the creation of goods and services, while unproductive labor, though necessary for the functioning of society, does not result in the immediate production of tangible wealth. This conceptual framework has had a lasting influence on economic thought.
Examination of Cases Illustrative of the Idea of Capital
Mill provides a nuanced examination of the concept of capital, exploring its various forms and the factors that influence its growth and deployment. He challenges the simplistic view of capital as solely consisting of physical assets, highlighting the importance of intangible elements such as skills and knowledge.
Increase of Fixed Capital, when, at the Expense of Circulating, might be Detrimental to the Laborers
In this chapter, Mill delves into the potential consequences of an increase in fixed capital (such as machinery) at the expense of circulating capital (such as wages). He astutely observes that while such a shift may enhance overall productivity, it can also have adverse effects on the well-being of laborers, a concern that remains relevant in contemporary economic debates.
The Law of Population
Mill's treatment of the law of population is a seminal contribution to the field. He acknowledges the Malthusian concerns about population growth outpacing food supply, but he also recognizes the potential for human agency and social progress to mitigate these challenges. His nuanced approach to this complex issue has influenced subsequent demographic and development theories.
Means for Saving in the Surplus above Necessaries
In this chapter, Mill explores the mechanisms by which individuals and societies can accumulate surplus resources beyond the basic necessities of life. He examines the role of savings, investment, and the efficient allocation of resources in driving economic growth and development.
Of The Law Of The Increase Of Production From Land
Mill delves into the factors that influence the productivity of land, including the role of technological advancements, the division of labor, and the impact of population growth. His analysis of the law of diminishing returns and its implications for agricultural production remains highly relevant.
Distribution (property, wages, profits, rent)
One of the central themes in Mill's "Principles of Political Economy" is the distribution of wealth and income. He explores the complex interplay between property rights, wages, profits, and rent, offering insights that have shaped subsequent debates on economic inequality and the role of government intervention.
Definitions of Value in Use, Exchange Value, and price
Mill's conceptual distinctions between value in use, exchange value, and price are foundational to the understanding of economic value. His analysis of these concepts lays the groundwork for the development of marginalist economics and the subjective theory of value.
Ultimate Analysis Of Cost Of Production
In this chapter, Mill delves into the underlying factors that determine the cost of production, including the role of labor, capital, and natural resources. His insights have influenced the evolution of production theory and the analysis of competitive markets.
Occasional Elements in Cost of Production taxesandground-rent
Mill acknowledges the impact of external factors, such as taxes and ground rent, on the cost of production. His recognition of these "occasional elements" highlights the complexity of real-world economic phenomena and the need for a nuanced approach to policy formulation.
Of The Value Of Money, As Dependent On Cost Of Production
Mill's analysis of the value of money, and its dependence on the cost of production, is a seminal contribution to monetary theory. His insights have informed the understanding of inflation, exchange rates, and the role of central banking in modern economies.
Credit a purchasing Power, similar to Money
In this chapter, Mill explores the role of credit as a substitute for money, recognizing its potential to influence economic activity and the price level. His analysis of the relationship between credit and money has had a lasting impact on the study of financial markets and monetary policy.
Of Excess Of Supply
Mill's treatment of the concept of excess supply, or the possibility of a general glut in the economy, is a significant contribution to the understanding of economic crises and recessions. His insights have influenced the development of Keynesian economics and the debate on the role of government intervention in stabilizing the economy.
The direct benefits of commerce consist in increased Efficiency of the productive powers of the World
Mill emphasizes the benefits of international trade, arguing that it enhances the overall efficiency of global production and the utilization of resources. His perspective on the advantages of commerce has shaped the discourse on the merits of free trade and globalization.
Of The Foreign Exchanges
Mill's analysis of the foreign exchange market and the factors that determine exchange rates is a seminal contribution to international economics. His insights have informed the understanding of currency fluctuations, balance of payments, and the role of government policies in managing external economic relations.
The rate of interest determines the price of land and of securities
In this chapter, Mill explores the relationship between the rate of interest and the valuation of land and financial assets. His analysis of the factors that influence interest rates and their impact on asset prices remains highly relevant in modern financial economics.
Influence Of The Progress Of Industry And Population On Values And Prices
Mill delves into the complex interplay between industrial progress, population growth, and their impact on economic values and prices. His nuanced approach to these dynamics has influenced the understanding of long-term economic trends and the role of technological change in shaping market outcomes.
On The General Principles Of Taxation
Mill's treatment of the principles of taxation is a seminal contribution to public finance theory. He explores the criteria of fairness, efficiency, and administrative feasibility in the design of tax systems, offering insights that have shaped the development of modern fiscal policies.
Of Direct Taxes
In this chapter, Mill examines the various forms of direct taxation, such as income tax and property tax, and their implications for economic incentives and the distribution of wealth. His analysis has informed the ongoing debates on the role of taxation in promoting social and economic objectives.
Of A National Debt
Mill's discussion of the role and implications of national debt is a significant contribution to the field of public finance. He explores the potential benefits and drawbacks of government borrowing, offering a nuanced perspective that has influenced subsequent debates on fiscal policy and debt management.
Of An Interference Of Government Grounded On Erroneous Theories
In the final chapter, Mill critically examines the potential for government intervention in the economy based on flawed economic theories. His insights on the importance of sound economic analysis in policymaking remain highly relevant in contemporary discussions on the appropriate scope of government involvement in the market.
Overall, John Stuart Mill's "Principles of Political Economy" is a seminal work that has had a lasting impact on the field of economics. Its breadth, depth, and analytical rigor have made it a foundational text for generations of scholars and policymakers. Mill's ability to synthesize classical economic thought, while also incorporating his own innovative ideas, has cemented his place as one of the most influential figures in the history of economic thought.
The Requisites of Production
Mill begins by outlining the three essential factors of production: labor, capital, and land. He delves into the nature and characteristics of each, emphasizing their interdependence and the importance of their efficient utilization for economic progress.
Definition of Productive and Unproductive Labor
One of Mill's key contributions is his distinction between productive and unproductive labor. He argues that productive labor directly contributes to the creation of goods and services, while unproductive labor, though necessary for the functioning of society, does not result in the immediate production of tangible wealth. This conceptual framework has had a lasting influence on economic thought.
Examination of Cases Illustrative of the Idea of Capital
Mill provides a nuanced examination of the concept of capital, exploring its various forms and the factors that influence its growth and deployment. He challenges the simplistic view of capital as solely consisting of physical assets, highlighting the importance of intangible elements such as skills and knowledge.
Increase of Fixed Capital, when, at the Expense of Circulating, might be Detrimental to the Laborers
In this chapter, Mill delves into the potential consequences of an increase in fixed capital (such as machinery) at the expense of circulating capital (such as wages). He astutely observes that while such a shift may enhance overall productivity, it can also have adverse effects on the well-being of laborers, a concern that remains relevant in contemporary economic debates.
The Law of Population
Mill's treatment of the law of population is a seminal contribution to the field. He acknowledges the Malthusian concerns about population growth outpacing food supply, but he also recognizes the potential for human agency and social progress to mitigate these challenges. His nuanced approach to this complex issue has influenced subsequent demographic and development theories.
Means for Saving in the Surplus above Necessaries
In this chapter, Mill explores the mechanisms by which individuals and societies can accumulate surplus resources beyond the basic necessities of life. He examines the role of savings, investment, and the efficient allocation of resources in driving economic growth and development.
Of The Law Of The Increase Of Production From Land
Mill delves into the factors that influence the productivity of land, including the role of technological advancements, the division of labor, and the impact of population growth. His analysis of the law of diminishing returns and its implications for agricultural production remains highly relevant.
Distribution (property, wages, profits, rent)
One of the central themes in Mill's "Principles of Political Economy" is the distribution of wealth and income. He explores the complex interplay between property rights, wages, profits, and rent, offering insights that have shaped subsequent debates on economic inequality and the role of government intervention.
Definitions of Value in Use, Exchange Value, and price
Mill's conceptual distinctions between value in use, exchange value, and price are foundational to the understanding of economic value. His analysis of these concepts lays the groundwork for the development of marginalist economics and the subjective theory of value.
Ultimate Analysis Of Cost Of Production
In this chapter, Mill delves into the underlying factors that determine the cost of production, including the role of labor, capital, and natural resources. His insights have influenced the evolution of production theory and the analysis of competitive markets.
Occasional Elements in Cost of Production taxesandground-rent
Mill acknowledges the impact of external factors, such as taxes and ground rent, on the cost of production. His recognition of these "occasional elements" highlights the complexity of real-world economic phenomena and the need for a nuanced approach to policy formulation.
Of The Value Of Money, As Dependent On Cost Of Production
Mill's analysis of the value of money, and its dependence on the cost of production, is a seminal contribution to monetary theory. His insights have informed the understanding of inflation, exchange rates, and the role of central banking in modern economies.
Credit a purchasing Power, similar to Money
In this chapter, Mill explores the role of credit as a substitute for money, recognizing its potential to influence economic activity and the price level. His analysis of the relationship between credit and money has had a lasting impact on the study of financial markets and monetary policy.
Of Excess Of Supply
Mill's treatment of the concept of excess supply, or the possibility of a general glut in the economy, is a significant contribution to the understanding of economic crises and recessions. His insights have influenced the development of Keynesian economics and the debate on the role of government intervention in stabilizing the economy.
The direct benefits of commerce consist in increased Efficiency of the productive powers of the World
Mill emphasizes the benefits of international trade, arguing that it enhances the overall efficiency of global production and the utilization of resources. His perspective on the advantages of commerce has shaped the discourse on the merits of free trade and globalization.
Of The Foreign Exchanges
Mill's analysis of the foreign exchange market and the factors that determine exchange rates is a seminal contribution to international economics. His insights have informed the understanding of currency fluctuations, balance of payments, and the role of government policies in managing external economic relations.
The rate of interest determines the price of land and of securities
In this chapter, Mill explores the relationship between the rate of interest and the valuation of land and financial assets. His analysis of the factors that influence interest rates and their impact on asset prices remains highly relevant in modern financial economics.
Influence Of The Progress Of Industry And Population On Values And Prices
Mill delves into the complex interplay between industrial progress, population growth, and their impact on economic values and prices. His nuanced approach to these dynamics has influenced the understanding of long-term economic trends and the role of technological change in shaping market outcomes.
On The General Principles Of Taxation
Mill's treatment of the principles of taxation is a seminal contribution to public finance theory. He explores the criteria of fairness, efficiency, and administrative feasibility in the design of tax systems, offering insights that have shaped the development of modern fiscal policies.
Of Direct Taxes
In this chapter, Mill examines the various forms of direct taxation, such as income tax and property tax, and their implications for economic incentives and the distribution of wealth. His analysis has informed the ongoing debates on the role of taxation in promoting social and economic objectives.
Of A National Debt
Mill's discussion of the role and implications of national debt is a significant contribution to the field of public finance. He explores the potential benefits and drawbacks of government borrowing, offering a nuanced perspective that has influenced subsequent debates on fiscal policy and debt management.
Of An Interference Of Government Grounded On Erroneous Theories
In the final chapter, Mill critically examines the potential for government intervention in the economy based on flawed economic theories. His insights on the importance of sound economic analysis in policymaking remain highly relevant in contemporary discussions on the appropriate scope of government involvement in the market.
Overall, John Stuart Mill's "Principles of Political Economy" is a seminal work that has had a lasting impact on the field of economics. Its breadth, depth, and analytical rigor have made it a foundational text for generations of scholars and policymakers. Mill's ability to synthesize classical economic thought, while also incorporating his own innovative ideas, has cemented his place as one of the most influential figures in the history of economic thought.
July 6, 2024
No one expects to get an edge-of-your-seat novel from a book titled Principles of Political Economy. However, I did find great enjoyment in reading many foundational economic principles written down at a time when the theory was actively evolving.
Mill was by no means perfect, and it is easy for me in hindsight to pick apart many of his arguments. Even a relative short time after this was written, the editor was able to advance many insights that either Mill missed or which were not apparent mere decades earlier.
Nevertheless, I think this is a fantastic read for someone like myself trying to improve their understanding of foundational political economics.
Mill was by no means perfect, and it is easy for me in hindsight to pick apart many of his arguments. Even a relative short time after this was written, the editor was able to advance many insights that either Mill missed or which were not apparent mere decades earlier.
Nevertheless, I think this is a fantastic read for someone like myself trying to improve their understanding of foundational political economics.
May 12, 2025
Es un libro que me sorprendió lo "sencillo" que es de leer, no tiene prácticamente nada de lenguaje rebuscado. Obviamente con el tiempo se vuelve tedioso porque es muy largo, sin embargo, es de los que más he aprendido.
Te lo recomiendo ampliamente.
- 3.75/5 ⭐
- 27:36 ⌛
Te lo recomiendo ampliamente.
- 3.75/5 ⭐
- 27:36 ⌛
April 8, 2010
Mill is the original BA
ECON 314: John Stuart Mill: Political Economy and Social Philosophy
ECON 314: John Stuart Mill: Political Economy and Social Philosophy
October 9, 2011
Essential, although I think I like reading Bastiat more (both in French and in translation).
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