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Introduction
The best Introduction to the Principles of Political Economy of John Stuart Mill is Mill's own account of his economic studies. They began at the age of thirteen; when he was approaching the end of that unique educational process, enforced by the stern will of his father, which he has described in his Autobiography for the amazement and pity of subsequent generations.
“It was in 1819 that he took me through a complete course of political economy. His loved and intimate friend, Ricardo, had shortly before published the book which formed so great an epoch in political economy; a book which would never have been published or written, but for the entreaty and strong encouragement of my father.... No didactic treatise embodying its doctrines, in a manner fit for learners, had yet appeared. My father, therefore, commenced instructing me in the science by a sort of lectures, which he delivered to me in our walks. He expounded each day a portion of the subject, and I gave him next day a written account of it, which he made me rewrite over and over again until it was clear, precise, and tolerably complete. In this manner I went through the whole extent of the science; and the written outline of it which resulted from my daily compte rendu served him afterwards as notes from which to write his Elements of Political Economy. After this I read Ricardo, giving an account daily of what I read, and discussing... the collateral points which offered themselves in our progress.
“On Money, as the most intricate part of the subject, he made me read in the same manner Ricardo's admirable pamphlets, written during... the Bullion controversy; to these succeeded Adam Smith; and... it was one of my father's main objects to make me apply to Smith's more superficial view of political economy the superior lights of Ricardo, and detect what was Edition: current; Page: [vi] fallacious in Smith's arguments, or erroneous in any of his conclusions. Such a mode of instruction was excellently calculated to form a thinker; but it required to be worked by a thinker, as close and vigorous as my father. The path was a thorny one, even to him, and I am sure it was so to me, notwithstanding the strong interest I took in the subject. He was often, and much beyond reason, provoked by my failures in cases where success could not have been expected; but in the main his method was right, and it succeeded.”1
After a year in France, during which he “passed some time in the house of M. Say, the eminent political economist, who was a friend and correspondent” of the elder Mill,2 he went a second time over the same ground under the same guidance.
“When I returned (1821), my father was just finishing for the press his Elements of Political Economy, and he made me perform an exercise on the manuscript, which Mr. Bentham practised on all his own writings, making what he called ‘marginal contents’; a short abstract of every paragraph, to enable the writer more easily to judge of, and improve, the order of the ideas, and the general character of the exposition.”3
This was soon after reaching the age of fifteen. Four years later, in 1825, he made a systematic survey of the field for the third time. Though he was still only nineteen, he was now fully embarked upon his career as an economist, and was contributing articles on currency and commercial policy to the Westminster Review. Yet when, in that year, John Mill and a number of his youthful friends entered upon “the joint study of several of the branches of science” which they “wished to be masters of,” it was once more the work of the elder Mill which served as the basis.
“We assembled to the number of a dozen or more. Mr. Grote lent a room of his house in Threadneedle Street.... We met two mornings in every week, from half-past eight till ten, at which hour most of us were called off to our daily occupations. Our first subject was Political Economy. We chose some systematic treatise as our text-book; my father's Elements being our first choice. One of us read a chapter, or some smaller portion of the book. The discussion was then opened, and anyone who had an objection, or other remark to make, made Edition: current; Page: [vii] it. Our rule was to discuss thoroughly every point raised... until all who took part were satisfied with the conclusion they had individually arrived at; and to follow up every topic... which the chapter or the conversation suggested, never leaving it until we had untied every knot.”1
The figure of James Mill has been singularly obscured by the more attractive personality of his son. It may possibly be open to discussion how far James Mill was a trustworthy interpreter of Ricardo. But what cannot be doubted is the extent and penetrating character of his influence. The evidence of his son may certainly be relied upon:
“My father's writings and conversation drew round him a number of young men who had already imbibed, or who imbibed from him, a greater or smaller portion of his very decided political and philosophical opinions. The notion that Bentham was surrounded by a band of disciples who received their opinions from his lips, is a fable.... The influence which Bentham exercised was by his writings. Through them he has produced, and is producing, effects on the condition of mankind, wider and deeper than any which can be attributed to my father. He is a much greater name in history. But my father exercised a far greater personal ascendency. He was sought for the vigour and instructiveness of his conversation, and did use it largely as an instrument for the diffusion of his opinions....
“It was my father's opinions which gave the distinguishing character to the Benthamic or utilitarian propagandism of that time. They fell singly, scattered from him, in many directions, but they flowed from him in a continued stream principally in three channels. One was through me, the only mind directly formed by his instructions, and through whom considerable influence was exercised over various young men, who became, in their turn, propagandists. A second was through some of the Cambridge contemporaries of Charles Austin... some of the more considerable of whom afterwards sought my father's acquaintance.... The third channel was that of a younger generation of Cambridge undergraduates, contemporary... with Eyton Tooke, who were... introduced by him to my father....
“Though none of us, probably, agreed in every respect with Edition: current; Page: [viii] my father, his opinions, as I said before, were the principal element which gave its colour and character to the little group of young men who were the first propagators of what was afterwards called ‘Philosophic Radicalism.’ Their mode of thinking was characterized by... a combination of Bentham's point of view with that of the modern political economy, and with the Hartleian metaphysics. Malthus's population principle was quite as much a banner, and point of union among us, as any opinion specially belonging to Bentham. This great doctrine... we took up with ardent zeal,... as indicating the sole means of realizing the improvability of human affairs by securing full employment at high wages to the whole labouring population through a voluntary restriction of the increase of their numbers.”1
What was true of James Mill's personal influence on the entire circle of young Philosophic Radicals and over the whole range of their beliefs, was peculiarly true of his influence on the economic opinions of his son. The impress was deep and indelible. For good or for ill,—and it is not the purpose of this Introduction to interpose between the reader and the author and to assign either praise or blame—John Mill's economics remained those of his father down to the end of his life. His economics, that is to say, in the sense of what he himself afterwards described as “the theoretic principles,”2 or again as the “abstract and purely scientific”3 element in his writings: the whole, in fact, of the doctrine of Distribution and Exchange in its application to competitive conditions. After reading through the first three Books of the son's Principles of 1848, one has but to turn to the father's Elements of 1821 to realize that, though on outlying portions of the field (like the subject of Currency) John Mill had benefited by the discussions that had been going on during the interval, the main conclusions, as well as the methods of reasoning, are the same in the two treatises. How much of “the deposit” of doctrine,—if we may borrow a theological term,—came originally from Ricardo, how much from Malthus, from Adam Smith, from the French Physiocrats of the eighteenth century, and from the general movement of philosophical and political thought, is a subject on which much has been written, but on which we cannot now enter. Edition: current; Page: [ix] It is sufficient for our purpose to make this one point clear: that it was through James Mill, and, as shaped by James Mill, that it chiefly reached his son.
Yet John Mill certainly thought, when he was writing his book in 1848, and still more evidently when he wrote his Autobiography in 1861, that there was a wide difference between himself and those whom he calls, in language curiously anticipating that of our own day, “the political economists of the old school,”1 or “the common run of political economists.”2 And accordingly it is essential to observe that this difference consisted, not in any abandonment of the “abstract science,” but in the placing of it in a new setting. In substance he kept it intact; but he sought to surround it, so to speak, with a new environment.
To make this clear, we must return to Mill's mental history. Though eminently retentive of early impressions, he was also, in a very real sense, singularly open-minded; and the work of his life cannot be better described than in a happy phrase of his own coinage: it was a constant effort to “build the bridges and clear the paths” which should connect new truths with his “general system of thought,”3 i.e. with his Benthamite and Ricardian starting point. Of the influences, later than that of his father, which coloured his thoughts, three must be singled out for notice. They may briefly be summed up—though each name represents much besides—as those of Coleridge, of Comte, and of his wife.
In Coleridge and in the Coleridgians—such as Maurice and Sterling, whose acquaintance he made in 1828—he recognised the English exponents of “the European reaction against the philosophy of the eighteenth century,”4 and its Benthamite outcome. That reaction, he came to believe, was in large measure justifiable; and in two celebrated articles in the London and Westminster Review in 1838 and 18405 he sought to expound Benthamism and Coleridgism as complementary bodies of truth. He did not, indeed, extend this appreciation to Coleridge's economic utterances, and compounded for the respect he paid to his political philosophy by the vivacity with which he condemned his incursions into the more sacred field:
Edition: current; Page: [x]“In political economy he writes like an arrant driveller, and it would have been well for his reputation had he never meddled with the subject. But this department of knowledge can now take care of itself.”1
What Coleridge helped him to realise was, firstly, the historical point of view in its relation to politics, and secondly, and as a corollary, the inadequacy of laissez faire.
“The Germano-Coleridgian school produced... a philosophy of society in the only form in which it is yet possible, that of a philosophy of history.”2
And again
“That series of great writers and thinkers, from Herder to Michelet, by whom history... has been made a science of causes and effects,... by making the events of the past have a meaning and an intelligible place in the gradual evolution of humanity, have afforded the only means of predicting and guiding the future.”3
Similarly, after pointing out that Coleridge was
“at issue with the let alone doctrine, or the theory that governments can do no better than to do nothing,”
he remarks that it was
“a doctrine generated by the manifest selfishness and incompetence of modern European governments, but of which, as a general theory, we may now be permitted to say that one-half of it is true and the other half false.”4
It is not wonderful that the Bentham and Coleridge articles should “make a temporary alienation between Mill and his old associates and plant in their minds a painful misgiving as to his adhering to their principles,” as we learn from Professor Bain, who became an intimate friend of Mill shortly afterwards.5 As early as 1837 Mrs. Grote had been “quite persuaded that the [London and Westminster] Review would cease to be an engine of propagating sound and sane doctrines on Ethics and Politics under J. M.”6 But it is a little surprising, perhaps, that by 1841 Mill was ready to describe himself in the privacy of correspondence as having definitely withdrawn from the Benthamite school “in Edition: current; Page: [xi] which I was brought up and in which I might almost say I was born.”1
The letter was that in which Mill introduced himself to Comte, the first of a remarkable series which has only recently seen the light. By the time he wrote it, the influence of Coleridge had been powerfully supplemented by that of the French philosopher. Indeed, with that tendency to run into extremes which was seldom quite absent from him, Mill even declared, in addressing Comte, that it was the impression produced as far back as 1828 by the reading of a very early work by Comte which had “more than any other cause determined his definite withdrawal from the Benthamite school.” In his eager enthusiasm, he probably ante-dated Comte's influence. It seems to have been the first two volumes of the Positive Philosophy (of which the second appeared in 1837) that first interested Mill at all deeply in Comte's views; though, as we shall notice later, he had long been familiar with ideas akin to them in the writings of the St. Simonians.
However this may have been, it is abundantly clear that during the years 1841–3, when he was engaged in completing his great treatise on Logic, Mill was fascinated by Comte's general system, as set forth in the Positive Philosophy. In October, 1841, he wrote to Bain that he thought Comte's book, in spite of “some mistakes,” was “very near the grandest work of this age.”2 In November, in the letter to Comte already quoted, he took the initiative and wrote to the French philosopher to express his “sympathy and adhesion.” “I have read and re-read your Cours with a veritable intellectual passion,” he told him.
“I had indeed already entered into a line of thought somewhat similar to your own; but there were many things of the first importance which I had still to learn from you and I hope to show you, by and by, that I have really learnt them. There are some questions of a secondary order on which my opinions are not in accord with yours; some day perhaps this difference will disappear; I am not flattering myself when I believe that I have no ill-founded opinion so deeply rooted as to resist a thorough discussion,”
such as he hoped to engage Comte in. It was for this reason Edition: current; Page: [xii] that he ventured to put himself into communication with “that one of the great minds of our time which I regard with most esteem and admiration,” and believed that their correspondence might be “of immense value” for him. And in the first edition of his Logic, which appeared in 1843, he did not scruple to speak of Comte as “the greatest living authority on scientific methods in general.”1 Into the causes of this enthusiasm it is unnecessary to enter. Mill was tired of Benthamism: a masterly attempt to construct a philosophy of Science and of Humanity, which paid attention at the same time to historical evolution and to the achievements of modern physical and biological science (a side on which the Benthamite school had always been weak), and yet professed to be “positive,” i.e. neither theological nor metaphysical—such an attempt had, for the time, an overmastering charm for him. The effect of his reading of Comte on his conception of the logic of the physical and biological sciences falls outside our present range. What we have now to notice are Comte's views with regard to political economy. They cannot but have shaken, at any rate for a time, Mill's confidence that what he had learnt from his father could “take care of itself.”
Comte's ultimate object was, of course, the creation of “the Social Science” or “Sociology.” To-day there are almost as many different conceptions of the scope of “sociology” as there are eminent sociologists; so that it is perhaps worth while to add that Comte's ideal was a body of doctrine which should cover the life of human society in all its aspects. This science could be created, he held, only by the “positive” method—by the employment of the Art of Observation, in its three modes, Direct Observation or Observation proper, Experiment, and Comparison.2 Each of these modes of Observation would necessarily assume a character appropriate to the field of enquiry. As to Observation proper: while the metaphysical school of the eighteenth century had grossly exaggerated its difficulties, on the other hand there was no utility in mere collections of disconnected facts. Some sort of provisional hypothesis or theory or anticipation was necessary, if only to give direction to our enquiries. As to Experiment: direct Experiment, as in the physical sciences, was evidently impracticable, but its place could be taken by a consideration of “pathological” states of society such as might fairly be called “indirect” Experiment. Edition: current; Page: [xiii] And as to Comparison: there was a form of this procedure, viz. the comparison of “the different consecutive conditions of humanity,”—“the historical method” in the true sense of the term,—so fruitful in sociological enquiry as to constitute the distinguishing characteristic of this particular branch of science.
To this social science of his vision Comte applied the distinction he had already applied to the preliminary sciences, between the static and the dynamic.1 The difference between “the fundamental study of the condition of existence of society” and “the study of the laws of its continuous movement” was so clear, in his judgment, that he could foresee the ultimate division of Sociology into Social Statics and Social Dynamics. But to attach, in the formative stage of the science, any very great importance to this convenient distribution of the subject matter would, he thought, be positively dangerous, since it would tend to obscure “the indispensable and permanent combination of the two points of view.”
Comte's attitude towards political economy, as it was then taught was the natural result of his views as to the proper method of creating a science of society.2 As part of the general movement of revolutionary thought, it had had a “provisional” function, and had rendered a transitory service in discrediting the industrial policy of the ancien régime after that policy had become a mere hindrance to progress. It had prepared the way for a sound historical analysis by calling attention to the importance of the economic side of life. Its practical utility, however, was by this time a thing of the past and it was now an actual obstacle to social advance. Like the rest of the revolutionary philosophy, it now tended to prolong and systematise social anarchy. It led people to regard the absence of all regulating intervention in economic affairs on the part of society as a universal dogma; and it met all the difficulties arising out of modern industrial changes, such as “the famous and immense economic question of the effect of machinery,” with “the sterile aphorism of absolute industrial liberty.” And these practical consequences were but, in Comte's judgment, the consequences of its underlying scientific defects. From this sweeping condemnation Comte excepts Adam Smith, from whose example, according to him, the creators of the contemporary political economy had completely departed. But of the contemporary political economy he declares that it was fundamentally metaphysical: its creators had no real Edition: current; Page: [xiv] understanding of the necessity and character of scientific observation. Its “inanity” was proved by the absence in economic literature of the real tests of all truly scientific conceptions, viz. continuity and fecundity. Its sterile disputes on the meaning of terms such as value, and utility, and production were like the worst debates of medieval schoolmen. And the very isolation of economics from other fields of social enquiry which economists had sought to justify was its decisive condemnation.
“By the nature of the subject, in social studies the various general aspects are, quite necessarily, mutually inter-connected and inseparable in reason, so that the one aspect can only be adequately explained by the consideration of the others. It is certain that the economic and industrial analysis of society cannot be positively accomplished, if one leaves out all intellectual, moral and political analysis: and therefore this irrational separation furnishes an evident indication of the essentially metaphysical nature of the doctrines based upon it.”
Now Mill was immensely attracted, and for the time possessed, by Comte's general conception of the Social Science or Sociology; and in the concluding chapters of his Logic he took this over bodily, together with Comte's distinction between Social Statics and Social Dynamics.1 Just as Comte rejected the “metaphysical” political philosophy of France, so Mill made clear his opinion of the inadequacy of “the interest-philosophy of the Bentham school” in its application to “the general theory of government.” That philosophy, as he explained, was “founded on one comprehensive premiss: namely, that men's actions are always determined by their interests.” But as this premiss was not true, what were really “the mere polemics of the day,” and useful enough in that capacity, were quite erroneously “presented as the scientific treatment of a great question.” And quite in the spirit of Comte he added:
“These philosophers would have applied and did apply their principles with innumerable allowances. But it is not allowances that are wanted. There is little chance of making due amends in the superstructure of a theory for the want of sufficient breadth in its foundations. It is unphilosophical to construct a science out of a few of the agencies by which the phenomena are determined, and leave the rest to the routine of practice or the sagacity of conjecture. We ought either not to pretend to scientific forms or Edition: current; Page: [xv] we ought to study all the determining agencies equally, and endeavour, as far as can be done, to include all of them within the pale of the science; else we shall infallibly bestow a disproportionate attention upon those which our theory takes into account, while we misestimate the rest and probably underrate their importance.”1
How, then, about political economy, which Comte had criticised in precisely the same spirit ? Mill was not at all disposed to throw overboard the Ricardian economics received from his father. In the first place, he maintained that a distinction could be drawn between the “general Science of Society” or “general Sociology” and “the separate compartments of the science, each of which asserts its conclusions only conditionally, subject to the paramount control of the laws of the general science.” The ground for this contention he sets forth thus:
“Notwithstanding the universal consensus of the social phenomena, whereby nothing which takes place in any part of the operations of society is without its share of influence on every other part; and notwithstanding the paramount ascendency which the general state of civilisation and social progress in any given society must hence exercise over the partial and subordinate phenomena; it is not the less true that different species of social facts are in the main dependent, immediately and in the first resort, on different kinds of causes; and therefore not only may with advantage, but must, be studied apart....
“There is, for example, one large class of social phenomena of which the immediately determining causes are principally those which act through the desire of wealth; and in which the psychological law mainly concerned is the familiar one that a greater gain is preferred to the smaller... A science may be thus constructed which has received the name of Political Economy.”2
In spite of the “for example” with which political economy is introduced, it is clear that the generalisation was formulated for the sake of that one subject, subject to a qualification to be shortly mentioned.
“I would not here undertake to decide what other hypothetical or abstract sciences, similar to Political Economy, may admit of being carved out of the general body of the social science; Edition: current; Page: [xvi] what other portions of the social phenomena are in a sufficiently close and complete dependence, in the first resort, on a particular class of causes, to make it convenient to create a preliminary science of those causes; postponing the consideration of the causes which act through them or in concurrence with them to a later period of the enquiry.”1
But Mill was not content with this “departmental” view, taken by itself: he proceeded to build two further “bridges” between his new and his old opinions. In an essay, written for the most part in 1830, and published in the London and Westminster Review in 1836,2 Mill had laid down with the utmost stringency that the only method appropriate to political economy, i.e. to the Ricardian economics, was the a priori or deductive one. Between this and the method of Observation recommended by Comte it might have been thought that there was a sufficiently wide gulf. But Mill now proceeded to describe “the historical method,”—whereby “general” Sociology was to be built up according to Comte and himself alike,—in such terms as permitted him to designate even that a “Deductive Method,” though indeed an “Inverse Deductive Method.” Thus the evident contrast in method was softened down into the difference simply between “direct” and “inverse” deduction.3
The other bridge was to be a new science, or couple of sciences, still to be created. Mill explained at length in his Logic that there was need of what he denominated “Ethology” or a Science of Character.4 Built upon this, there ought to be a Political Ethology, or “a theory of the causes which determine the type of character belonging to a people or to an age.”5 The bearing of Political Ethology on Political Economy is thus summarily indicated:
“The most imperfect part of those branches of social enquiry which have been cultivated as separate sciences is the theory of the manner in which their conclusions are affected by ethological considerations. The omission is no defect in them as abstract or hypothetical sciences, but it vitiates them in their practical application as branches of a comprehensive social science. In political economy, for instance, empirical laws of human nature are tacitly assumed by English thinkers, which are calculated only for Great Britain and the United States. Among other Edition: current; Page: [xvii] things an intensity of competition is constantly supposed, which, as a general mercantile fact, exists in no country in the world except those two. An English political economist... has seldom learned that it is possible that men, in conducting the business of selling their goods over the counter, should care more about their ease or their vanity than about their pecuniary gain.”1
In spite once more of the introductory “for instance,” it is clear that it is only political economy that Mill has in his mind; and it is primarily to remedy its “imperfections” that Political Ethology is to be created. Political Ethology, like Ethology itself, Mill conceived of as directly deductive in its character.
It is no part of my task to criticise either Mill or Comte: all I am seeking to do is to make clear the intellectual relations between them. And whether, in particular, a Science of National Character is possible, and, if possible, on what sort of lines it may be constructed, I “would not here undertake to decide.” I go on now to the purely biographical facts,—which need the more emphasis because they have dropt altogether out of the Autobiography,—that Mill took this project of creating an Ethology very seriously; that “with parental fondness he cherished this subject for a considerable time”;2 and that he dropt it because he could not make anything of it.3
It was in this mood of recoil that he began to think of composing “a special treatise on political economy, analogous to that of Adam Smith.” Writing to Comte in April, 1844, he remarked that for him “this would only be the work of a few months.”4 Some particulars as to the actual period of composition are furnished by the Autobiography.5
“The Political Economy was far more rapidly executed than the Logic, or indeed than anything of importance which I had previously written. It was commenced in the autumn of 1845, and was ready for the press before the end of 1847. In this period of little more than two years there was an interval of six months during which the work was laid aside, while I was writing articles in the Morning Chronicle... urging the formation of peasant properties on the waste lands of Edition: current; Page: [xviii] Ireland. This was during the period of the Famine, the winter of 1846–47.”
After what we have seen of his mental history, it is easy to anticipate that Mill would no longer be satisfied with the kind of treatment that economics had received at the hands of his father, or in subsequent years of McCulloch or Senior. The “principles” of abstract political economy, as he had inherited them, he entertained no sort of doubt about. As has been well said, within that field “Mill speaks as one expounding an established system.”1 As late as 1844 he had reprinted in the thin volume entitled Some Unsettled Questions of Political Economy his old essay on Method, and had expressed his complete satisfaction, within its range, with the science as it was to be found “in the writings of its best teachers.”2 But he was bound to put this science into some sort of relation with that general Social Science or Philosophy, of which he had gained, or solidified, his notion from the reading of Comte. Accordingly, he gave to his book the title “Principles of Political Economy, with some of their Applications to Social Philosophy.” And he himself spoke of the work in later years in the following terms:
“It was, from the first, continually cited and referred to as an authority, because it was 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; a branch of Social Philosophy, so interlinked with all the other branches, that its conclusions, even in its own peculiar province, are only true conditionally, subject to interference and counteraction from causes not directed within its scope: while to the character of a practical guide it has no pretension, apart from other classes of considerations.”3
It must be left to the reader to judge how far this “application” was successful,—how far, indeed, the nature of the abstract science lent itself to application. But the character of the undertaking will be rendered clearer by noticing certain of its characteristics.
Ethology, as we have seen, had receded from Mill's mind. But the thoughts which had given rise to the project have left their traces in the chapter on “Competition and Custom.”4 Here Edition: current; Page: [xix] Custom is placed side by side with Competition as the other agency determining the division of produce under the rule of private property. It is pointed out not only that Competition is a comparatively modern phenomenon, so that, until recently, rents, for instance, were ruled by custom, but also that “even in the present state of intense competition” its influence is not so absolute as is often supposed: there are very often two prices in the same market. He asserts that
“political economists generally, and English political economists above others, are accustomed to lay almost exclusive stress upon the first of these agencies; to exaggerate the effect of competition, and take into little account the other and conflicting principle. They are apt to express themselves as if they thought that competition actually does, in all cases, whatever it can be shown to be the tendency of competition to do.”
The language in which he goes on to formulate an explanation and relative justification of their practice is of the utmost significance.
“This is partly intelligible, if we consider that only through the principle of competition has political economy any pretension to the character of a science. So far as rents, profits, wages, prices, are determined by competition, laws may be assigned for them. Assume competition to be their exclusive regulator, and principles of broad generality and scientific precision may be laid down, according to which they will be regulated. The political economist justly deems this his proper business: and as an abstract or hypothetical science, political economy cannot be required to do anything more.”
But, as the ascription to Competition of an unlimited sway is, as a matter of fact, “a great misconception of the actual cause of human affairs.”
“to escape error, we ought, in applying the conclusions of political economy to the actual affairs of life, to consider not only what will happen supposing the maximum of competition, but how far the result will be affected if competition falls short of the maximum.”
After this it might perhaps be expected that Mill would himself embark on a quantitative estimate of the extent of the divergence of the “laws” of “the science” from the facts of life. But certainly no such attempt is made within the covers of his treatise—and he makes it clear that the application of his warning is to be left to the reader:
Edition: current; Page: [xx]“These observations must be received as a general correction, to be applied whenever relevant, whether expressly mentioned or not, to the conclusions contained in the subsequent portions of this treatise. Our reasonings must, in general, proceed as if the known and natural effects of competition were actually produced by it.”
To discuss the conception of “science” and its relation to “law” which underlies such passages; to compare it with that implied by Mill elsewhere; or to enter into the question whether a systematic ascertainment and grouping of actual facts, guided by the ordinary rules of evidence, might not deserve to be called “scientific,” even if it did not result in “law”—would take us too far afield. By confining, as he did, the term “science” to the abstract argument, and by leaving the determination of its relation to actual conditions to what he himself in another connexion calls “the sagacity of conjecture,” Mill undoubtedly exercised a profound influence on the subsequent character of economic writing in England.
Another result, in the Political Economy, of the preceding phase of Mill's social speculation, is to be found in the distinction between Statics and Dynamics which he now introduces into economics itself.1 In the Logic, as we have noticed, this distinction was applied, following Comte, only to the general Sociology which was to be created by “the historical method.” But the general Sociology being indefinitely postponed, because the Ethology which in Mill's judgment was its necessary foundation was not forthcoming, it seemed proper to employ the distinction in the “preliminary” science, and to add in the Political Economy itself a “theory of motion” to the “theory of equilibrium.” Thus employed, however, the distinction becomes something very different from what Comte had intended. Almost the whole of Mill's Book IV on the Progress of Society consists of a highly theoretical and abstract argument as to the effect on Prices, Rents, Profits, and Wages, within a competitive society of the present type, of the progress of population, capital, and the arts of production, in various combinations. Much of the substance of these arguments was derived from Ricardo or his school; and the whole discussion, even when Mill takes an independent line of his own, moves within the Ricardian atmosphere. This statement of fact does not necessarily imply condemnation. It is made only to clear Mill's use of Edition: current; Page: [xxi] the terms “static” and “dynamic” in his Political Economy from the ambiguity which his own previous use of the term in relation to general Sociology might cause to cling to it. And we must except the last chapter of the Book, dealing with “the Probable Futurity of the Working Classes,” which is a prophecy of the ultimate victory of Co-operation, and has little or no connexion with what goes before.
And now we come finally to what Mill himself regarded as the distinguishing characteristic of his work; and with it we reach the third of the influences that affected the movement of his mind after his early education. I refer, of course, to the distinction which Mill drew between the laws of the Production and those of the Distribution of wealth.1 With the formal statement in the Principles may be compared the passage in the Autobiography,2 where Mill gives an account of the influence of Mrs. Taylor (who became his wife in April, 1851):
“The purely scientific part of the Political Economy I did not learn from her; but it was chiefly her influence that gave to the book that general tone by which it is distinguished from all previous expositions of political economy that had any pretension to being scientific.... This tone consisted chiefly in making the proper distinction between the laws of the Production of wealth—which are real laws of nature, dependent on the properties of objects—and the modes of its Distribution, which, subject to certain conditions, depend on human will. The common run of political economists confuse these together, under the designation of economic laws, which they deem incapable of being defeated or modified by human effort; ascribing the same necessity to things dependent on the unchangeable conditions of our earthly existence, and to those which, being but the necessary consequences of particular social arrangements, are merely co-extensive with these: given certain institutions and customs, wages, profits, and rent will be determined by certain causes; but this class of political economists drop the indispensable presupposition, and argue that these causes must, by an inherent necessity, against which no human means can avail, determine the shares which fall, in the division of the produce, to labourers, capitalists, and landlords. Edition: current; Page: [xxii] The Principles of Political Economy yielded to none of its predecessors in aiming at the scientific appreciation of the action of these causes, under the conditions which they presuppose; but it set the example of not treating those conditions as final. The economic generalizations which depend not on necessities of nature but on those combined with the existing arrangements of society, it deals with only as provisional, and as liable to be much altered by the progress of social improvement. I had indeed partially learnt this view of things from the thoughts awakened in me by the speculations of the St. Simonians; but it was made a living principle pervading and animating the book by my wife's promptings.”
It would be interesting, had I space, to try to distinguish the various currents of thought which converged at this time upon Mill and his wife. They were both people of warm hearts and generous sympathies; and the one most important fact about Mill's Principles, besides its being the work of the son of his father, is that it was published in the great year 1848. Mill's personal friendship with Carlyle and Maurice in England, his keen interest for years in St. Simonism and all the other early phases of French “socialism,” sufficiently disposed him, if he wore the old political economy at all, to wear it “with a difference.” I do not propose to add one more to the numerous arguments as to the validity of the distinction between the laws of Production and the modes of Distribution. But I should like to comment on one word which was constantly in Mill's mouth in this connexion—and that is the word “provisional”; a word which, according to his own account, he had picked up from Austin.1 He used it twice in the letter to Comte announcing his intention to write an economic treatise:
“I know your opinion of the political economy of the day: I have a better opinion of it than you have; but, if I write anything on the subject, it will be never losing out of sight the purely provisional character of all its concrete conclusions; and I shall take special pains to separate the general laws of Production; which are necessarily common to all industrial societies; from the principles of the Distribution and Exchange of wealth, which necessarily presuppose a particular state of society, without implying that this state should, or even can, indefinitely continue.... I believe that such a treatise might have, especially, in England, great provisional utility, and that Edition: current; Page: [xxiii] it will greatly help the positive spirit to make its way into political discussions.”1
Then followed a curious interchange of letters. Comte replied politely that he was glad to learn of Mill's project, and that he did not doubt that it would be very useful, by contributing to the spread of the positive spirit.
“Although an economic analysis, properly so called, ought not, in my opinion, to be finally conceived of or undertaken apart from the general body of sociological analysis, both static and dynamic, yet I have never refused to recognise the provisional efficacy of this kind of present-day metaphysics.”2
Mill wrote in return that he was pleased to get Comte's approbation, since he was afraid Comte might have thought his project “essentially anti-scientific”;
“and so it would really be if I did not take the greatest possible care to establish the purely provisional character of any doctrine on industrial phenomena which leaves out of sight the general movement of humanity.”3
Comte once more replied that he thought Mill's project a happy one.
“When regarded as having the purely preliminary purpose and provisional office that are assigned to it by a general historical view, political economy loses its principal dangers and may become very useful.”4
It is sufficiently apparent that the correspondents are at cross purposes. By “provisional” Comte means until a positive Sociology can be created; Mill means so long as the present system of private property lasts. Until the present social system should be fundamentally changed, Mill clearly regarded the Ricardian economics as so far applicable to existing conditions as to call for no substantial revision in method or conclusions. And by this attitude,—by deferring any breach with Ricardian political economy to a time comparable in the minds of men less ardent than himself to the Greek Kalends,—he certainly strengthened its hold over many of his readers.
Since Mill's time there has been a vast amount of economic Edition: current; Page: [xxiv] writing. The German Historical School has come into existence, and has reached a high point of achievement in the treatise of Gustav Schmoller. On the other hand, other bodies of theory have made their appearance, quite as abstract as the Ricardian which they reject: and here the names of Jevons and Menger stand out above the rest. An equally abstract Socialist doctrine, the creation largely of Marx, has meantime waxed and waned. But Mill's Principles will long continue to be read and will deserve to be read. It represents an interesting phase in the intellectual history of the nineteenth century. But its merit is more than historical. It is still one of the most stimulating books that can be put into the hands of students, if they are cautioned at the outset against regarding it as necessarily final in all its parts. On some topics there is still, in my opinion, nothing better in the English language; on others Mill's treatment is still the best point of departure for further enquiry. Whatever its faults, few or many, it is a great treatise, conceived and executed on a lofty plane, and breathing a noble spirit. Mill—especially when we penetrate beneath the magisterial flow of his final text, as we are now enabled to do by the record in this edition of his varying moods—is a very human personality. The reader of to-day is not likely to come to him in too receptive a spirit; and for a long time there will be much that even those who most differ from him will still be able to learn from his pages.
It remains now to describe the character of the present edition. The text is that of the seventh edition (1871), the last revised by Mill; and it is hoped that the occasional but misleading misprints which had crept into it have now all been corrected. It has not seemed desirable to add anything in the way of editorial comment. But in the one case where Mill himself publicly abandoned an important doctrine of his Principles,—that of the Wages Fund—it has seemed proper to give an excerpt from his later writings in the Appendix. And the same plan has been pursued with regard to Mill's latest views on Socialism. I have also appended a series of references to the chief writers who have dealt with the main topics of Mill's treatise, especially those of a controversial nature, since his time. That I have altogether escaped the influence of personal bias in this selection I can hardly hope. If the references under any head should seem scanty or one-sided, it should be borne Edition: current; Page: [xxv] in mind that they are intended to include only those outstanding works whose value is generally recognized by all serious economists, and that the choice is limited in the main to the books that are easily accessible to the English-reading public.
The characteristic feature, however, of this edition is the indication in the notes of all the significant changes or additions made by Mill in the course of the six editions revised by himself. The dates of these editions, after the first in 1848, were 1849, 1852, 1857, 1862, 1865, and 1871. In every one of these Mill made noteworthy alterations. Rewriting, or the addition of whole sections or paragraphs, takes place chiefly in the earlier editions;. but even in the last, that of 1871, the “few verbal corrections” of which Mill speaks in his Preface were sufficient, in more passages than one, to give a different complexion to the argument. My attention was called to this interesting feature in the history of the Principles by Miss M. A. Ellis' article in the Economic Journal for June, 1906; and it seemed to me that the interest of students would be aroused by a record of the variations. Accordingly I have compared the first and the seventh edition page by page and paragraph by paragraph; and where any striking divergence has shown itself, I have looked up the earlier editions and ascertained the date of its first appearance. This has proved an unexpectedly toilsome business, even with the assistance of the notes that Miss Ellis has been good enough to put at my disposal; and I cannot feel quite sure that nothing has escaped my eye that ought to be noted. Mere changes of language for the sake of improving the style I have disregarded, though I have erred rather in the direction of including than of excluding every apparent indication of change of opinion or even of mood. All editorial notes are placed within square brackets; and I have added, and marked in the same way, the dates of all Mill's own footnotes subsequent to the first edition. As Mill's revision of the text, though considerable, was rather fragmentary, his time-references are occasionally a little bewildering: a “now” in his text may mean any time between 1848 and 1871. In every case where it seemed necessary to ascertain and to remind the reader of the time when a particular sentence was written, I have inserted the date in the text in square brackets.
Mill's punctuation is not quite so preponderatingly grammatical as punctuation has since become. As in all the books of the middle of last century, it is also largely rhetorical. The printers had already, during the course of six editions, occasionally used their Edition: current; Page: [xxvi] discretion and dropt out a misleading comma. I have ventured to carry the process just a little further, and to strike out a few rhetorical commas that seemed to interfere with the easy understanding of the text. The Index has been prepared by Miss M. A. Ellis.
I must express my thanks to the proprietors of the Fortnightly Review for allowing me to make use of Mill's posthumous articles, and to Mr. Hugh Elliot for permitting me to refer to the Letters of Mill which he is now editing.
Preface [1848]
The appearance of a treatise like the present, on a subject on which so many works of merit already exist, may be thought to require some explanation.
It might, perhaps, be sufficient to say, that no existing treatise on Political Economy contains the latest improvements which have been made in the theory of the subject. Many new ideas, and new applications of ideas, have been elicited by the discussions of the last few years, especially those on Currency, on Foreign Trade, and on the important topics connected more or less intimately with Colonization: and there seems reason that the field of Political Economy should be re-surveyed in its whole extent, if only for the purpose of incorporating the results of these speculations, and bringing them into harmony with the principles previously laid down by the best thinkers on the subject.
To supply, however, these deficiencies in former treatises bearing a similar title, is not the sole, or even the principal object which the author has in view. The design of the book is different from that of any treatise on Political Economy which has been produced in England since the work of Adam Smith.
The most characteristic quality of that work, and the one in which it most differs from some others which have equalled or even surpassed it as mere expositions of the general principles of the subject, is that it invariably associates the principles with their applications. This of itself implies a much wider range of ideas and of topics than are included in Political Economy, considered as a branch of abstract speculation. For practical purposes, Political Economy is inseparably intertwined with many other branches of Social Philosophy. Except on matters of mere detail, there are perhaps no practical questions, even among those which Edition: current; Page: [xxviii] approach nearest to the character of purely economical questions, which admit of being decided on economical premises alone. And it is because Adam Smith never loses sight of this truth; because, in his applications of Political Economy, he perpetually appeals to other and often far larger considerations than pure Political Economy affords—that he gives that well-grounded feeling of command over the principles of the subject for purposes of practice, owing to which the Wealth of Nations, alone among treatises on Political Economy has not only been popular with general readers, but has impressed itself strongly on the minds of men of the world and of legislators.
It appears to the present writer that a work similar in its object and general conception to that of Adam Smith, but adapted to the more extended knowledge and improved ideas of the present age, is the kind of contribution which Political Economy at present requires. The Wealth of Nations is in many parts obsolete, and in all, imperfect. Political Economy, properly so called, has grown up almost from infancy since the time of Adam Smith; and the philosophy of society, from which practically that eminent thinker never separated his more peculiar theme, though still in a very early stage of its progress, has advanced many steps beyond the point at which he left it. No attempt, however, has yet been made to combine his practical mode of treating his subject with the increased knowledge since acquired of its theory, or to exhibit the economical phenomena of society in the relation in which they stand to the best social ideas of the present time, as he did, with such admirable success, in reference to the philosophy of his century.
Such is the idea which the writer of the present work has kept before him. To succeed even partially in realizing it, would be a sufficiently useful achievement, to induce him to incur willingly all the chances of failure. It is requisite, however, to add, that although his object is practical, and, as far as the nature of the subject admits, popular, he has not attempted to purchase either of those advantages by the sacrifice of strict scientific reasoning. Though he desires that his treatise should be more than a mere exposition of the abstract doctrines of Political Economy, he is also desirous that such an exposition should be found in it.1
Edition: current; Page: [xxix][Addition to the Preface in the Second Edition, 1849]
The additions and alterations in the present edition are generally of little moment; but the increased importance which the Socialist controversy has assumed since this work was written has made it desirable to enlarge the chapter which treats of it; the more so, as the objections therein stated to the specific schemes propounded by some Socialists have been erroneously understood as a general condemnation of all that is commonly included under that name. A full appreciation of Socialism, and of the questions which it raises, can only be advantageously attempted in a separate work.
Preface to the Third Edition [July, 1852]
The present edition has been revised throughout, and several chapters either materially added to or entirely re-cast. Among these may be mentioned that on the “Means of abolishing Cottier Tenantry,” the suggestions contained in which had reference exclusively to Ireland, and to Ireland in a condition which has been much modified by subsequent events. An addition has been made to the theory of International Values laid down in the eighteenth chapter of the Third Book.
The chapter on Property has been almost entirely re-written. I was far from intending that the statement which it contained of the objections to the best known Socialist schemes should be understood as a condemnation of Socialism, regarded as an ultimate result of human progress. The only objection to which any great importance will be found to be attached in the present edition is the unprepared state of mankind in general, and of the labouring classes in particular; their extreme unfitness at present for any order of things, which would make any considerable demand on either their intellect or their virtue. It appears to me that the great end of social improvement should be to fit mankind by cultivation for a state of society combining the greatest personal freedom with that just distribution of the fruits of labour which the present laws of property do not profess to aim at. Whether, when this state of mental and moral cultivation shall be attained, individual property in some form (though a form very remote from the present) or community of ownership in the instruments of production and Edition: current; Page: [xxx] a regulated division of the produce will afford the circumstances most favourable to happiness, and best calculated to bring human nature to its greatest perfection, is a question which must be left, as it safely may, to the people of that time to decide. Those of the present are not competent to decide it.
The chapter on the “Futurity of the Labouring Classes” has been enriched with the results of the experience afforded, since this work was first published, by the co-operative associations in France. That important experience shows that the time is ripe for a larger and more rapid extension of association among labourers than could have been successfully attempted before the calumniated democratic movements in Europe, which, though for the present put down by the pressure of brute force, have scattered widely the seeds of future improvement. I have endeavoured to designate more clearly the tendency of the social transformation, of which these associations are the initial step; and at the same time to disconnect the co-operative cause from the exaggerated or altogether mistaken declamations against competition, so largely indulged in by its supporters.
[Addition to the Preface in the Fourth Edition, 1857]
The present edition (the fourth) has been revised throughout, and some additional explanations inserted where they appeared to be necessary. The chapters to which most has been added are those on the Influence of Credit on Prices, and on the Regulation of a Convertible Paper Currency.
[Addition to the Preface in the Fifth Edition, 1862]
The present fifth edition has been revised throughout, and the facts, on several subjects, brought down to a later date than in the former editions. Additional arguments and illustrations have been inserted where they seemed necessary, but not in general at any considerable length.
[Addition to the Preface in the Sixth, Edition, 1865]
The present, like all previous editions, has been revised throughout, and additional explanations, or answers to new objections, have been inserted where they seemed necessary; but not, in Edition: current; Page: [xxxi] general, to any considerable length. The chapter in which the greatest addition has been made is that on the Rate of Interest; and for most of the new matter there introduced, as well as for many minor improvements, I am indebted to the suggestions and criticisms of my friend Professor Cairnes, one of the most scientific of living political economists.
[Addition to the Preface in “The People's Edition,” 1865]
The present edition is an exact transcript from the sixth, except that all extracts and most phrases in foreign languages have been translated into English, and a very small number of quotations, or parts of quotations, which appeared superfluous, have been struck out.1 A reprint of an old controversy with the Quarterly Review on the condition of landed property in France, which had been subjoined as an Appendix, has been dispensed with.2
Preface to the Seventh Edition [1871]∗
The present edition, with the exception of a few verbal corrections,3 corresponds exactly with the last Library Edition and with the People's Edition. Since the publication of these, there has been some instructive discussion on the theory of Demand and Supply, and on the influence of Strikes and Trades Unions on wages, by which additional light has been thrown on these subjects; but the results, in the author's opinion, are not yet ripe for incorporation in a general treatise on Political Economy.† For an analogous reason, all notice of the alteration made in the Land Laws of Ireland by the recent Act, is deferred until experience shall have had time to pronounce on the operation of that well-meant attempt to deal with the greatest practical evil in the economic institutions of that country.
CONTENTS
- Introduction . . . . . . . . . . . . . . V
- BOOK I
PRODUCTION- Chapter I. Of the Requisites of Production
- § 1. Requisites of production, what . . . . . . . . 22
- 2. The function of labour defined . . . . . . . . 23
- 3. Does nature contribute more to the efficacy of labour in some occupations than in others? . . . . . . . 25
- 4. Some natural agents limited, others practically unlimited, in quantity . . . . . . . . . . . . . . 26
- Chapter II. Of Labour as an Agent of Production
- § 1. Labour employed either directly about the thing produced, or in operations preparatory to its production . 29
- 2. Labour employed in producing subsistence for subsequent labour . . . . . . . . . . . . . . 31
- 3. — in producing materials . . . . . . . . . 33
- 4. — or implements . . . . . . . . . . . . 34
- 5. — in the protection of labour . . . . . . . . 36
- 6. — in the transport and distribution oi the produce . . 37
- 7. Labour which relates to hnman beings . . . . . . 39
- 8. Labour of invention and discovery . . . . . . . 40
- 9. Labour agricultural, manufacturing, and commercial . 42
- Edition: current; Page: [xxxiv]
Chapter III. Of Unproductive Labour
- § 1. Labour does not produce objects, but utilities . . . 44
- 2. — which are of three kinds . . . . . . . . . . . 45
- 3. Productive labour is that which produces utilities fixed and embodied in material objects . . . . . . . 47
- 4. All other labour, however useful, is classed as unproductive . . . . . . . . . . . . . . . 49
- 5. Productive and Unproductive Consumption . . . . 51
- 6. Labour for the supply of Productive Consumption, and labour for the supply of Unproductive Consumptiou . 52
- Chapter IV. Of Capital
- Chapter V. Fundamental Propositions respecting Capital
- § 1. Industry is limlted by Capital . . . . . . . . 63
- 2. — but does not always come up to that limit . . . 65
- 3. Increase of capital gives increased employment to labour, without assignable bounds . . . . . . . . 66
- 4. Capital is the result of saving . . . . . . . . 68
- 5. All capital is consumed . . . . . . . . . . 70
- 6. Capital is kept up, not by preservation, but by perpetual reproduction . . . . . . . . . . 73
- 7. Why countries recover rapidly from a state of devastation 74
- 8. Effects of defraying government expenditure by loans . 76
- 9. Demand for commodities is not demand for labour . . 79
- 10. Fallacy respecting Taxation . . . . . . . . . 88
- Chapter VI. Of Circulating and Fixed Capital
- Edition: current; Page: [xxxv]
Chapter VII. On what depends the degree of Productiveness of Productive Agents
- § 1. Land, labour, and capital, are of different productiveness at different times and places . . . . . . . . 101
- 2. Causes of superior produetiveness. Natural advantages . . . . . . . . . . . . . . . . 102
- 3. — greater energy of labour . . . . . . . . . 104
- 4. — superior skill and knowledge . . . . . . . 107
- 5. — superiority of intelligence and trustworthiness in the community generally . . . . . . . . . . 108
- 6. — superior security . . . . . . . . . . . 113
- Chapter VIII. Of Co-operation, or the Combination of Labour
- § 1. Combination of Labour a principal cause of superior productiveness . . . . . . . . . . . . 116
- 2. Effects of separation of employments analyzed . . . 118
- 3. Combination of labour between town and country . . 120
- 4. The higher degees of the division of labour . . . . 122
- 5. Analysis of its advantages . . . . . . . . . 124
- 6. Limitations of the division of labour . . . . . . 130
- Chapter IX. Of Production on a Large, and Production on a Small Scale
- § 1. Advantages of the large system of production in manufactures . . . . . . . . . . . . . . 132
- 2. Advantages and disadvantages of the joint-stock principle . . . . . . . . . . . . . . 137
- 3. Conditions necessary for the large system of production . . . . . . . . . . . . . . . . 142
- 4. Large and small farming compared . . . . . . 144
- Chapter X. Of the Law of the Increase of Labour
- Edition: current; Page: [xxxvi] Chapter XI. Of the Law of the Increase of Capital
- Chapter XII. Of the Law of the increase of Production from Land
- § 1. The limited quantity and limited productiveness of land, the real limits to production . . . . . . . . 176
- 2. The law of production from the soil, a law of diminishing return in proportion to the increased application of labour and capital . . . . . . . . . . . 176
- 3. Antagonist principle to the law of diminishing return; the progress of improvements in production . . . 181
- Chatper XIII. Consequences of the foregoing Laws
- § 1. Remedies when the limit to production is the weakness of the principle of accumulation . . . . . . . 189
- 2. Necessity of restraining population not confined to a state of inequality of property . . . . . . . . . 190
- 3. — nor superseded by free trade in food . . . . . 193
- 4. — nor in general by emigration . . . . . . . 197
- Chapter I. Of the Requisites of Production
- BOOK II
DISTRIBUTION- Chapter I. Of Property
- Edition: current; Page: [xxxvii]
Chapter II. The some subject continued
- § 1. The institution of property implies freedom of acquisition by contract . . . . . . . . . . . . . 218
- 2. — the validity of prescription . . . . . . . . 220
- 3. — the power of bequest, but not the right of inheritance. Question of inheritance examined . . . . . . 221
- 4. Should the right of bequest be limited, and how ? 226
- 5. Grounds of property in land, different from those of property in moveables . . . . . . . . . . . 229
- 6. — only valid on certain conditions, which are not always realized. The limitations considered . . . . . 231
- 7. Rights of property in abuses . . . . . . . . 235
- Chapter III. Of the Classes among whom the Produce is distributed
- Chapter IV. Of Competition and Custom
- Chapter V. Of Slavery
- Chapter VI. Of Peasant Proprietors
- § 1. Ditterence between English and Continental opinions respecting peasant properties . . . . . . . . 256
- 2. Evidence respecting peasant properties in Switzerland . 258
- 3. — in Norway . . . . . . . . . . . . . 263
- 4. — in Germany . . . . . . . . . . . . 266
- Edition: current; Page: [xxxviii] § 5. Evidence respecting peasant properties in Belgium . 271
- 6. — in the Channel Islands . . . . . . . . . 276
- 7. — in France . . . . . . . . . . . . . 277
- Chapter VII. Continuation of the same subject
- Chapter VIII. Of Metayers
- Chapter IX. Of Cottiers
- § 1. Nature and operation of cottier tenure . . . . . 3181
- 2. In an overpeopled country its necessary consequence is nominal rents . . . . . . . . . . . . 321
- 3. — which are inconsistent with industry, frugality, or restraint on population . . . . . . . . . 323
- 4. Ryot tenancy of India . . . . . . . . . . 324
- Chapter X. Means of asolishiag Cotticr Tenancy
- Chapter XI. Of Wages
- § 1. Wages depend on the demand and supply of labour—in other words, on population and capital . . . . . 343
- 2. Examination of some popular opinions respecting wages 344
- Edition: current; Page: [xxxix] § 3. Certain rare circumstances excepted, high wages imply restraints on population . . . . . . . . . 349
- 4. — which are in some cases legal . . . . . . . 353
- 5. — in others the effect of particular customs . . . . 355
- 6. Due restriction of population the only safeguard of a labouring class . . . . . . . . . . . . 857
- Chapter XII. Of Pepular Remedies for Low Wages
- § 1. A legal or customary minimum of wages, with a guarantee of employment . . . . . . . . . . . . 361
- 2. — would require as a condition, legal measures for repression of population . . . . . . . . . . 363
- 3. Allowances in aid of wages . . . . . . . . . 366
- 4. The Allotment System . . . . . . . . . . 368
- Chapter XIII. Romediesa for Low Wages further considered
- § 1. Pernicious direction of public opinion on the subject of population . . . . . . . . . . . . . 373
- 2. Grounds for expecting improvement . . . . . . 376
- 3. Twofold means of elevating the habits of the labouring people : by education . . . . . . . . . . 380
- 4. — and by large measures of immediate relief, through foreign and home colonization . . . . . . . 381
- Chapter XIV. Of the Differenes of Wages in differet Employments
- § 1. Differences of wages arising from different degrees of attractiveness in different employments . . . . . 385
- 2. Differences arising from natural monopofies . . . . 390
- 3. Effect on wages of a class of subsidized competitors . . 394
- 4. — of the competition of persons with independent means of support . . . . . . . . . . . 397
- 5. Wages of women, why lower than those of men . 400
- 6. Differences of wages arising from restrictive laws, and from combinations . . . . . . . . . . . 401
- 7. Cases in which wages are fixed by custom . . . . . 403
- Chapter XV. Of Profits
- § 1. Profits resolvable into three parts; interest, insurance, and wages of superintendence . . . . . . . 405
- Edition: current; Page: [xl] § 2. The minimum of profits; and the variations to which it is liable . . . . . . . . . . . . . . . 407
- 3. Differences of profits arising from the nature of the particular employment . . . . . . . . . 409
- 4. General tendency of profits to an equality . . . . 410
- 5. Profits do not depend on prices, nor on purchase and sale 416
- 6. The advances of the capitalist consist ultimately in wages of labour . . . . . . . . . . . . . . 417
- 7. The rate of profit depends on the Cost of Labour . . . 418
- Chapter XVI. Of Remt
- § 1. Rent the effect of a natural monopoly . . . . . . 422
- 2. No land can pay rent except land of such quality or situation as exists in less quantity than the demand . . 423
- 3. The rent of land consists of the excess of its return above the return to the worst land in cultivation . . . . 425
- 4. — or to the capital employed in the least advantageous circumstances . . . . . . . . . . . . 426
- 5. Is payment for capital sunk in the soil, rent, or profit ? . 429
- 6. Rent does not enter into the cost of production of agricultural produce . . . . . . . . . . . 433
- BOOK III
EXCHANGE- Chapter I. Of Value
- § 1. Preliminary remarks . . . . . . . . . . . 435
- 2. Definitions of Value in Use, Exchange Value, and Price 436
- 3. What is meant by general purchasing power . . . . 437
- 4. Value a relative term. A general rise or fall of values a contradiction . . . . . . . . . . . . 439
- 5. The Laws of Value, how modified in their application to retail transactions . . . . . . . . . . . 440
- Edition: current; Page: [xli]
Chapter II. Of Demand and Supply, in their rdation to Value
- § 1. Two conditions of Value : Utility, and Difficulty of Attainment . . . . . . . . . . . . . . 442
- 2. Three kinds of Difficulty of Attainment . . . . . 444
- 3. Commodities which are absolutely limited in quantity . 445
- 4. Law of their value, the Equation of Demand and Supply 446
- 5. Miscellaneous cases falling under this law . . . . 448
- Chapter III. Of Cost of Production, in its relation to Value
- Chapter IV. Ultimate Analysis of Oost of Production
- § 1. Principal element in Coat of Production—Quantity of Labour . . . . . . . . . . . . . . 457
- 2. Wages not an element in Cost of Production . . . 459
- 3. — except in so far as they vary from employment to employment . . . . . . . . . . . . . 460
- 4. Profits an element in Cost of Production, in so far as they vary from employment to employment . . . . . 461
- 5. — or are spread over unequal lengths of time . . . 463
- 6. Occasional elements in Cost of Production : taxes, and scarcity value of materials . . . . . . . . 466
- Chapter V. Of Rent, in its relation to Value
- § 1. Commodities which are susceptible of indefinite multiplication, but not without increase of cost. Law of their Value, Cost of Production in the most unfavourable existing circumstances . . . . . . . . . . 469
- 2. Such commodities, when produced in circumstances more favourable, yield a rent equal to the difference of cost . 471
- 3. Rent of mines and fisheries, and ground-rent of buildings . . . . . . . . . . . . . . . 473
- 4. Cases of extra profit analogous to rent . . . . . 476
- Edition: current; Page: [xlii] Chapter VI. Summary of the Theory of Value
- Chapter VII. Of Money
- Chapter VIII. Of the Value of Money, as dependent on Demand and Supply
- Chapter IX. Of the Value of Money, as dependent on Cost of Production
- Chapter X. Of a Double Standard, and Subsidiary Coins
- Chapter XI. Of Credit, as a Substitute for Money
- § 1. Credit not a creation but a transfer of the means of production . . . . . . . . . . . . . 511
- Edition: current; Page: [xliii] § 2. In what manner it assists production . . . . . . 512
- 3. Function of credit in economizing the use of money . 514
- 4. Bills of exchange . . . . . . . . . . . . 515
- 5. Promissory notes . . . . . . . . . . . . 519
- 6. Deposits and cheques . . . . . . . . . . . 520
- Chapter XII. Influence of Credit on Prices
- § 1. The influence of bank notes, bills, and cheques, on priee, a part of the influence of Credit . . . . . . . 523
- 2. Credit a purchasing power similar to money . . . . 524
- 3. Effects of great extensions and contractions of credit. Phenomena of a commercial crisis analyzed . . . 525
- 4. Bills a more powerful instrument for acting on prices than book credits, and bank notes than bills . . . 529
- 5. — the distinction of little practical importance . . . 532
- 6. Cheques an instrument for acting on prices, equally powerful with bank notes . . . . . . . . . 536
- 7. Are bank notes money ? . . . . . . . . . 538
- 8. No generic distinction between bank notes and other forms of credit . . . . . . . . . . . . 540
- Chapter XIII. Of an Inconvertible Paper Currency
- § 1. The value of an inconvertible paper, depending on its quantity, is a matter of arbitrary regulation . . . 542
- 2. If regulated by the price of bullion, an inconvertible currency might be safe, but not expedient . . . . 544
- 3. Examination of the doctrine that an inconvertible currency is safe if representing actual property . . . 546
- 4. Examination of the doctrine that an increase of the currency promotes industry . . . . . . . . 550
- 5. Depreciation of currency a tax on the community, and a fraud on creditors . . . . . . . . . . . 551
- 6. Examination of some pleas for committing this fraud . 552
- Chapter XIV. Of Excess of Supply
- § 1. Can there be an oversupply of commodities generally ? . 556
- 2. The supply of commodities in general cannot exceed the power of purchase . . . . . . . . . . . 557
- Edition: current; Page: [xliv] § 3. The supply of commodities in general never does exceed the inclination to consume . . . . . . . . 558
- 4. Origin and explanation of the notion of general overaupply 560
- Chapter XV. Of a Measure of Value
- Chapter XVI. Of some Peculiar of Value
- Chapter XVII. Of International Trade
- § 1. Cost of production not the regulator of international values . . . . . . . . . . . . . . 574
- 2. Interchange of commodities between distant places, determined by differences not in their absolute, but in their comparative cost of production . . . . . 576
- 3. The direct benefits of commerce consist in increased efficiency of the productive powers of the world . . 578
- 4. — not in a vent for exports, nor in the gains of merchants 578
- 5. Indirect benefits of commerce, economical and moral; still greater than the direct . . . . . . . . 581
- Chapter XVIII. Of International Values
- § 1. The values of imported commodities depend on the terms of international interchange . . . . . . . . 583
- 2. — which depend on the Equation of International Demand . . . . . . . . . . . . . . . 584
- 3. Influence of cost of carriage on international values . . 588
- 4. The law of values which holds between two countries and two commodities, holds of any greater number . . 590
- 5. Effect of improvements in production on international values . . . . . . . . . . . . . . . 593
- 6. The preceding theory not complete . . . . . . 596
- Edition: current; Page: [xlv] § 7. International valaes depend not solely on the quantities demanded, but also on the means of production available in each country for the supply of foreign markets . . . . . . . . . . . . . . 597
- 8. The practical result little affected by this additional element . . . . . . . . . . . . . . 601
- 9. The cost to a country of its imports, on what circumstances dependent . . . . . . . . . . . 604
- Chapter XIX. Of Money, considered as an Imported Commodity
- § 1. Money imported in two modes; as a commodity, and as a medium of exchange . . . . . . . . . . 607
- 2. As a commodity, it obeys the same laws of value as other imported commodities . . . . . . . . . . 608
- 3. Its value does not depend exclusively on its cost of production at the mines . . . . . . . . . . 610
- Chapter XX. Of the Foreign Exchanges
- § 1. Purposes for which money passes from country to country as a medium of exchange . . . . . . . . . 612
- 2. Mode of adjusting international payments through the exchanges . . . . . . . . . . . . . 612
- 3. Distinction between variations in the exchanges which are self-adjustings and those which can only be rectified through prices . . . . . . . . . . . . 617
- Chapter XXI. Of the Distribution of the Precious Metals through the Commercial World
- § 1. The substitution of money for barter makes no difference in exports and imports, nor in the law of international values . . . . . . . . . . . . . . 619
- 2. The preceding theorem further illustrated . . . . 622
- 3. The precious metals, as money, are of the same value, and distribute themselves according to the same law, with the precious metals as a commodity . . . . . . 626
- 4. International payments of a non-commercial character . . . . . . . . . . . . . . . 627
- Edition: current; Page: [xlvi]
Chapter XXII. Influence of the Currency an the Exchanges and on Foreign Trade
- § 1. Variations in the exchange which originate in the currency 629
- 2. Effect of a sudden increase of a metallic currency, or of the sudden creation of bank notes or other substitutes for money . . . . . . . . . . . . . 630
- 3. Effect of the increase of an inconvertible paper currency. Real and nominal exchange . . . . . 634
- Chapter XXIII. Of the Rate of Interest
- § 1. The rate of interest depends on the demand and supply of loans . . . . . . . . . . . . . . 637
- 2. Circumstances which determine the permanent demand and supply of loans . . . . . . . . . . 638
- 3. Circumstances which determine the fluctuations . . . 641
- 4. The rate of interest, how far and in what sense connected with the value of money . . . . . . . . . 644
- 5. The rate of interest determines the price of land and of securities . . . . . . . . . . . . . . 649
- Chapter XXIV. Of the Regulation of a Gonverlible Paper Currency
- § 1. Two contrary theories respecting the influence of bank issues . . . . . . . . . . . . . . . 651
- 2. Examination of each . . . . . . . . . . . 653
- 3. Reasons for thinking that the Currency Act of 1844 produees a part of the beneficial effect intended by it . . 656
- 4. — but produces mischiefs more than equivalent. . . 662
- 5. Should the issue of bank notes be confined to a single establishment ? . . . . . . . . . . . . 674
- 6. Should the holders of notea be protected in any peculiar manner against failure of payment ? . . . . . . 676
- Chapter XXV. Of the Competition of Different Countries in the same Market
- § 1. Causes which enable one country to undersell another . 678
- 2. Low wages one of those causes . . . . . . . . 680
- 3. — when peculiar to certain branches of industry . . 682
- 4. — but not when common to all . . . . . . . 684
- 5. Some anomalous cases of trading communities examined 685
- Edition: current; Page: [xlvii] Chapter XXVI. Of Distribution, as affected by Exchange
- BOOK IV
INFLUENCE OF THE PROGRESS OF SOCIETY ON
PRODUCTION AND DISTRIBUTION- Chapter I. General Characteristics of c Progressive State of Wealth
- Chapter II. Influence of the Profress of Industry and Population on Values and Prices
- § 1. Tendency to a decline of the value and cost of production of all commodities . . . . . . . . . . . 700
- 2. — except the products of agriculture and mining, which have a tendency to rise . . . . . . . . . 701
- 3. — that tendency from time to time counteracted by improvements in production . . . . . . . . 703
- 4. Effect of the progress of society in moderating fluctuations of value . . . . . . . . . . . . 704
- 5. Examination of the influence of speculators, and in particular of corn dealers . . . . . . . . . . 706
- Chapter III. Influence of the Progress of Industry and Population, on Rents, Profits, and Wages
- § 1. First case; population increasing, capital stationaxy . 710
- 2. Second case; capital increasing, population stationary . 713
- Edition: current; Page: [xlviii] § 3. Third case; population and capital increasing equally, the arts of production stationary . . . . . . 714
- 4. Fourth case; the arts of production progressive, capital and population stationary . . . . . . . . . 715
- 5. Fifth case; all the three elements progzessive . . . 720
- Chapter IV. Of the Tendency of Profits to a Minimum
- § 1. Doctrine of Adam Smith on the competition of capital . 725
- 2. Doctrine of Mr. Wakefield respecting the field of employment . . . . . . . . . . . . . . . 727
- 3. What determines the minimum rate of profit . . . . 728
- 4. In opulent countries, profits habitually near to the minimum . . . . . . . . . . . . . . . 731
- 5. — prevented from reaching it by commercial revulsions . 733
- 6. — by improvements in production . . . . . . . 735
- 7. — by the importation of cheap necessaries and instruments . . . . . . . . . . . . . . 736
- 8. — by the emigration of capital . . . . . . . . 738
- Chapter V. Consequences of the Tendency of Profits to a Minimum
- Chapter VI. Of the Stationary State
- Chapter VII. On the Probable Futurity of the Labouring Classes
- § 1. The theory of dependence and protection no longar applicable to the condition of modern society . . . . 752
- 2. The future well-being of the labouring classes principally dependant on their own mental cultivation . . . . 757
- 3. Probable effects of improved intelligence in cawing a better adjustment of population—Would be promoted by the social independence of women . . . . 759
- Edition: current; Page: [il] § 4. Tendency of society towards the disuse of the relation of hiring and service . . . . . . . . . . . 760
- 5. Examples of the association of labourers with capitalist 764
- 6. —of the association of labourers among themselves . 772
- 7. Competition not pernicious, but useful and indispensable . 792
- BOOK V
ON THE INFLUENCE OF GOVERNMENT- Chapter I. Of the Functions of Government in General
- Chapter II. Of the General Priciples of Taxation
- § 1. Four fundamental rules of taxation . . . . . . 802
- 2. Grounds of the principle of Equality of Taxation . . 804
- 3. Should the same percentage be levied on all amounts of income ? . . . . . . . . . . . . . . 806
- 4. Should the same percentage be levied on perpetual and on terminable incomes ? . . . . . . . . . 810
- 5. The increase of the rent of land from natural causes a fit subject of peculiar taxation . . . . . . . . 817
- 6. A land tax, in some cases, not taxation, but a rent-charge in favour of the public . . . . . . . . . . . 820
- 7. Taxes falling on capital, not necessarily objectionable . 821
- Chapter III. Of Direct Taxes
- § 1. Direct taxes either on income or on expenditure . . . 823
- 2. Taxes on rent . . . . . . . . . . . . . 823
- 3. — on profits . . . . . . . . . . . . . 824
- 4. — on wages . . . . . . . . . . . . . 827
- Edition: current; Page: [l] § 5. An Income Tax . . . . . . . . . . . . 829
- 6. A House Tax . . . . . . . . . . . . . 832
- Chapter IV. Of Taxes on Commodities
- § 1. A tax on all commodities would fall on profits . . . 837
- 2. Taxes on particular commodities fall on the consumer . 838
- 3. Peculiar effects of taxes on necessaries . . . . . . 839
- 4. — how modified by the tendency of profits to a minimum 842
- 5. Effects of discriminating duties . . . . . . . . 847
- 6. Effects produced on international exchange by duties on exports and on imports . . . . . . . . . 850
- Chapter V. Of some other Taxes
- Chapter VI. Comparison between Direct and Indirect Taxation
- Chapter VII. Of a National Debt
- § 1. Is it desirable to defray extraordinary public expenses by loans ? . . . . . . . . . . . . . 873
- 2. Not desirable to redeem a national debt by a general contribution . . . . . . . . . . . . . 876
- 3. In what cases desirable to maintain a surplus revenue for the redemption of debt . . . . . . . . . 878
- Chapter VIII. Of the Ordinary Functions of Governments, considered as to their Economical Effects
- Chapter IX. The same subject continued
- § 1. Laws of Inheritance . . . . . . . . . . . 889
- 2. Law and Custom of Primogeniture . . . . . . 891
- 3. Entails . . . . . . . . . . . . . . . 894
- 4. Law of compulsory equal division of inheritances . . 896
- 5. Laws of Partnership . . . . . . . . . . . 897
- 6. Partnership with limited liability. Chartered Companies 899
- 7. Partnerships in commandite . . . . . . . . . 903
- 8. Laws relating to Insolvency . . . . . . . . . 909
- Chapter X. Of Interferences of Government grounded on Erroneous Theories
- § 1. Doctrine of Protection to Native Industry . . . . 916
- 2. Usury Laws . . . . . . . . . . . . . 926
- 3. Attempts to regulate the prices of commodities . . . 930
- 4. Monopolies . . . . . . . . . . . . . . 932
- 5. Laws against Combination of Workmen . . . . . 933
- 6. Restraints on opinion or on its publication . . . . 939
- Chapter XI. Of the Grounds and Limits of the Laisser-faire or Non-Interference Principle
- § 1. Governmental intervention distinguished into authoritative and unauthoritative . . . . . . . . 941
- 2. Objections to government intervention—the compulsory character of the intervention itself, or of the levy of funds to support it . . . . . . . . . . . 942
- 3. — increase of the power and influence of government . 944
- 4. — increase of the occupations and responsibilities of government . . . . . . . . . . . . . 945
- 5. — superior effcascy of private agency, owing to stronger interest in the work . . . . . . . . . . 947
- 6. — importance of cultivating habits of collective action in the people . . . . . . . . . . . . 948
- Edition: current; Page: [lii] § 7. Lasser-faire the general rule . . . . . . . . 950
- 8. — but liable to large exceptions. Cases in which the consumer is an incompetent judge of the commodity. Education . . . . . . . . . . . . . 953
- 9. Case of persons exercising power over others. Protection of children and young persons; of the lower animals. Case of women not analogons . . . . 956
- 10. Case of contracts in perpetuity . . . . . . . . 959
- 11. Cases of delegated management . . . . . . . 960
- 12. Cases in which public intervention may be necessary to give effect to the wishes of the persons interested. Examples: hours of labour; disposal of colonial lands 963
- 13. Case of acts done for the benefit of others than the persons concerned. Poor Laws . . . . . . . 966
- 14. — Colonization . . . . . . . . . . . . 969
- 15. — other miscellaneous examples . . . . . . . 975
- 16. Government intervention may be necessary in default of private agency, in cases where private agency would be more suitable . . . . . . . . . . . 977
- BIBLIOGRAPHICAL APPENDIX
By the Editor- A. The Mercantile System . . . . . . . . . . 981
- B. The Definition of Wealth . . . . . . . . . 981
- C. The Types of Society . . . . . . . . . . 982
- D. Productive and Unproductive Labour . . . . . 982
- E. The Definition of Capital . . . . . . . . 982
- F. Fundamental Propositions on Capital . . . . . 983
- G. Division and Combination of Labour . . . . . 983
- H. Large and Small Farming . . . . . . . . . 983
- I. Population . . . . . . . . . . . . . 984
- J. The Law of Diminishing Return . . . . . . . 984
- K. Mill's earlier and later Writings on Socialism . . . 984
- L. The later History of Socialism . . . . . . . 990
- M. Indian Tenures . . . . . . . . . . . . 991
- N. Irish Agrarian Development . . . . . . . . . 991
- O. The Wages Fund Doctrine . . . . . . . . 991
- P. The Movement of Population . . . . . . . . 993
- Q. Profita . . . . . . . . . . . . . 994
- Edition: current; Page: [liii] R. Rent . . . . . . . . . . . . . . . 995
- S. The Theory of Value . . . . . . . . . . 995
- T. The Value of Money . . . . . . . . . . 996
- U. Bimetallism . . . . . . . . . . . . . 996
- V. International Values . . . . . . . . . . 996
- W. The Regulation of Currency . . . . . . . . 996
- X. Prices in the Nineteenth Century . . . . . . . . 997
- Y. Commercial Cycles . . . . . . . . . . . 999
- Z. Rents in the Nineteenth Century . . . . . . 999
- AA. Wages in the Nineteenth Century . . . . . . . 999
- BB. The Importation of Food . . . . . . . . . 1000
- CC. The Tendency of Profits to a Minimum . . . . . 100l
- DD. The subsequent History of Co-operation . . . . . 1001
- EE. The subsequent History of Income Tax . . . . . 1001
- FF. The Taxation of Land . . . . . . . . . . 1001
- GG. The Incidence of Taxation . . . . . . . . . 1002
- HH. Company and Partnership Law . . . . . . 1002
- II. Protection . . . . . . . . . . . . . 1002
- JJ. Usury Laws . . . . . . . . . . . . 1004
- KK. The Factory Jkcts . . . . . . . . . . . 1004
- LL. The Poor Law . . . . . . . . . . . . . 1004
- MM. The Province of Government . . . . . . . . 1004
- Index . . . . . . . . . . . . . . . . 1005
- Chapter I. Of Value