Mill

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JOHN STUART MILL (1806-1873)

A highly educated individual who revisited the previous works of Smith, Malthus and Ricardo.

At the time of his writing, the divide between rich and poor was severe. Factors which influenced the time were the corn laws, the industrial revolution and the emergence of the global markets, which saw winners and losers in various industries.

Mill was from a privileged background, his father was a renowned economist, which helped him develop his education. A large part of Mill's working career was spent working for the East India Company.

The major economic contribution of Mill came after he stopped working, became a member of parliament and began championing the cause of the working class. We shall now briefly discuss the main areas of his work:

PRODUCTIVE LABOUR - Mill looked at the classical approach to productive labour and re-defined the concept. Mill viewed productive labour as essentially still being that which increases the value of materials. Mill extended the concept as including training of workers which will in effect the value of materials.

UN-PRODUCTIVE LABOUR - Mill stated that all labour used to manufacture products could be classed as being productive. This he argued, un-productive labour would occur when labour was used to manufacture products which could not readily be sold. In other words, when products are made to be stock piled.

WAGES & PRICING - When looking at the difference in prices of products, an often quoted extract from Mill is used:

'If one of two things commands, on the average, a greater value than the other, the cause must be that it requires for its production either a greater quantity of labour, or a kind of labour paid at a higher rate.'

Although Mill suggested prices of products could be attributed to higher wage costs he did believe that prices were also adjusted to include sustained profit margins for the owners of capital.

COMPETITIVE MARKETS - Mill was quite un-repentant on how the marketplace actually worked, he argued that although free global markets could enforce lower prices for products, national markets often consisted of friendly agreements, he states 'Competitors are so few that they always end by agreeing not to compete' This may be attributable to his time period where most goods were traded nationally in corn exchanges and coffee houses.

GOVERNMENTS - Mill did suggest that governments could prove to be productive in certain circumstances. This was in direct contrast to Adam Smith who viewed governments as being un-productive.

Mill suggested that police and courts were productive to the nation.

Governments were seen as a force for stability. Mill suggested they be the tools by which to address the inequalities of society.

INCOME DISTRIBUTION - This was the area where Mill excelled.

Essentially Mill argued that economic growth occurs over time as mankind develops in terms of technological progress, new products on the marketplace, market forces, etc. Mill states economic growth as a result of increasing production could not be helped, in part due to the need for workers to survive and capitalists to exploit markets.

Mill also states that the distribution of income as a result of increased economic growth was changeable. He argued that income should be distributed on a more even basis.

MILL AND THE CLASSICAL SCHOOL - Mill was horrified at the way the classical school of economics simply ignored the need for addressing income distribution between the rich and the poor. He stated 'The stationary state of capital and wealth with the unaffected so generally manifested towards it by political economists of the old school.'

ESSENTIAL FEATURES OF THE WORKS OF JOHN STUART MILL

Mill wrote at a time when economic growth and mass production was reaping greater national economic prosperity.
Mill believed as the economy was growing, the gap between the rich and the poor was growing not declining.
Mill argued for greater distribution between the rich and the poor.
Mill argued for a variety of measures to ease the burden of the working classes.
The works of Mill influenced Karl Marx.

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