Econlib

The Library

Other Sites

 Front Page arrow Titles (by Subject) arrow PRODUCTION AND DISTRIBUTION - The Collected Works of John Stuart Mill, Volume II - The Principles of Political Economy with Some of Their Applications to Social Philosophy (Books I-II)

Return to Title Page for The Collected Works of John Stuart Mill, Volume II - The Principles of Political Economy with Some of Their Applications to Social Philosophy (Books I-II)

Search this Title:

PRODUCTION AND DISTRIBUTION - John Stuart Mill, The Collected Works of John Stuart Mill, Volume II - The Principles of Political Economy with Some of Their Applications to Social Philosophy (Books I-II) [1848]

Edition used:

The Collected Works of John Stuart Mill, Volume II - The Principles of Political Economy with Some of Their Applications to Social Philosophy (Books I-II), ed. John M. Robson, introduction by V.W. Bladen (Toronto: University of Toronto Press, London: Routledge and Kegan Paul, 1965).

Part of: Collected Works of John Stuart Mill, in 33 vols.

About Liberty Fund:

Liberty Fund, Inc. is a private, educational foundation established to encourage the study of the ideal of a society of free and responsible individuals.


PRODUCTION AND DISTRIBUTION

In the “Preliminary Remarks,” Mill distinguished the laws of production from those of distribution. The “manner in which wealth is distributed in any given society, depends on the statutes or usages therein obtaining” (I.21.17-8). So, at the beginning of Book II, he says: “The laws and conditions of the production of wealth partake of the character of physical truths. . . . It is not so with the Distribution of Wealth. That is a matter of human institution solely” (I.199.4-29). In fact Mill has much to say about the effect on productivity of “human institutions” as I propose to demonstrate. The really important distinction that he made was between the inevitability of the consequences which flow from any given circumstances and the freedom to modify the circumstances. Thus in the “Preliminary Remarks” he says: “though governments or nations have the power of deciding what institutions shall exist, they cannot arbitrarily determine how those institutions shall work” (I.21.18-20). And in Book II: “We have here to consider, not the causes, but the consequences, of the rules according to which wealth may be distributed. Those, at least, are as little arbitrary, and have as much the character of physical laws, as the laws of production. Human beings can control their own acts, but not the consequences of their acts either to themselves or to others” (I.200.20-5). One of these “consequences” is reflected in productivity. It is of great importance to recognize the effect of “institutions” on productivity, and in particular to recognize the effect on productivity of institutions devised with a view to improving the distribution of wealth. The smaller the amount to be divided the more seriously must the effect of redistribution on the size of the dividend be examined. The problem becomes one of identifying “useful injustices” (as Sir Dennis Robertson has called them).39

In the chapter on the “Degrees of Productiveness” the importance of “Security” is emphasized. “This consists of protection by the government, and protection against the government” (I.112.4-5), and much of it seems to be “the effect of manners and opinion rather than of law” (I.114.11-2). The key sentence is this: “the efficiency of industry may be expected to be great, in proportion as the fruits of industry are insured to the person exerting it” (I.114.33-5). This is a recurrent theme. In Chapter ix, when discussing the conduct of large scale enterprise by joint stock, he states two qualifications of the manager: “fidelity and zeal.” The former he thinks it is easy to secure, the latter very difficult. The “directing mind should be incessantly occupied with the subject; should be continually laying schemes by which greater profit may be obtained. . . . This intensity of interest . . . it is seldom to be expected that any one should feel, who is conducting a business as the hired servant and for the profit of another. There are experiments in human affairs which are conclusive on the point. Look at the whole class of rulers, and ministers of state” (I.137.39—138.5). Again, in Chapter xii, the doctrine is applied to agriculture: “Improvements in government, and almost every kind of moral and social advancement, operate in the same manner. Suppose a country in the condition of France before the Revolution: taxation imposed . . . on such a principle as to be an actual penalty on production. . . . Was not the hurricane which swept away this system of things, even if we look no further than to its effect in augmenting the productiveness of labour, equivalent to many industrial inventions?” (I.183.6-14). From taxation we turn to tenure to note the effect in Ireland “of a bad system of tenancy, in rendering agricultural labour slack and ineffective. No improvements operate more directly upon the productiveness of labour, than those in the tenure of farms, and in the laws relating to landed property” (I.183.24-7). So, in Book I, on “Production,” discussion of the expediency of social institutions crept in, and in Book II, on “Distribution,” the problems of justice did not crowd out the problems of expediency through effects on production.

The chapter on “Property” (II, i) underwent very great changes. In the preface to the 2nd edition, Mill says that the objections stated in the 1st edition 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” (I.xcii.35-7). To meet the objection he enlarged the chapter. In the 3rd edition he rewrote it. “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” (I.xciii.12-6). These changes, and his later posthumous Chapters on Socialism, provide scope for long debates about how socialistic Mill was at various points in his career. What is really valuable is not his changing answers, but his continuing questions. The criteria for judging society as it existed, and society as it might be, emerge from the questions. One of the criteria is the degree of motivation to work:

The objection ordinarily made to a system of community of property and equal distribution of the produce, that each person would be incessantly occupied in evading his fair share of the work, points, undoubtedly, to a real difficulty. But those who urge this objection, forget to how great an extent the same difficulty exists under the system on which nine-tenths of the business of society is now conducted. . . . From the Irish reaper or hodman to the chief justice or the minister of state, nearly all the work of society is remunerated by day wages or fixed salaries. A factory operative has less personal interest in his work than a member of a Communist association. . . . Mankind are capable of a far greater amount of public spirit than the present age is accustomed to suppose possible. . . . To what extent, therefore, the energy of labour would be diminished by Communism, or whether in the long run it would be diminished at all, must be considered . . . an undecided question.

(I.203.37—205.40.)

This is a more favourable judgment than that in the 1st edition, and is seemingly inconsistent with the general attitude of the Principles on motivation and incentive. The explanation of the change and the “inconsistency” lies in the addition of “two conditions . . . without which neither Communism nor any other laws or institutions could make the condition of the mass of mankind other than degraded and miserable. One of these conditions is universal education; the other, a due limitation of the numbers of the community” (I.208.21-5). He may dream of a utopia where pecuniary incentives are unnecessary; but he has a very realistic recognition of the importance of pecuniary incentives for some time to come: “we may, without attempting to limit the ultimate capabilities of human nature, affirm, that the political economist, for a considerable time to come, will be chiefly concerned with the conditions of existence and progress belonging to a society founded on private property and individual competition” (I.214.5-9).

If productivity is assured under “Communism” there remains the question of “human liberty and spontaneity.” Of liberty as an end in itself I have said something earlier. One sentence has peculiar relevance to the modern world: “No society in which eccentricity is a matter of reproach, can be in a wholesome state” (I.209.33-4). But here the concern is with productivity and I would argue that the atmosphere of liberty and spontaneity is especially conducive to productivity. Indeed I think Mill would so argue, and in support of this view I would cite his attitude to competition as developed in the chapter on the “Probable Futurity of the Labouring Classes” (IV, vii) in a section, be it noted, that was added in the 3rd edition. “To be protected against competition is to be protected in idleness, in mental dulness . . .” (II.795.37-8). Competition, innovation, enterprise, are the fruits of liberty, the complement of spontaneity. Mill’s dissent from the socialists’ declamation against competition comes at the end of his discussion of co-operative societies: communism was a matter of the distant future, co-operatives promised improvement in the immediate future. The co-operative movement promised, not only a new dignity to labour and “the healing of the standing feud between capital and labour” (II.792.7-8), but a great increase in the “productiveness of labour.” This increase would result from the “vast stimulus given to productive energies, by placing the labourers, as a mass, in a relation to their work which would make it their principle and their interest—at present it is neither—to do the utmost, instead of the least possible, in exchange for their remuneration” (II.792.1-5). Yet Mill believed that it would be desirable, “for a considerable length of time,” that individual capitalists should “coexist” with co-operative societies. “A private capitalist, exempt from the control of a body, if he is a person of capacity, is considerably more likely than almost any association to run judicious risks, and originate costly improvements” (II.793.3-5).

Along with his admiration for the co-operative association in industry, Mill had a curiously individualistic attitude to the organization of agriculture. His chapters on “Peasant Proprietors,” “Metayers,” and “Cottiers” all reflect his idealization of the small agriculturists of Wordsworth’s Lakes (I.253n). The theme is essentially motivation to hard work: “ ‘The magic of property turns sand to gold. . . . Give a man the secure possession of a bleak rock, and he will turn it into a garden. . . .’ ” (I.274.19-30.) But it is not just a matter of increased exertion: peasant proprietorship stimulates “mental activity” and is “propitious to the moral virtues of prudence, temperance, and self-control. Day-labourers . . . are usually improvident. . . . [P]easant proprietors . . . are oftener accused of penuriousness than of prodigality” (I.281.28—282.8). Mill indeed recognized the dangers of morcellement and the advantages of grande culture, but he concluded that compared with the English system of cultivation by hired labour peasant proprietorship was “eminently beneficial” and he did not feel “on the present occasion called upon to compare it with the joint ownership of the land by associations of labourers” (I.296.2-4).

Mill proceeded to examine two other systems of tenure: metayers and cottiers. He contrasts the happy stage of Lombardy and its metayers with the miserable condition of the Irish cottiers. “Under a metayer system there is an established mode in which the owner of land is sure of participating in the increased produce drawn from it” (I.316.5-7). Of the cottier he says: “If the landlord at any time exerted his full legal rights, the cottier would not be able even to live. If by extra exertion he doubled the produce of his bit of land, or if he prudently abstained from producing mouths to eat it up, his only gain would be to have more left to pay to his landlord . . . if he is lazy or intemperate, it is at his landlord’s expense” (I.318.30—319.3). Mill watched closely the revolution in Ireland, and Cairnes (as is clear from Appendix H) kept him posted. Repeal of the Corn Laws “would of itself have sufficed to bring about this revolution in tenure” (I.333.2-3), but it was “immensely facilitated and made more rapid by the vast emigration, as well as by that greatest boon ever conferred on Ireland by any Government, the Encumbered Estates Act” (I.332.6-9). The change, however, was toward the English system of capitalist farming; “The truly insular ignorance of her public men respecting a form of agricultural economy which predominates in nearly every other civilized country” made it doubtful whether action would be taken to promote peasant proprietorship; “Yet there are germs of a tendency . . .” (I.334.7-10).

[39 ]Sir D. H. Robertson, Utility and All That (London, 1952), 63. “Surely one of the economist’s most obvious duties is to attempt to disentangle useful injustices from useless or harmless ones. . . . If, in the face of his findings, the Sovereign People then deliberately decides that Justice is at all costs to be preferred to Welfare, or even that Soaking the Rich is at all costs to be preferred to both—well, that is that.”