Front Page Titles (by Subject) Jevons and Laissez-faire - Literature of Liberty, April/June 1979, vol. 2, No. 2
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Jevons and Laissez-faire - Leonard P. Liggio, Literature of Liberty, April/June 1979, vol. 2, No. 2 
Literature of Liberty: A Review of Contemporary Liberal Thought was published first by the Cato Institute (1978-1979) and later by the Institute for Humane Studies (1980-1982) under the editorial direction of Leonard P. Liggio.
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Jevons and Laissez-faire
“W. Stanley Jevons: Economic Revolutionary, Political Utilitarian.” Journal of the History of Ideas 40 (April/June 1979): 267–283.
In the last quarter of the nineteenth century, the fundamental principles upon which classical economics had been founded were questioned and in most instances found wanting. Primary among these was the labor or cost of production theory of value which W. Stanley Jevons completely overturned with his final utility theory of value. Other important components of the classical framework were also shattered, such as the Malthusian population theory; the projection of a future stationary state; the Ricardian “iron law” of wages; and the macroeconomic approach to determining the shares distributed to each class in the production process. What is truly remarkable, however, is that despite these dramatic alterations in economic theory per se, little direct effect can be seen from this quarter on the question of the government's role in the economy. There was no essential break between John Stuart Mill and Jevons in their approaches to this question, for both were Utilitarians, and, hence, they both advocated an ad hoc evaluation of each particular proposal for governmental intervention.
The movement away from laissez-faire which was begun in the third quarter of the nineteenth century came to completion in this later period. It was no longer necessary to disavow any connection between economics as a science and the doctrine of laissez-faire. Laissez-faire had become something of a dead issue resulting from the combined influences of attacks by J.S. Mill, Henry Sidgwick, and J.E. Cairnes, plus the rise of trade unions, and practical men's demands for an increased regulatory role for the state enabling it to deal with the pressing social questions of the day. Thus for economists of this later period, such as Jevons, Wicksteed, and Marshall, it was no longer necessary to prefer even the formalistic, and largely empty, obeisance to laissez-faire that Mill uttered before examining the particular cases for governmental intervention. Their approach, then, was entirely empirical, proceeding with no preconceived preference for either state action or unfettered, free competition. The two were placed more nearly upon an equal footing. In this development, there was no decided break with their immediate predecessors, rather, they completed the disassociation with laissez-faire that the last generation had begun.
Jevons was more extreme than Mill in his enthronement of utility and expediency as respectively the objective and the test of legislation, and in his all but complete disavowal of laissez-faire as the regnant principle governing state intervention in the economy. When it came down to actual proposals, Jevons was, however, not nearly as adventuristic as Mill, and he did not display Mill's enthusiasm for socialistic ventures, although he had no preconceived hostility towards them. He was perfectly willing to adopt such measures if they proved their suitability for maximizing general happiness. While Adam Smith on several occasions dismissed various state activities by saying that they constituted violations of the right to property, Jevons, in contrast, says that any violation of property is valid so long as it can be scientifically shown to increase the general good. This comparison of Smith and Jevons sharply focuses on the contrast between the moral theories of Lockean natural rights and Benthamite utility as they affected the question of the proper role of government in the economy.
The principle of utility coexisted with laissez-faire governmental policies for a time, particularly in Bentham and to a lesser extent in Mill, but in Jevons's laissez-faire the former was finally victorious over the latter. On the question of the proper limits of the government's interference in the economy, Jevons completed the work of Mill; i.e., he abandoned all a priori opposition to state regulation and subjected each case to the test of expediency with the Utilitarian end of general happiness. Jevons held the Ricardian-Millian economics in nothing short of utter contempt, yet on the level of political theory his revolutionary economics did not lead him to question the assumptions and conclusions of the Utilitarian School.