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Source: Editor's Introduction to James Mill, Selected
Economic Writings, ed.
Donald Winch (Edinburgh: Oliver Boyd for the Scottish Economic Society, 1966).
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MILL AND DAVID RICARDO
Mill's most important contribution to classical political economy lay in his twin rôle as schoolmaster and disciple to Ricardo, whom he met in 1808 as a result of the publication of Commerce Defended. A large part of the history of their friendship and remarkable intellectual affinity can be found in Mr Sraffa's superb edition of Ricardo's correspondence. The correspondence can be divided into three main overlapping phases. First, there is the initial period of co-operation on monetary questions which begins with the revival of the bullion controversy in 1810–11, and ends with the publication of Ricardo's Economical and Secure Currency in 1816. Secondly, there are Mill's efforts, beginning in earnest in August 1815, to encourage Ricardo to extend the scope of his economic studies and to publish his Principles of Political Economy. The final phase in the correspondence, which can only be touched on here, concerns Mill's attempts to complete Ricardo's political education, and to make him the parliamentary spokesman for the Benthamite cause.
From the very beginning James Mill established a rapport with Ricardo on economic questions which was notably absent in his relations with Bentham. Bentham's economic writings were finished (though very few of them had been published) before collaboration with Mill began; by which time also, Mill's own views on economic questions had been formed and stated. The divergence of their opinions can be seen briefly in the positions which they adopted with respect to the corn trade during the period of grain scarcity at the turn of the century. In his Defence of a Maximum (1801), Bentham advocated temporary restrictions on the price of corn, whereas Mill in his essay on the corn trade roundly condemned all forms of interference in the free market for provisions. Bentham was inclined to unorthodox views on economic matters, while Mill rarely strayed from the path laid down by Smith and, later, Ricardo.
It was evidently as a result of finding themselves on the same side during the bullionist controversy of 1810–11 that Mill and Ricardo became close friends. Mill abandoned the equivocal position adopted in his early writings on this question in favour of Ricardo's strong, not to say dogmatic, view of the issue. The first letters between Ricardo and Mill that have been preserved concern Bentham's True Alarm. Dumont had sent the French translation of Bentham's MS. to Mill in 1810 for his opinion as to whether it should be published as a contribution to the current bullionist discussion. Mill was dubious, and when Ricardo also returned an unfavourable verdict on the work, Dumont reluctantly decided to give up the project. In September 1811, Mill sent Ricardo a paper on the bullion question which supported Ricardo's position. Apart from ‘some trifling points’, Ricardo was very favourably inclined to the paper: ‘it assails our adversaries in most of their strongholds and contains the most close reasoning that has appeared on our side of the question. I shall not rest till you publish it.’ The idea of publication was dropped when Malthus, who had approved of Mill's earlier article, gave his opinion that: ‘The style appears to me to be rather heavy and laboured, too much abounding in repetition; and with a pretension to accuracy and precision which it does not fulfill.’
The currency question was raised once more in 1815 when Ricardo wrote his Proposals for an Economical and Secure Currency; here he dealt with the management of paper money and the National Debt by the Bank of England. He was doubtful as to whether the pamphlet was worthy of publication and, as Mr Sraffa says, ‘Mill's encouragement was decisive.’ Ricardo called on Mill's advice as to style and on tactics. He wished to attack the existing agreement between the government and the Bank which fixed the charges for managing the currency at what he thought to be an excessive level, but was afraid that some of his ammunition might be wasted on a target which, though vulnerable, could not be destroyed. This was precisely the kind of question which suited Mill's dialectical skills. Mill held that it was important to ‘expose that bargain, and show that it was such a bargain as ought never to have been made’. The Bank should be forced to return its unjust gains at the expense of the public. In a subsequent letter Mill emphasised this point:
…the only advice which I think I can offer…is to dwell with some force on the moral part of the argument against the Bank; which will not only afford a variety in the midst of the other more abstract and less familiar topics, but will really press with a more galling weight upon the parties concerned. Hold up to view unsparingly the infamy of a great and opulent body like the bank, exhibiting a wish to augment its hoards by undue gains wrested from the hands of an overburthened people.
Ricardo, who needed little encouragement to attack the Bank, accepted this advice and incorporated Mill's exact words into the text of his pamphlet. This incident is symptomatic of Mill's relationship with Ricardo as a whole. He could give Ricardo little substantive assistance, but he bolstered Ricardo's confidence and brought to the fore the political and moral issues underlying Ricardo's economic arguments. This emerges more clearly in the second phase of the correspondence which concerns the publication of Ricardo's Principles of Political Economy.
From late 1811 until the summer of 1814 both Mill and Ricardo were in London; they met frequently and went on long walks together. It seems likely that among the subjects discussed was Ricardo's theory of profits which he was working out at this time. Ricardo's first statement of this theory was in his Essay on Profits, and not long after its publication in 1815 we learn that Mill was urging him ‘to write it over again more at large’. In August, Mill set out clearly his ambitions for Ricardo; he considered that Ricardo had made enough money to satisfy his family's needs so there would now be ‘leisure for other pursuits’.
That you will devote yourself to them, in that case, with a calm but vigorous perseverance, I have no doubt; for that is part of your nature. I should advise you to do so, if I had nothing in view but to promote the happiness of a friend; even if I had no hopes of your gaining any illustration to your name, and sharing in the dignity which does attend upon the reputation for talents, and profound knowledge of an important subject. When I am satisfied, however, that you can not only acquire that reputation, but that you can very greatly improve a science on which the progress of human happiness to a singular degree depends; in fact that you can improve so important a science far more than any other man who is devoting his attention to it, or likely to do so, for Lord knows how many years—my friendship for you, for mankind, and for science, all prompt me to give you no rest, till you are plunged over head and ears in political economy.
Ricardo's reply was typically modest: he accepted the call to action but doubted whether Mill's ambitions for him could be fulfilled. By October Mill was demanding a progress report. Ricardo was warming to the task, though he continued to claim that he would write more for his own amusement than for publication. Ricardo's main doubts centred on his inability to express his ideas clearly. On these matters Mill, as a professional journalist, had some right to think he could be of assistance, though he freely admitted that on matters of substance he had become an amateur.
Notwithstanding my passion for the science of political economy, it has so happened that for a good many years I have not been able to think of it, except when I was excited by your instructive conversation or by your writings. Why do you cry, ‘Oh that I were able to write a book!’ when there is no obstacle to your writing, but this want of confidence in your own powers. You want some practice in the art of laying down your thoughts, in the way most easy of apprehension to those who have little knowledge, and little attention; and this is to be got infallibly by a little practice. As I am accustomed to wield the authority of a schoolmaster, I therefore, in the genuine exercise of this honourable capacity, lay upon you my commands, to begin to the first of the three heads of your proposed work, rent, profit, wages—viz. rent, without an hours' delay. If you entrust the inspection of it to me, depend upon it I shall compell you to make it all right, before you have done with it.
Mill's advice on the art of composition was for Ricardo to write as though to a friend of average understanding. He attempted to make Ricardo's style less elliptical by forcing him to write exercises like the following:
You have stated repeatedly this proposition, that improvements in agriculture (suppose in such a state as that of England at present) raises the profits of stock, and produce immediately no other effects. But you have no where stated the proof. You have left it to be inferred from your general doctrine as to rent. The additional produce cannot be received as rent, which is limited by another circumstance. And it cannot go as wages, because they too are otherwise limited. Therefore, it must be received as profit. But what I wish you to do, is, not to content yourself with this inference—but to show by what steps, in practice, the distribution would take place. As for example—By improvements, all the capital employed on the English soil becomes more productive—the same quantity of corn is consumed in cultivating the land; a greater quantity is returned: What, in their order, are the effects which follow? On this subject, I ordain you to perform an exercise—a school exercise: in other words, write me a letter. That is to say, provided you understand what I propose to you. My meaning is, that you should successively answer the question, What comes next? First of all is the improvement. What comes next? Ans. the increase of produce. What comes next? Ans. a fall in the price of corn. What comes next?—and so on. I shall see then what next is to be proposed to you. For as you are already the best thinker on political economy, I am resolved you shall also be the best writer.
As a further aid to clarity he suggested the favourite Benthamite device of making analytical, marginal summaries of each paragraph. The extent to which Ricardo was willing to place himself in Mill's hands, even down to accepting advice as to how his every-day life should be organised, is a tribute to Ricardo's faith in Mill's counsel.
In December 1815, however, Ricardo was ‘stopped by the word price’, and Mill's vague reassurances could hardly have been of much assistance. As a result of his difficulties over the problem of value, Ricardo's efforts began to flag. In May 1816 he gave up writing altogether for two months and was dubious as to whether he would ever resume. In August Ricardo resumed work, but informed Mill that ‘I am often inclined to throw my writing aside as a task much beyond my powers to accomplish, and I believe my sole inducement to go on is the reflection that I am not obliged to publish.’ The following bracing reply came back from Mill:
I was much delighted with your kind letter, received a few nights ago, though it continues so much in the old desponding tone. Why should a man that is not afraid to talk upon a subject before any body, be afraid to write; since writing is nothing but talking upon paper? You can not only talk before the people who are the most celebrated for their knowledge upon this subject, but you are not afraid to contest with them, and to hold your opinion in preference to theirs; and make it appear to the auditors that you are right. Well, then, just do the same thing upon paper-what more would you have?—I shall begin by and bye to think that your misgivings, and your faintness at heart, are apologies ingeniously contrived by you in defence of idleness? Or (what is a more ingenious conjecture, just come into me head) that you employ them as baits with which to fish for compliments;—as who should say,—Ah, I have not talents for the thing, my capacity is not sufficient-And then comes the kind friend, who cries with enthusiasm, My dear Sir, allow me to correct the only mistake in which in the course of your life you ever fell-your talents are admirable; your capacity is immense-only do write and astonish the world! Now I, not being much practiced in the arts of pleasing, shall say quite the contrary-that no talents are wanted, but what any body possesses-you have the thoughts in your mind already and have only to put them down upon paper-after they are down, to look them over, and see that nothing is omitted which you wish to have there-that no one thing is there in more places than one-and that every thing is in the right place. Surely there is nothing in all this to frighten any body-Well, this is all you have to do. The first thing is, to go over your subject, from the beginning to the end, in any way, no matter what. If then, it don't please you, have it back and go over the ground again, altering when you find altering to be good. If it should not please in this form, go over it again. Do you think that any man writes a good book by Divine Grace, and the favour of inspiration? Rousseau declares that he never gave anything to the public, which, so far from pleasing him the first time, had not been written five times over. I do not mean to let you retract your faith solemnly pledged that I am to be your School master, fully vested with all the rights belonging to that redoubtable office. Well then, in virtue of these rights, I solemnly command and ordain that you proceed, without loss of time, on the plan which you have already sketched out, till you have gone over the whole field of Political Economy, from the beginning to the end, thinking nothing of order, thinking nothing of repetitions, thinking nothing of stile-regarding nothing, in short, but to get all the thoughts blurred upon paper some how or another. We shall see what is to be done with it after that-that is the first thing. Surely you can do that-for it is only saying do what you can-and you will not pretend to say that you cannot do what you can.
Another command of mine is, that-as I know you have by this time a pretty mass of papers, written first and last upon the subject-you put as much of them as possible, that is all except those which are absolutely necessary for you to go on with, up in a parcel, and send them here. I have a quantity of things to learn, which I know they will teach me. And perhaps they may enable me to give some directions to you which may not be useless. I mean that you should include those which you read to me in London, because hearing a thing read is very different from reading it when you have leisure by yourself. If you can put the sheets that relate to one subject up by themselves-and give some indication of what each subdivision is about, so much the better-but if not, no matter-send them higgledy-piggledy all together.
Ricardo promised to obey but procrastinated for two months on the grounds that he needed to copy out the papers. However, on 14 Oct. 1816, after further badgering, the papers covering the first seven chapters of the Principles were sent to Mill. A month later the second half of the book containing the principles of taxation was despatched. Having had these parts of the work read to him by Ricardo earlier, Mill was familiar with the general line of argument; he accepted both parts of the work wholeheartedly.
My opinion may be given in very few words; for I think you have made all your points. There is not a single proposition the proof of which I think is not irresistible. With the curious result pointed out in your letter with respect to the effects produced by the rise of wages, on the price of those commodities which are chiefly the return from fixed capital, I was very much struck; but have no doubt whatsoever as to the validity of your conclusions, the proof of which I think is incontrovertible…
I have now gone over your inquiry into the subject of Taxation, with the same care as the former part of the work. I have also the pleasure to tell you that I am equally well satisfied. Now for the first time is the real operation of taxes explained; for this was a part of his subject on which Adam Smith was superficial, and added not a great deal to the knowledge of the world. Your doctrines are original and profound, for it was by no means an easy matter to get down to them; and I have no hesitation whatsoever in saying that they are fully and completely made out. I embrace every one of them; and am ready to defend them against all the world.
Mill's contribution in inducing Ricardo to write his great work was very fairly assessed by Ricardo himself.
If I am successful in my undertaking it will be to you mainly that my success will be owing, for without your encouragement I do not think I should have proceeded, and it is to you that I look for assistance of the utmost importance for me-the arranging of the different parts, and curtailing what may be superfluous.
Apart from acting as impresario and coach to a shy performer, Mill helped with the detailed preparation of the text for publication. He does not seem to have had much influence on the final arrangement of topics-he adopted a different plan for his own exposition of Ricardo's principles-but his hand can be detected at a number of points in matters of style and emphasis. On questions of theory Mill had little to offer Ricardo. In this respect, it might be said that Malthus, by acting as a constant antagonist, was of more help to Ricardo. But Mill's efforts on his friend's behalf were prodigious; and the vicarious pleasure which he took in Ricardo's success brings out the human side of the more familiar picture of Mill as the stern schoolmaster.
Besides wanting to place Ricardo ‘beyond all dispute at the head of Political Economy’, Mill hoped that Ricardo would become the parliamentary spokesman for ‘correct’ economic principles and ‘good government’. On the latter subject Mill was the expert, and there was good reason for him to believe in the malleability of Ricardo's mind when subjected to the hammer of reason. The first step in Ricardo's political education was to convince him that the principal source of misgovernment was the subservience of public men to their private interests. Ricardo, to begin with, rejected out of hand Mill's suggestion that he should enter parliament. He also felt that Mill was ‘unjustly severe’ in his strictures on the venality of public men; and that he was inclined ‘to allow too much force to the stimulus of money, and the praise of princes, and too little to the effect of public opinion’.
For a time the matter was left in abeyance, but towards the end of 1816 it is clear that Mill had made inroads on Ricardo's firm rejection of the parliamentary scheme. Ricardo was now saying that he would consider entering parliament if his book was successful. Ricardo was true to his word and negotiations to obtain a seat began late in 1817, although they were not brought to fruition until February 1819. Throughout this period Ricardo continued to express doubts as to his ability to speak or contribute anything to the cause of reform. A good deal of his diffidence sprang from his belief that outside questions of political economy his education had been irreparably neglected. Nevertheless, he allowed Mill to take charge of his general and political education. As groundwork Mill advised Ricardo to read Locke, Hume, and Millar, and later, his own History of India. He felt sure that he would be able to overcome Ricardo's feeling that legislation was a ‘most difficult science’.
I have no doubt about removing all your difficulties; and showing you that instead of being a science, the practical results of which must always be uncertain, rendering it always prudent to try to remain in the state we are in, rather than venture the unknown effects of a change, legislation is essentially a science the effects of which may be computed with an extraordinary degree of certainty; and the friends of human nature cannot proceed with too much energy in beating down every obstacle which opposes the progress of human welfare.
It is clear that Ricardo was eager to be convinced by Mill's sweeping claims. By the spring of 1818 he was an enthusiastic, though moderate, parliamentary reformer. It was at this time that he began his attempts to convert Hutches Trower to the cause, making use of arguments supplied by Mill in the course of their walks together. As further preparation for his duties as an M.P., Ricardo undertook the task set him by Mill of writing a few ‘discourses’ on the principles of reform. As an M.P. Ricardo was looked upon as an ‘ultra-reformer and a visionary’. Mill's influence on him in this respect was crucial. This was acknowledged by Ricardo himself when he wrote to Francis Place that: ‘I as well as you am a disciple of the Bentham and Mill school.’ It was also apparent to neutral contemporary observers like J. L. Mallet.
He early became an advocate of the principle of utility. James Mill…a pupil of Bentham's, and a man of considerable acuteness, research and talents, was Ricardo's most intimate friend, and no doubt contributed to the formation of many of his opinions.
1. The Elements of Political Economy
In 1819, when John Stuart Mill had reached the ripe age of thirteen, James Mill decided that it was time for him to be initiated into the mysteries of political economy. In the course of their daily walks he lectured John on the subject: these lectures were then written up in note form, and submitted for rigorous criticism the following day. The notes served as an outline for the Elements of Political Economy, which James Mill began to write towards the end of 1820. By April 1821 the work was nearly finished, although it was not published until November.
The Elements was intended as a ‘school-book’ for those who wished to learn the essential doctrines of the ‘new school of political economy’, but who were not willing to make the effort necessary to understand Ricardo's Principles. It was Mill's attempt to do for Ricardo what he had already done for Bentham in the field of law and government: to consolidate the Ricardian school and remove any obstacles which might bar the way to a full acceptance of ‘correct’ principles. In spite of its aim, the style of the work was not a very popular one. It is written in a manner which seems to confirm Macaulay's jibe against Mill's Essay on Government, that its author was ‘an Aristotelian of the 15th Century born out of due season’. The Westminster Review actually recommended that Mill's book should be read as Euclid and not as a novel; but others from the ranks of the converted considered its ‘geometric’ approach a drawback to its success. McCulloch had this to say about the book:
…it is of too abstract a character to be either popular or of much utility. Those secondary principles and modifying circumstances, which exert so powerful an influence over general principles are wholly, or almost wholly, overlooked by Mill. But although their consideration might be omitted in an original work like that of Ricardo, it is not so easily excused in an elementary treatise…The Science is very far from having arrived at the perfection Mr Mill supposed.
John Stuart Mill put his finger on his father's weakness when he said that he trusted ‘too much to the intelligence of the abstract, when not embodied in the concrete.’ John considered that the Elements was ‘a very useful book when first written, but which has now for some time finished its work’ : he obviously did not think it was one of his father's more enduring contributions.
James Mill was not interested in theoretical refinements for their own sake; he merely wished to give a logical account of the Ricardian system, avoiding or cutting through any disputed areas. This is a justifiable procedure in any introductory work, but the truth is that Mill was unwilling to recognise many of the difficulties with which others struggled. When he was writing the Elements he was pleased with his success in treating the subject ‘within a narrow compass’; but clearly found sections like that on money, for example, where ‘many different circumstances had to be noticed’, tedious to write. Although he made fairly extensive revisions to the book when the second edition was published in 1824, these mostly took the form of fuller expositions of positions already held. He made little effort to alter those parts of the work on which Ricardo had commented; and although in the third edition he modified his treatment of international values and profits as a result of criticisms arising out of discussions of the book by the younger utilitarians led by his son, he did not go as far as they would have liked.
At this point in time the very crudity of Mill's Elements makes it an interesting document to the modern reader. We are presented with the Ricardian interpretation of the classical model in its simplest form. Ricardo was too absorbed in his task of following through the logic of an original insight to present a balanced picture of this model. Mill brings out more clearly the continuing Smithian basis of classical thinking by emphasising the growth factor, the division of labour, and the distinction between productive and unproductive consumption. The opening chapter and the whole arrangement of the Elements make it clear that the book is addressed mainly to ‘real’ problems; that the grand, equilibrium circle-primitive accumulation, production, distribution, exchange, consumption and back to accumulation-is to occupy the centre of the stage. In this respect, and especially in view of his stress on the Law of Markets, Mill's Elements follows naturally on his earlier work Commerce Defended. The important difference is that at the heart of the Elements lay Ricardo's theorems linking accumulation with the distribution of the total product between wages, rent and profits. As Mill saw it, these were the final pieces in the jig-saw of political economy. ‘Till the laws were discovered, which determine the boundaries of these several portions…almost all the conclusions of Political Economy were vague and uncertain.’
Ricardo's Principles opens with a long and tortuous chapter on the determinants of exchange value and the related question of the measure of value; for several years these were the chief topics of theoretical discussion among economists. It was Mill's original intention to concentrate on the distribution question, and ‘steer clear if possible of the difficult word value’. Ricardo obviously did not think this approach was impossible. He had attempted to do the same in his 1815 essay on the corn laws; and even after he had found it necessary to wrestle with the problem of value in the Principles, he maintained, on one occasion at least, that ‘the great questions of Rent, Wages, and Profits must be explained by the proportions in which the whole produce is divided between landlords, capitalists and labourers, and which are not essentially connected with the doctrine of value’. Nevertheless, neither Ricardo nor Mill succeeded in sidestepping the issue. In Mill's case this was probably due to the fact that Ricardo's treatment of the issue had come under fire from Torrens, and Mill felt it necessary to make good his promise to defend Ricardo's doctrines ‘against all the world’.
Mill accepted Ricardo's view that the existence of capital made little or no difference to the general rule that the quantity of labour embodied in a commodity determined its exchange value. But his dogmatic treatment of the question in the Elements obscured Ricardo's acknowledgment that the rule required modification where capital was employed in different proportions and possessed differing degrees of durability. As Ricardo said: ‘What I call exceptions and modifications of the general rule you appear to me to say come under the general rule itself.’
Mill's plus royaliste position merely served to inflame Torrens, Bailey and Malthus, Ricardo's chief critics; but Mill himself does not appear to have been eager to enter into extended controversy on the issue. He got his son, a mere boy of sixteen at the time, to answer Torrens's criticisms of his section on value as it appeared in the first edition. It istrue that Mill may have written the reply to Bailey's attack on the Ricardian theory of value in the Westminster Review; but Mill did not think it worth mentioning Bailey's name in the third edition of the Elements. He also made critical notes on Malthus's Measure of Value, but made no effort to get them published. John Stuart Mill spoke for his father when he said that the dispute over value was ‘a question of pure curiosity and of no practical use whatever’.
Ricardo himself reopened the question a few weeks before his death in a paper on Absolute Value and Exchangeable Value, in which he criticised Mill and McCulloch's solution to the measure of value problem. When these papers came into Mill's hands he took the decision not to have them published. He was simply following the line he had advocated earlier when he discouraged Ricardo from publishing his Notes on Malthus as an appendix to the third edition of the Principles. It could not serve the cause of ‘correct principles’ to confuse the public mind with prolonged disputes and revisions.
The same decided view is apparent in Mill's attitude to the Political Economy Club, of which he was a founder member in 1821. He clearly felt that the object of the Club was not so much to debate where Ricardo had or had not been mistaken, but to act in concert to defend and propagate an accepted doctrine. In the draft of the rules of the Club prepared by Mill, it was proposed that each member should answer a catechism before every meeting which contained questions like the following: ‘Do you know anything in the legislation or practice of this country, not recently under consideration of this Society, peculiarly at variance with the principles of Political Economy and has anything occurred to you with respect to the measures of remedying such evils?’ The catechism idea was rejected, but the rules themselves contain ample evidence of Mill's desire to use the Club to influence public opinion. It was, for instance, the duty of members to watch the press ‘to ascertain if any doctrines hostile to sound views in Political Economy have been propagated; and to contribute whatever may be in their power to refute such erroneous doctrines and counteract their influence’. Mill wanted the Club to do what he had been doing constantly for the cause of parliamentary reform.
It shall be the duty of the Society to study the means of obtaining access to the public mind through as many as possible of the periodical publications of the day and to influence as far as possible the tone of such publications in favour of just principles of Political Economy.
Despite this early zeal, before 1826 Mill proposed only one question for discussion by members of the Club, concerning the effect of Irish immigration on English living standards ; and after this date, he attended on only three occasions. After the third edition of the Elements was off his hands, Mill was anxious to return to an early love, namely the analysis of the human mind. J. L. Mallet, however, considered that there were less flattering reasons for Mill's failure to attend the Club's meetings.
He is not enough of an oracle among us, and does not find among his equals in intellect, so far as this science is concerned, Torrens, Malthus, McCulloch, Tooke, that deference, not to say adulation, which is paid him by the younger Utilitarians and Aristocratical worshippers of Talent.
A more charitable interpretation might be that he considered the main work in political economy to have been done already by Ricardo. The task now was simply one of spreading the good tidings; and this the Club did not seem interested in doing.
One further attempt by Mill to add to the public understanding of political economy deserves brief mention here. As a member of the Committee of the Society for the Diffusion of Useful Knowledge he was responsible for pressing the Society to publish treatises on practical aspects of political economy written by the younger utilitarians.
A number of books have been written on Ricardian economics since the publication of Ricardo's collected works. It does not seem necessary, therefore, to traverse the whole of this ground by comment on Mill's exposition of Ricardo's principles in the Elements. Two topics on which Mill added to or differed from Ricardo are discussed here: more detailed comment is reserved for footnotes to the text.
2. Population and Wages
The treatment given to population and wages in the Elements provides a good example of Mill's penchant for what Ricardo called ‘strong cases’. Throughout his discussion of these matters he dramatised the remedy which he favoured for ‘the condition of the people’, by putting forward an apparently water-tight argument which minimised the value of alternative solutions or outcomes. Mill's treatment of the population question also shows the way in which he introduced socio-political arguments into what purported to be a ‘school-book’ confined to the ‘science’ of political economy.
Mill declared his support for the Malthusian principle, that population has a consistent tendency to grow faster than the means of support, in his earliest economic pamphlet. There were many ways in which this principle could be interpreted: Mill chose to adopt an extreme view, although it is more accurate to describe him as an extreme neo-Malthusian. His first full discussion of the problem was in his article on ‘Colonies’ for the Supplement to the Encyclopaedia Britannica written in 1817. Here he contrasts the evidence of population redundancy under a system of slavery with that of a modern wage-economy. In a slave system, the burden of redundancy falls on the slave-owner who has to meet higher food costs. In a wage economy, competition for available food supplies takes the form of the mass of the population offering more labour in exchange for food; or, in other words, accepting lower wages and living standards.
This is the point of departure for the treatment given to the subject in the Elements. In a wage economy, wages depend on the ratio of population to capital, i.e. the wage-fund doctrine, which Mill expresses in its most unqualified form. He now sets out to show that population has a universal tendency to outpace capital accumulation, and his first argument is an assertion to the effect that the consequences of this tendency are plainly in evidence throughout the world; the living standards of the masses are actually at the physical subsistence minimum. Here Mill typically fails to distinguish between what could happen according to his model, and what has in fact occurred: he moves directly from a ceteris paribus situation to the real world. Unlike Smith and Ricardo, Mill makes no allowance for the possibility that real wages may remain above the psychological or physical minimum for what amounts to a lengthy short run.
The next stage of the argument is based on the notion that the biological factors underlying population growth are more persistent in their operation than the social and psychological factors which determine capital accumulation. The exercise in deductive sociology used to support the proposition that capital accumulates slowly constitutes the most interesting part of the whole chapter. At one end of the scale, according to Mill, there are those societies where the many are poor and the rich are few. The poor cannot save and the rich have little incentive to add to their possessions. Alternatively, there are those societies in which both capitalists and labourers possess ‘the means of all the substantial enjoyments of life’. In this type of society neither the near-sighted nor those capable of foresight have any great incentive to accumulate; the former by definition, and the latter because they realise that what they will add to their ‘enjoyments’ by saving ‘is in a great measure fancy’. Two possible motives for saving are left: ‘the desire of a command over the sentiments of mankind’ and ‘the wish to make a provision for children’. Power and influence are difficult to acquire if most people are moderately well-provided for and independent, which is one reason why Mill considered this type of society to be ideal. As to the desire to provide for children, Mill claims that a man who has reached a satisfactory plateau of wealth is not likely to wish to place his children in a ‘better’ position. For these reasons only ‘moderate effects’ (whatever these might be) are to be expected from the motives for accumulation. Mill seems to have recognised that this type of argument did not constitute a ‘proof’ of the tendency for capital to accumulate more slowly than population; this he thinks is given by invoking the law of diminishing returns, the fall of profits and the consequent decline in the source of savings.
Mill's sociological arguments are redolent of the kind used by Adam Smith when discussing ‘the desire of every man to better his condition’. Smith too was basically an ascetic when it came to the question of individual riches; but unlike Mill, Smith seems to have thought that men were not sufficiently rational to realise that the pursuit of wealth or command over the sentiments of others was, beyond a certain point, fruitless; there was no rational millennium, the attainment of which would weaken the desire for further accumulation. John Stuart Mill is usually considered to be unique in his concept of an ideal stationary state in which further economic striving ceases ; but it seems clear that this notion was derived from his father.
The rest of Mill's chapter on wages is devoted to a demonstration of the futility of all remedies for the population problem other than the one which he favoured. He considers the possibility that the legislature might intervene to create capital by taxation, but concludes that forced accumulation would merely push a society more rapidly towards the stationary state by increasing population, raising rents and lowering profits. All members of society except the existing landowners would become poor wage-earners; population density would rise, and land would be increasingly subdivided. At this point Mill invokes another sociological argument to show that the elimination of the middle classes, those living on moderate incomes and enjoying sufficient leisure to cultivate the arts and sciences, would be disastrous to the progress of society.
Since little hope of raising living standards could be expected from increased capital accumulation, the only remedy left was to control the growth of population; and by this Mill meant birth control and not simply moral restraint. In his article on ‘Colonies’ for the Supplement to the Encyclopaedia Britannica Mill became the first economist to endorse birth control in print, albeit rather circumspectly. He is discussing the question of ‘what are the best means of checking the progress of population?’
It is, indeed, the most important practical problem to which the wisdom of the politician and moralist can be applied. It has, till this time, been miserably evaded by all those who have meddled with the subject, as well as by those who were called upon by their situation to find a remedy for the evils to which it relates. And yet if the superstitions of the nursery were discarded, and the principles of utility kept steadily in view, a solution might not be very difficult to be found…
In the Elements the advocacy of birth control is less oblique. He speaks of the form of prudence where ‘care is taken that children, beyond a certain number, shall not be the fruit’, and of ‘securing the happiness of the matrimonial union without the attendant evil of over-population’. Having started from the assumption that wages were constantly at the barest minimum, he ends by holding out boundless hopes of improvement; the limitation of births could ‘raise the condition of the labourer to any state of comfort and enjoyment which may be desired, and prevent the need for further accumulation’.
These were the beliefs which Mill instilled in the younger philosophical radicals, as his son's account makes clear.
The Malthusian principle was quite as much a banner, and point of union among us, as any doctrine specially belonging to Bentham. This great doctrine, originally brought forward as an argument against the indefinite improbability of human affairs, we took up with ardent zeal in the contrary sense, as indicating the sole means of realizing that improbability by securing full employment at high wages, to the whole labouring population through a voluntary restriction of their numbers.
3. Taxes on Rent
In his History of British India, Mill referred to Ricardo's treatment of taxation as ‘the most profound, by far, which has yet been given to the world’. As one might expect, therefore, Mill's discussion of taxes in the Elements is largely derived from Ricardo. But on one important question, the feasibility and desirability of taxes on rent, Mill went a good deal further than either Ricardo or McCulloch were willing to go. This was not simply a textbook matter because, as will be seen later, in his capacity as Chief Examiner at the India Office, Mill attempted to implement the radical conclusions which he drew from Ricardo's interpretation of the rent doctrine. Though this is seldom realised, Mill's influence on the Indian land revenue system represents perhaps the single most important application of Ricardian economics in practice.
The first clues as to Mill's position with regard to taxes on rent can be found in the History of British India, where he discusses the Hindu system of raising revenue from the produce of the land. Although he levelled severe criticism at this system, he considered the objections ‘to arise from the mode rather than the essence’; it was an obvious expedient in a society dependent on agriculture but it also had ‘no inconsiderable recommendation from science itself’. By science Mill meant the rent doctrine. If rent was a pure surplus earned on intra-marginal land after the payment of wages and profits, then it could be taxed without affecting production or prices. In the early stages of society when land is owned communally, it becomes a simple matter for the state to appropriate that part of the annual produce which, under a system of private land ownership, would go to the landlord as rent. This was one case where Mill obviously felt that European progress, in the shape of the establishment of private incomes from land, had been a retrograde step: what might have gone to meet community needs had been annexed to private individuals.
This was basically the position which Mill upheld in his chapter on taxes on rent in the Elements, though here he was faced with the problem of how rent could be taxed once land had become private property, and land values reflected expectations of private rent income. He admitted that in the absence of complete land nationalisation, the solution he favoured in India, it would be unjust to meet the whole of the needs of the government by appropriating rent. But he saw no reason why a kind of generalised betterment charge should not be imposed in the form of a tax on incremental land values. This would require making a distinction between present land values, based on existing rents plus a reasonable allowance for improvement, and any increase in values beyond present levels which could be imputed to the acts of the legislature. The land-owner had acquired a right to the former but not to the latter. Any legislative measure which increased population and the demand for food gave to the land-owner an unearned increment, which Mill thought it proper for the state to tax.
In upholding the principle of taxing rent Mill was merely taking to its logical political conclusion, Ricardo's argument that there was an inherent conflict between the interests of land-owners and the rest of the community. Ricardo himself did not think that Mill's scheme was practicable; it would be difficult to separate pure rent from profit on capital invested by the land-owner, and therefore a tax on contractual rents might inhibit the improving landlord. But, as always, Ricardo was willing to face the logical consequences of his doctrines, and does not seem to have been afraid of considering the possibility of complete land nationalisation. The same could not be said of McCulloch who invariably stressed the harmony of the economic order ; he criticised Mill's argument concerning taxes on rent on the grounds that it involved discriminatory taxation. Mill replied to this criticism in the third edition of the Elements, pointing out McCulloch's inconsistency in recognising the special nature of rent income, while, for taxation purposes, regarding it as similar to profits.
The difference between Mill and McCulloch on this issue is, of course, basically political. Ricardo's rent doctrine merely provided scientific support for Mill's longstanding antagonism towards the land-owning classes; it accorded completely with his view that the politics of the day were dominated by the clash of selfish interests. McCulloch, on the other hand, was a Whig, and regretted that Mill was such an ‘incorrigible radical’. Even before Ricardo had published his Essay on the Influence of the Corn Laws on the Profits of Stock (1815), in which the idea of conflict between land-owners and the rest of the community was first emphasised, we find Mill stressing the class struggle side of the Corn Law issue. In a letter to McCulloch on the subject later, Mill's political motive in stressing this conflict becomes clear.
There was an excellent paragraph the other day in the Scotsman, stating the effect of the Corn-Laws in setting the rest of the community against the landlords, and showing the indispensable necessity of taking the monopoly of legislation out of their hands. The terror arising out of this view is the only thing which will work upon them. They must therefore be plied with it.
The political implications of Mill's tax proposal did not go unnoticed. During the second reading of the Reform Bill, an opponent, Vyvyan, pointed out the danger to property if such men as Mill were allowed access to power. After quoting from Mill's chapter on taxes on rent he went on to say:
These were Mr Mill's sentiments upon the subject of rent: he is one of the class who in future are to be called upon to regulate our affairs: and I will ask any hon. Member if, after land has been so treated, the funded property can last a single hour?
He predicted that all forms of property, including the ‘poor man's hoardings’ in the Savings Banks, would be placed in jeopardy by the passage of the Bill.
Vyvyan's fears were exaggerated. Mill believed that the Savings Banks and the Benefit Societies were valuable institutions, helping to encourage working-class prudence and foresight in the face of the Malthusian menace. There were special reasons for Mill's animosity towards the landed interest which did not apply to any other form of property. He believed that land-owners controlled parliament in their own interests, and that their income and influence was ‘unearned’ in the precise economic sense of the term. As we have seen in our discussion of population and accumulation, Mill shared Adam Smith's view that the possession of a large fortune, particularly as derived from large estates, was inimical to foresight and saving; it encouraged the cultivation of idle pleasures and was not conducive to the pursuit of the ‘intellectual virtues’ which Mill prized so highly. To this point of view must be added Mill's special insistence on the contribution of the hardworking, prudent, middle classes to the progress of society.
In an article on ‘Aristocracy’ for the London Review, Mill went out of his way to point out that:
Reformers are far from thinking evil of inequality of fortunes; on the contrary they esteem them a necessary consequence of things which are so good, that society itself, and all the happiness of human beings, depend upon them: a consequence of those laws whence the generations and augmentation of a property proceed. That the property of nations may advance, there must exist motives to accumulation.
Inequality was essential for cultural progress as well,
To have men of high intellectual attainments, we must have men who have their time at their command, not under necessity of spending it wholly, or in greater part, in providing the means of subsistence:—or in other words, we must have men of independent income.
But this inequality had to be the result of the ‘natural laws of accumulation’ and not derived from ‘unnatural restraints put upon the natural laws of distribution’. By the latter Mill meant inheritance under the law of primogeniture. He opposed this law because it required ‘that a man should not leave his property to whom he will, or that it should not go in equal parts to those whose proximity of relation to him is the same.’ Once more Mill was at logger-heads with McCulloch, who defended primogeniture as the means by which efficient farming and political stability were preserved.
Having stated his preference for a society in which the necessary inequality was based on accumulation and intellectual merit, James Mill was anxious to combat redistributive measures.
When a man has attained eminence by intellectual acquirements, by a course of beneficent conduct to his fellow-creatures, by presenting a model of what is amiable in his amusements and tastes, or, lastly, by the honourable accumulation of wealth, why should he be robbed of any portion of the dignity which those merits confer?
In his article on ‘Colonies’ for the Supplement to the Encyclopaedia Britannica Mill went out of his way to ‘prove’ by means of the law of diminishing utility that income redistribution reduces the total sum of happiness.
When from one of two parties, equally provided with the means of enjoyment, you take a portion to give it to the other, the fact is,—a fact too well established, and too consonant with the experience of every man, to need illustration here,—that you do not add to the happiness of the one, so much as you take from the happiness of the other, and that you diminish the sum of happiness of the two taken together. This, in truth, is the foundation upon which the laws for the protection of property rest. As the happiness of one man, is, or ought to be, of no more value to the state than the happiness of another man, if the man who takes from another man a part of his property, added to his own happiness, as much as he took from the happiness of the other, there would be no loss of happiness upon the whole, and the state would have no ground, in utility, on which to interfere.
This is yet another example of the polemical use of the ‘strong case’. Without the question-begging assumption that both parties are ‘equally provided with the means of enjoyment’, the whole argument could be reversed.
Having isolated the land-owner from the rest of society, Mill argued that the interests of labour and capital were harmonious. This conclusion could be supported by the wage-fund doctrine, and was strengthened by Mill's belief that the working classes would be guided by ‘the most wise and the most virtuous part of the community, the middle rank’. Indeed, he considered that the working classes would ‘account it to their honour’ to adopt middle-class opinions. The ‘occasional turbulence of a manufacturing district’ was entirely due to the absence of sufficient middle-class influence. He was bitterly opposed to those working-class radicals who, like Thomas Hodgskin, attacked property and ‘sound’ money, and championed the right of labour to the whole produce.
These opinions, if they were to be spread, would be the subversion of civilised society; worse than the overwhelming deluge of Huns and Tartars. This makes me astonished at the madness of people of another description who recommend the invasion of one species of property, so thoroughly knavish, and unprincipled, that it can never be executed without extinguishing respect for the rights of property in the whole body of the nation, and can never be spoken of with approbation, without encouraging the propagation of those other doctrines which directly strike at the root of all property.
If the proper information were to be made available, the working classes would realise ‘that the existence of property was not only good for the labouring man, but of infinitely more importance to the labourers as a class, than to any other’. Mill wished to substitute middle-class rule for aristocratic domination. He was quite unable to understand the nature of the working-class movement and its aspirations. For all his talk of ‘the people’, his view of the working class was basically paternalist; their best fate was to be guided, and perhaps ultimately assimilated, by their immediate superiors.