Liberty Matters

John Stuart Mill and the Dangers from Unrestrained Government. Part I


John Stuart Mill is notorious among classical liberals for his insistence in his Principles of Political Economy that while,
The laws and conditions of the Production of wealth partake of the character of physical truths” with “nothing optional or arbitrary in them . . . It is not so with the Distribution of wealth. That is a matter of human institution solely. The things once there, mankind, individually or collectively, can do with them as they like. They can place them at the disposal of whomsoever they please, and on whatever terms . . . The rules by which it is determined are what the opinions and feelings of the ruling portion of the community make them, and are very different in different ages and countries; and might be still more different if mankind so chose.”[38]
Due to Mill’s reasoning in support of this dichotomy between the laws of production and distribution, and his attempts to suggest that human nature toward work and collective effort might change in the future, Austrian economist, F. A. Hayek argued that Mill’s “advocacy of distributive justice and a general sympathetic attitude towards socialist aspirations in some of his other writings, prepared the gradual transition of a large part of the liberal intellectuals to a moderate socialism.”[39]
And it is certainly the case that from the modern classical liberal/libertarian perspective, Mill’s assertions and claims seem both conceptually unconvincing and experientially unfounded.[40]
In his Principles, Mill argued the case for numerous exceptions to the laissez-faire principle of governments being limited to the protection of life, liberty and peacefully acquired property. Most current-day classical liberals would no doubt find many or even most of these exceptions unpersuasive in the light of more than a century with government intervention in education, business regulation, the labor market, and welfare state “social safety nets.”
Self-Interest and the Consequences of Government Intervention
 But it would be unfair to Mill to assert that he had lapsed into a fully utopian la-la-land of malleable human nature in which social reality could be whatever the dreamer of a “better world” might desire.
He may have been open and even sympathetic to the idea that maybe someday human nature in the normal societal work environment might become more like a monastic brotherhood of collective sharing and selflessness. But in the world in which Mill lived he had no illusions about any such transformation in a reasonable horizon of time. He worked under the clear and evident assumption that individuals are guided by self-interest, that they attempt to improve their own circumstances as they define betterment, and they respond to the incentive structures within the institutional settings in which they find themselves.  
Given the reality of human nature in the social world, Mill was insistent that, “though governments or nations have the power of deciding what institutions shall exist, they cannot arbitrarily determine how those institutions shall work.”[41] The effects from changing how wealth was distributed in society were not under man’s unlimited control through government edict, legislation or command. Or as he put it,
We have here to consider, not the causes, but the consequences, of the rules according to which wealth may be distributed . . . Human beings can control their own acts, but not the consequences of their acts either to themselves or to others. Society can subject the distribution of wealth to whatever rules it thinks best; but what practical results will flow from the operation of those rules must be discovered, like any other physical or mental truths, by observation and reasoning.”[42]
He understood that the link between work and reward was strongest when the gains from effort were the property of the producer of wealth, and the resulting output might be negatively affected under prevailing human circumstances with a break in this linkage.
Individuals Know Their Own Interests Better Than Government
He also believed that individuals have a far greater understanding of their own surroundings in terms of enterprise decisions than any government agents and bureaucrats could ever possess. Even if one were to imagine that they possessed the same knowledge as the actors in the different corners of the division of labor, those representatives of the government would never have the same incentive to use that knowledge as productively and profitably as the separate individuals in the market arena.[43]
However, in fact, there is more knowledge in the minds of all the members of a society combined than any one or group of government officials could ever know or master, Mill pointed out. Thus, it was better to leave the use of such dispersed and personal knowledge to those who possessed it, rather than the government taking on commercial and enterprising tasks for which it was not competent.[44]
In addition, given the reality of self-interest on the part of all members of society, whether in the market or in government, Mill warned the presumption needed to be the constant danger of misuse and abuse of political power and governmental position.
Government the Greatest Threat to Person and Property
Essential for individual and social prosperity was security of person and property, Mill insisted. But there is always the eternal problem of who guards the people from the guardians meant to protect people’s lives and possessions? Or as Mill expressed it:
By security I mean the completeness of the protection which society affords to its members. This consists of protection by the government and protection against the government. The latter is the most important.“Where a person known to possess anything worth taking away, can expect nothing but to have it torn from him, by every circumstance of tyrannical violence, by the agents of a rapacious government, it is not likely that many will exert themselves to produce much more than necessaries . . . The only insecurity which is altogether paralyzing to the entire energies of producers, is that arising from the government, or from persons invested with its authority . . .“It is sufficient to remark, that the efficiency of industry may be expected to be great, in proportion as the fruits of industry are insured to the person exerting it; and that all social arrangements are conducive to useful exertion, according as they provide that the reward of every one for his labor shall be proportioned as much as possible to the benefit which it produces.“All laws and usages which . . . chain up the efforts of any part of the community in pursuit of their own good, or stand between efforts and their natural fruits  . . . [tend] to make the aggregate productive powers of the community productive in a less degree than they would otherwise be.”[45]
In the next installment of this post I will discuss two more important points raised by Mill, namely that even disirable government services should not be monopolized and the dangers which come from democracy and the need to limit the franchise.
[38.] John Stuart Mill, Principles of Political Economy, with Some of Their Applications to Social Philosophy (Fairfield, NJ: Augustus M. Kelley, [1909] 1976) pp. 199-200.
[39.] F. A. Hayek, “Liberalism” [1973] in New Studies in Philosophy, Politics, Economics and the History of Ideas (Chicago: University of Chicago Press, 1978), pp. 129-130; on Hayek’s various and changing views of Mill’s liberalism and shift toward socialism, see, Bruce Caldwell, “Hayek on Mill,” History of Political Economy (Dec. 2008) pp. 689-704.
[40.] For a critique of Mill’s argument concerning work under markets versus under collectivism, see, Ludwig von Mises, Socialism: An Economic and Sociological Analysis (Indianapolis: Liberal Classics, [1936] 1981), pp.154-159. Online: </titles/1060>; see, also, Ludwig von Mises, Liberalism: The Classical Tradition (Indianapolis: Liberty Fund [1927] 2005) pp. 153-154: “John Stuart Mill is an epigone of classical liberalism and, especially in his later years, under the influence of his wife, full of feeble compromises. He slips slowly into socialism and is the originator of the thoughtless confounding of liberal and socialist ideas that led to the decline of English liberalism . . . Without a thorough study of Mill it is impossible to understand the events of the last two generations, for Mill is the great advocate of socialism. All the arguments that could be advanced in favor of socialism are elaborated by him with loving care.”
[41.] Mill, Principles, p. 21.
[42.] Ibid., p. 201.
[43.] Ibid., p. 957: “The ground of the practical principle of non-interference must here be, that most persons take a juster and more intelligent view of their own interest, and of the means of promoting it, than can either be prescribed to them by a general enactment of the legislature, or pointed out in the particular case by a public functionary.”
[44.] Ibid., p. 947: “It must be remembered, besides, that even if a government were superior in intelligence and knowledge to any single individual in the nation, it must be inferior to all the individuals of the nation taken together. It can neither possess in itself, nor enlist in its service, more than a portion of the acquirements and capacities which the country contains, applicable to any given purpose.” Thus, “the great majority of things are worse done by the intervention of the government, than the individuals most interested in the matter would do them, or cause them to be done, if left to themselves.”
[45.] Ibid., p. 115.