Published online by Cambridge University Press: 10 May 2010
J. S. Mill's role as a transitional figure between classical and egalitarian liberalism can be partly explained by developments in his often unappreciated economic views. Specifically, I argue that Mill's separation of economic production and distribution had an important effect on his political theory. Mill made two distinctions between economic production and the distribution of wealth. I argue that these separations helped lead Mill to abandon the wages-fund doctrine and adopt a more favorable view of organized labor. I also show how Mill's developments impacted later philosophers, economists, and historians. Understanding the relationship between Mill's political theory and economic theory does not only matter for Mill scholarship, however. Contemporary philosophers often ignore the economic views of their predecessors. I argue that paying insufficient attention to historical political philosophers' economic ideas obscures significant motivations for their political views.
1 I shall contrast two liberalisms: classical liberalism and modern egalitarian liberalism. I take classical liberalism to be the generally laissez-faire liberalism embodied by John Locke, Adam Smith, and the like. I take modern egalitarian liberalism to be a distinct political theory that instead emphasizes individuals' just claims to equal (however understood) shares of social wealth. Egalitarian liberal theories include those of Rawls, John, A Theory of Justice (Cambridge, 1971)Google Scholar; Dworkin, Ronald, Taking Rights Seriously (Cambridge, 1977)Google Scholar; and Walzer, Michael, Spheres of Justice: A Defence of Pluralism and Equality (New York, 1983)Google Scholar.
2 For two recent, though brief, discussions of Mill's separation, see Riley, Jonathan, ‘Mill's Political Economy: Ricardian Science and Liberal Utilitarian Art’, The Cambridge Companion to Mill, ed. Skorupski, John (Cambridge, 1998), pp. 293–337CrossRefGoogle Scholar; Wilson, Fred, ‘Mill on Psychology and the Moral Sciences’, The Cambridge Companion to Mill, ed. Skorupski, John (Cambridge, 1998), pp. 234–8Google Scholar.
3 I will qualify this statement below.
4 See Thompson, William, An Inquiry Into the Principles of the Distribution of Wealth Most Conducive to Human Happiness; Applied to the Newly Proposed System of Voluntary Equality of Wealth (London, 1824)Google Scholar; Say, Jean-Baptiste, A Treatise on Political Economy, 5th edn., ed. Biddle, Clement C., tr. Prinsep, C. R. (Philadelphia, 1855)Google Scholar; Jevons, W. S., The Theory of Political Economy, 3rd edn. (London, 1888)Google Scholar.
8 See Smith, Adam, An Inquiry into the Nature and Causes of the Wealth of Nations. ed. Campbell, R. H., Skinner, A. S., and Todd, W. B. (Oxford, 1976), p. 42Google Scholar.
9 Smith, Wealth of Nations, pp. 19–21.
10 Smith's Lectures on Jurisprudence contain some interesting passages. See Smith, Adam. Lectures on Jurisprudence, ed. Meek, R. L., Raphael, D. D., and Stein, P. G. (Oxford, 1978)Google Scholar.
11 See also David Ricardo's On the Principles of Political Economy of Taxation, in David Ricardo, Works and Correspondence of David Ricardo, ed. P. Sraffa, 11 vols. (London, 1951), vol. 1.
12 De Marchi analyzes several criticisms of the classical economists Mill felt compelled to answer. See De Marchi, ‘Mill's Principles’.
13 See Mill's autobiographical comments later in the essay. See. Mill, J. S., The Collected Works of John Stuart Mill, 33 vols., ed. Robson, John M. (Toronto, 1963), vol. 1, p. 256Google Scholar. For further commentary, also see Marshall, Alfred, Principles of Economics, 8th edn. (London, 1920), Appendix J4, p. 94Google Scholar.
14 Mill believed that his mental breakdown was cured partly by his discovery of romantic poets, many of whom were critical of political economy. See De Marchi, ‘Mill's Principles’ for a detailed analysis of the connection.
15 One should note, however, that Mill still bore in mind the consequences redistribution could have on production. See Mill, Collected Works, vol. 3, p. 755. Mill comments that ‘leveling institutions’ cannot permanently decrease poverty. I discuss this passage below.
16 Mill, Collected Works, vol. 12, pp. 36–7.
17 Mill, Collected Works, vol. 12, pp. 36–7.
18 Mill, Collected Works, vol. 12, pp. 36–7.
19 Mill, Collected Works, vol. 12, pp. 36–7.
20 Mill, Collected Works, vol. 12, p. 31.
21 De Marchi, ‘Mill's Principles’, pp. 119–57, esp. p. 136. Note also that Mill defends political economy in several different publications. See Mill, Collected Works, vol. 22, p. 249.
22 Mill, Collected Works, vol. 3, p. 753.
23 Mill, Collected Works, vol. 3, p. 753.
24 The influence of Thomas Malthus cannot be overlooked here. Malthusian views about population importantly influenced the classical economists, including Mill. Mill defends Malthus's influence in Mill, Collected Works, vol. 3, p. 753.
25 Mill, Collected Works, vol. 3, pp. 706–9.
26 Mill, Collected Works, vol. 3, pp. 753–4.
27 Mill, Collected Works, vol. 3, pp. 753–4.
28 Mill, Collected Works, vol. 3, pp. 753–4.
29 Mill, Collected Works, vol. 3, p. 752.
30 Mill, Collected Works, vol. 3, p. 755.
31 Mill, Collected Works, vol. 3, p. 755.
32 Mill, Collected Works, vol. 3, p. 755.
33 Mill, Collected Works, vol. 3, p. 755.
34 Mill, Collected Works, vol. 3, p. 755.
35 Mill, Collected Works, vol. 3, p. 755.
36 Mill, Collected Works, vol. 2, p. 202.
37 Mill, Collected Works, vol. 2, p. 202.
38 Mill, Collected Works, vol.3, p. 755.
39 See Sidgwick, Henry, The Principles of Political Economy (London, 1887), p. 402Google Scholar. For Sidgwick in more detail, see pp. 25–6.
40 Sidgwick, Principles, p. 406.
41 Bagehot, Walter, ‘Principles of Political Economy’, Prospective Review 4.16 (1848), pp. 460–502, esp. p. 460Google Scholar.
42 Marshall, Principles of Economics, p. 57.
43 For comments on the distinction in the twentieth century, see Bonar, James, ‘The Economics of John Stuart Mill’, The Journal of Political Economy 19 (1911), pp. 717–25CrossRefGoogle Scholar; Hayek, F. A., ‘The Muddle in the Middle’, Philosophical and Economic Foundations of Capitalism, ed. Pejovich, Svetozar (Lanham, 1983), pp. 89–100Google Scholar; Hollander, Samuel, The Economics of John Stuart Mill, 2 vols. (Toronto, 1985), vol. 1Google Scholar; Marx, Karl, ‘Critique of the Gotha Program’, The Marx-Engels Reader, ed. Tucker, Robert (New York, 1978), pp. 525–41Google Scholar; Schumpeter, History of Economic Analysis; Schwartz, New Political Economy.
44 Schwartz, New Political Economy, p. 137.
45 Mill, Collected Works, vol. 22, p. 249.
46 Mill, Collected Works, vol. 12, p. 322.
47 Mill, Collected Works, vol. 1, p. 256.
48 Mill, Collected Works, vol. 1, p. 256. This reference indicates that Mill was thinking about production and distribution in much the same way from an early age, somewhat contradicting his claims about Harriet Taylor's influence.
49 Mill, Collected Works, vol. 2, p. 22.
50 Mill, Collected Works, vol. 8, p. 904.
51 Hollander notes that Mill gives a weaker statement in his Preliminary Remarks, where he claims that ‘governments or nations can in some measure determine what institutions shall be established’. Yet the phrase appears only in the manuscript version and first two editions. Hollander, Economics of John Stuart Mill, p. 2. Also see p. 222.
52 Schwartz, New Political Economy, p. 59.
53 Mill, Collected Works, vol. 2, p. 208.
54 Mill is not distinguished from Marxists by his support of worker cooperatives. See Mill, Collected Works, vol. 5, p. 703.
56 Sidgwick, Principles, p. 51.
57 Sidgwick, Principles, p. 51. See also Henry Sidgwick, The Methods of Ethics (Indianapolis, 1981), p. 271.
58 Sidgwick, Principles, p. 537.
59 Specifically, Toynbee's ‘fourth stage’ is the stage of scientific and ethical thinking about the impact of the industrial revolution. Significantly, Toynbee's ‘third stage’ was unleashed by Ricardo, who attempted to discover the laws of distribution. Toynbee, Arnold, Lectures on the Industrial Revolution in England (Whitefish, 2004), p. 45Google Scholar.
60 Leslie, T. E. Cliffe, ‘The Political Economy of Adam Smith’, Fortnightly Review 1 (1870)Google Scholar, 25 January 2007 <http://socserv2.mcmaster.ca/~econ/ugcm/3ll3/leslie/leslie01.html>.
61 Leslie, T. E. Cliffe, ‘On the Philosophical Method of Political Economy’, Hermathena 2 (1876)Google Scholar, 25 January 2007 <http://socserv2.mcmaster.ca/~econ/ugcm/3ll3/leslie/leslie02.html>.
62 Bagehot, ‘Principles of Political Economy’, pp. 460–502, particularly p. 460.
63 Cairnes, J. E., The Character and Logical Method of Political Economy (Kitchener, Ontario, 2001), p. 17Google Scholar.
64 Marshall, Principles of Economics, app. J4.
65 Marshall, Principles of Economics, app. B, p. 30.
66 Marshall, Principles of Economics, app. B, p. 28.
67 In the same passage, Marshall names those who express Mill's view: ‘Not to mention writers yet living, the new temper is shown in Cliffe Leslie's historical inquiries and in the many-sided work of Bagehot, Cairnes, Toynbee and others; but above all in that of Jevons, which has secured a permanent and notable place in economic history by its rare combination of many various qualities of the highest order.’ Marshall, Principles of Economics, app. B, p. 31.
68 Marshall, Principles of Economics, app. B, p. 32.
69 It needs to be said, however, that Marshall did not wholeheartedly embrace Mill's view. Marshall writes, ‘In doing this [separating the laws of production, distribution and exchange] he allowed his zeal for giving a more human tone to economics to get the better of his judgment, and to hurry him on to work with an incomplete analysis.’ Marshall, Principles of Economics, app. J, p. 5.
70 Walras, Leon, Études d'economie sociale: Theorie de la repartition de la richesse sociale (Rome, 1969), p. 75Google Scholar.
72 Cirillo, ‘Leon Walras’, p. 53.
73 Walras, Études, p. 149.
74 Walras also had important influences. For instance, Rawls cited the influence of Walras on his own work. See John Rawls, ‘Interview with Samuel R. Aybar, Joshua D. Harlan, and Won J. Lee’, The Harvard Review of Philosophy (March 1991), pp. 31–47, esp. 38–47. In the same passage, Rawls discusses his interest in welfare economics, which itself emphasizes the distinction between efficiency and equity, a distinction close to that between production and distribution. Walras was one of the founders of welfare economics; thus we might speculate that the distinction bears a relationship to the distinction between production and distribution. Rawls also mentions Pigou, another famous founder of welfare economics. See Pigou, A. C., The Economics of Welfare (New Brunswick, 2002)Google Scholar. Rawls even notes the effect of Sidgwick's Principles on his thinking in Theory of Justice. See Rawls, A Theory of Justice, p. 20, fn. 9.
75 McCulloch, J. R., Treatise on the Circumstances Which Determine the Rate of Wages (New York, 1967), p. 48Google Scholar.
76 McCulloch, Treatise, p. 5.
77 The classical economists were not thereby against labor unions, nor did they think they had even mostly negative effects. McCulloch and Smith both believed that union negotiations could keep wages at their market rate. McCulloch even argued that ‘without the existence either of an open or avowed, or of a tacit and real combination, workmen would not be able to obtain a rise of wages by their own exertions, but would be left to depend on the competition of their masters’. See McCulloch, Treatise, p. 79.
79 Rogers, Thorold, Six Centuries of Work and Wages: The History of English Labor, 8th edn. (London, 1906), p. 525Google Scholar.
80 Mill, Collected Works, vol. 2, p. 339.
81 Many maintain that Mill's recantation was merely meant as a policy reform measure. See Schwartz, New Political Economy, pp. 68–9 and pp. 90–101. Also see West, E. G. and Hafer, R. W., ‘J. S. Mill, Unions, and the Wages Fund Recantation: A Reinterpretation’, The Quarterly Journal of Economics 92 (1978), pp. 603–19CrossRefGoogle Scholar. Others argue that it was a ‘calculated political act’. See Forget, E., ‘J. S. Mill and the Tory School: the Rhetorical Value of the Recantation’, History of Political Economy. 24 (1992), pp. 31–59CrossRefGoogle Scholar. Still others think that it developed as a specific part of his research. See Vint, J., Capital and Wages: A Lakatosian History of the Wages Fund Doctrine (Aldershot, 1994), pp. 1–7 and pp. 212–48Google Scholar. A further perspective holds that the wages-fund recantation is nothing more than a broad and unspecific revision. See Ekelund, R. B., ‘A Short-Run Classical Model of Capital and Wages: Mill's Recantation of the Wages Fund’, Oxford Economic Papers 28 (1976), pp. 66–85CrossRefGoogle Scholar. Finally, a more recent author argues that Mill did not recant the wages-fund doctrine, but only the doctrine's more ‘vulgar’ formulation. See Donoghue, Mark, ‘Mill's Affirmation of the Classical Wage Fund Doctrine’, Scottish Journal of Political Economy 44 (1997), pp. 82–99CrossRefGoogle Scholar.
82 Mill, Collected Works, vol. 16, p. 1130.
83 In a letter to Cairnes in April 1869, Mill wrote that the wages-fund was ‘a subject on which I have expressed myself in my Political Economy as inaccurately as other people, and which I have only within the last two or three years seen in its proper light’. See Mill, Collected Works, vol. 17, p. 1587, emphasis added.
84 Mill comments: ‘there is an impassable limit to the amount which can be so expended; it cannot exceed the aggregate means of the employing classes. It cannot come up to those means; for the employers have also to maintain themselves and their families. But short of this limit, it [the wages-fund] is not, in any sense of the word, a fixed amount.’ See Mill, Collected Works, vol. 5, p. 666.
85 For the argument, see Mill, Collected Works, vol. 5, pp. 632–68.
86 Mark Donoghue takes this as evidence that Mill never wholly recanted the wages-fund doctrine. See Mill, Collected Works, vol. 3, pp. 929–30, for the modified passage. Donoghue compares the passage in the seventh edition with the previous six editions. Mill appears to move from the classical position to a moderately pro-labor position. He certainly does not provide a determined defense of labor.
87 Mill, Collected Works, vol. 5, p. 647.
88 Ekelund, ‘Mill's Recantation’, p. 82.
89 Sidgwick's reaction to Mill's recantation is interesting: ‘In 1871, however, these halcyon days of Political Economy had passed away. Their termination was of course not abrupt; but so far as any date can be fixed for it, I should place it at the appearance of Mill's note of Thornton's book On Labour in the Fortnightly Review of March, 1869.’ See Sidgwick, Principles, p. 4. Sidgwick thought that Mill's recantation, while influential, was largely fallacious.
90 For examples of these theories, see n. 1. For criticism of these theories, see n. 55.
91 For recent work on the interaction between culture and wealth production see Soto, Hernando De, The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else (New York, 2000)Google Scholar. Also see Clark, Gregory, A Farewell to Alms: A Brief Economic History of the World (Princeton, 2007)Google Scholar.
92 For constructive comments and discussions of versions of this article, I am grateful to thank Gerald Gaus, Michael Gill, David Gordon, Roderick Long, and David Schmidtz. I also thank The University of Arizona Center for the Philosophy of Freedom for financial support.