John Stuart Mill ( ) History of Economic Thought Boise State University Fall 2015 Prof. D. Allen Dalton

John Stuart Mill The dominant intellectual figure of mid- 19 th century Britain. Logic, Political Economy, Political Philosophy, current affairs. Revived Ricardian economics from its faltering status; his intellectual dominance halted development of British economic analysis for 20 years. Modern appreciation decidedly mixed.

Mill’s Life Born in London in 1806, son of James Mill, philosopher, economist and senior official in the East India Company Educated by his father, with assistance of Bentham and Francis Place –Had learned Greek by age 3, and Latin by age 5 –Logician by age 12 and by age 16 a trained Ricardian economist 1827, suffers nervous breakdown 1830, meets Harriet Taylor and continues intimate relationship with consent of her husband, John Taylor

Mill’s Life 1830s, editor of the London and Westminster Review, quarterly of the Philosophic Radicals 1851 – marries Harriet Taylor after husband’s death Active career, administrator in the East India Company up to – Harriet Taylor Mill dies in France Liberal MP for Westminster – dies in and is buried next to Taylor at Avignon, France

Mill’s Works A System of Logic (1843) Essays on Some Unsettled Questions of Political Economy (1844) Principles of Political Economy (1848) On Liberty (1859) Considerations on Representative Government (1860) Utilitarianism (1863) The Subjection of Women (1869) Autobiography (1873)

J.S. Mill’s Contributions Essays on Some Unsettled Questions of Political Economy (1844) –international trade theory: introduces demand considerations to Ricardo’s model of comparative advantage; shows that international trade revolves around one price and reciprocal demand –treatment of Say’s Law: clarifies role of money as a commodity; fails to appreciate the disequilibrium nature of Sismondi’s and Malthus’ arguments

J.S. Mill’s Contributions Principles of Political Economy: with some of their applications to social philosophy (1848) –Introduced theory of noncompeting groups –Analysis of pricing of joint products –Land rent and opportunity costs –Confusion in treatment of supply and demand as determinants of price –Renewal of Ricardian labor theory of value –Re-emphasis upon the wages fund doctrine –Renewed emphasis on Malthusian population theory

Mill and Liberalism On Liberty –Argument concerns social constraints not government constraints –Argument for intellectual elitism Principles of Political Economy and Utilitarianism –Considerable watering down of the laissez-faire principle and expansion of the scope of government –“distinction” between the laws of production and the laws of distribution

Evaluating Mill Was most interested in applications rather than advances in analysis. Tendency to trust reputation rather than determine the worth of contributions himself. Advances in analysis were minimal, given his reputation at the time.

The Last Classicals John Eliot Cairnes ( ) –ardent disciple of J.S. Mill –Whately Chair at Dublin, –The Character and Logical Method of Political Economy (1857) first clearly methodological work in economics –Some Leading Principles of Political Economy Newly Expounded (1874) embarrassingly incorporated wages fund theory reluctantly reviews Jevons’ marginal utility theory

The Last Classicals Henry Sidgwick ( ) –Philosopher –Trinity College, Cambridge –follower of J.S. Mill –The Method of Ethics (1874) attempt to reconcile Mill’s utilitarianism with intuitional (duty) theory of ethics –Principles of Political Economy (1883) critique of Wages Fund theory defense of Mill against Jevons’ marginalism first economist to recognize problems for market allocation arising from externalities