1. History of Economic Thought
Classical Economics

2. Classical Economists Adam Smith (1723 – 1790)
David Ricardo (1772 – 1823)
Thomas Malthus (1766 – 1834)
John Stuart Mill (1806 – 1873)
John Stuart Mill (1772 – 1823)
9/20/2018

3. Background – Influenced by – Contributions – Impact – Critique – Questions
John Stuart Mill (1772 – 1823)
John Stuart Mill (1772 – 1823)
9/20/2018

4. Background – Influenced by – Contributions – Impact – Critique – Questions
Overview
In late 19th century was considered one of the most prominent figures in economics. His works having led to a greater understanding of classical economics as well as helping to progress the thinking of the time.
Important transitory figure in economic history, he drew from classic economists such as Smith, Ricardo, and Malthus; and became an important forerunner to the Marginalist School.
John Stuart Mill (1772 – 1823)
9/20/2018

5. Family and Childhood Born in May 20, 1806 in London.
Background – Influenced by – Contributions – Impact – Critique – Questions
Family and Childhood
Born in May 20, 1806 in London.
Raised and educated by his father; James Mill, a known historian and economist whose claim to fame soon came to be his son’s education.
His father discouraged activities of a normal childhood and promoted rigorous study.
Learned Greek by age three.
Studied Plato at age 7 and Latin at age 8.
John Stuart Mill (1772 – 1823)
9/20/2018

6. Background – Influenced by – Contributions – Impact – Critique – Questions
Family and Childhood
Before he was 13 he had mastered mathematics, chemistry, physics and logic and began his study of political economics.
At age 15 with his formal education finished he began to edit a five-volume work of Jeremy Bentham.
At 16 he joined his father in working at the East India Trading company turning down schooling at Oxford.
John Stuart Mill (1772 – 1823)
9/20/2018

7. Background – Influenced by – Contributions – Impact – Critique – Questions
Personal
At age 20 he has a emotional breakdown, falling into a deep depression which he talks about frankly in his Autobiography. He attributes this breakdown to having foregone emotional stability in place of rigorous intellectual development at the hands of his father, possibly the first consideration he has for opportunity cost.
John Stuart Mill (1772 – 1823)
9/20/2018

8. Background – Influenced by – Contributions – Impact – Critique – Questions
British Empire (1897)
John Stuart Mill (1772 – 1823)
9/20/2018

9. Background – Influenced by – Contributions – Impact – Critique – Questions
The early19th Century
The Industrial Revolution (late 18th Century-early 19th century)
During the early 19th century, the working classes began to find a voice.
This led to the formation of guilds and unions, which at first suppressed its members soon became powerful enough to resist.
John Stuart Mill (1772 – 1823)
9/20/2018

10. Background – Influenced by – Contributions – Impact – Critique – Questions
The early19th Century
The passing of the 1832 Reform Bill, which gave the vote to the majority of the (male) middle classes, but not to the 'working class'.
Many people made speeches on the 'betrayal' of the working class and the 'sacrificing' of their 'interests' by the 'misconduct' of the government.
John Stuart Mill (1772 – 1823)
9/20/2018

11. Influences His father James Mill Thomas Robert Malthus Jeremy Bentham
Background – Influenced by – Contributions – Impact – Critique – Questions
Influences
His father James Mill
Jeremy Bentham
Francis Place
Comte
David Ricardo
Adam Smith
Thomas Robert Malthus
Socialists Henri de Saint-Simon and Fourier
His friend and later wife Harriet Taylor
John Stuart Mill (1772 – 1823)
9/20/2018

12. James Mill (1773-1836) Father of John Stuart Mill
Background – Influenced by – Contributions – Impact – Critique – Questions
James Mill ( ) Father of John Stuart Mill
Worked as assistant examiner to East India Trading Company.
Philosophic radical dedicated to political reform.
Close friend and advocator of Jeremy Bentham.
Through two of his own political economic pamphlets came into acquaintance with David Ricardo.
John Stuart Mill (1772 – 1823)
9/20/2018

13. James Mill (1773-1836) Father of John Stuart Mill
Background – Influenced by – Contributions – Impact – Critique – Questions
James Mill ( ) Father of John Stuart Mill
Defended the view that manufacturing and other profits were legitimate forms of net- surplus.
Advocated birth control as a solution to population and wages.
Advocated taxes on land rents for landowners as a means of government income.
John Stuart Mill (1772 – 1823)
9/20/2018

14. Background – Influenced by – Contributions – Impact – Critique – Questions
Jeremy Bentham ( ) Prominent Political Reformer and Utilitarian
Prominent Political Reformer and Utilitarian.
Political radical who was a close friend of JS Mill’s father; spending a lot of time around the Mill household.
Advised James Mill on the education and raising of his son JS Mill.
John Stuart Mill (1772 – 1823)
9/20/2018

15. Background – Influenced by – Contributions – Impact – Critique – Questions
Jeremy Bentham ( ) Prominent Political Reformer and Utilitarian
Prominent advocator of utilitarianism and animal rights.
Stated that pleasure and pain can be ranked by intensity, duration, certainty, etc. - ”Utility”.
Set the precedent for the maximization principle for the firm and consumer.
John Stuart Mill (1772 – 1823)
9/20/2018

16. Utilitarianism Clarification
Utility function is a theoretical concept used by economists to describe how people actually make choices – maximize utility, subject to constraints.
Utilitarianism is an ethical theory which states that the best action is the one that maximizes utility:
The best action is the one that procures the greatest happiness of the greatest numbers—and the worst is the one that causes the most misery (Francis Hutcheson, 1725).
John Stuart Mill (1772 – 1823)
9/20/2018

17. Utilitarianism Clarification
Economists do not use utility theories for ethical considerations.
Any outcome that maximizes a weighted sum of utilities is Pareto Efficient (Alfredo Pareto).
Efficient allocations may or may not be ethical or socially desirable.
John Stuart Mill (1772 – 1823)
9/20/2018

18. Background – Influenced by – Contributions – Impact – Critique – Questions
Francis Place ( )
English social reformer; close friend of Joseph Hume and Jeremy Bentham.
Common in the Mill house, also advised Mill in the education and raising of his son.
Worked as a tailor.
John Stuart Mill (1772 – 1823)
9/20/2018

19. Francis Place (1771-1854) Attempted a campaign against the corn laws.
Background – Influenced by – Contributions – Impact – Critique – Questions
Francis Place ( )
Attempted a campaign against the corn laws.
Published one book, Illustrations and Proofs of the Principles of Population, in
John Stuart Mill (1772 – 1823)
9/20/2018

20. Background – Influenced by – Contributions – Impact – Critique – Questions
Francis Place ( )
Promoted the use of birth control and is credited for giving Malthus the courage to publish his pamphlet which gained much more publicity than his own
Had 15 children of his own
John Stuart Mill (1772 – 1823)
9/20/2018

21. Background – Influenced by – Contributions – Impact – Critique – Questions
Auguste Comte ( )
First to apply the scientific method to the social world.
Saw the science of sociology as the last and greatest of all the sciences one that combined all sciences and related each other to the whole.
Recognized the importance of the relationships between theory, practice, and understanding.
John Stuart Mill (1772 – 1823)
9/20/2018

22. Background – Influenced by – Contributions – Impact – Critique – Questions
Auguste Comte ( )
“If it is true that every theory must be based upon observed facts, it is equally true that facts can not be observed without the guidance of some theory. Without such guidance, our facts would be desultory and fruitless; we could not retain them: for the most part we could not even perceive them”- Comte, The Positive Philosophy of August Comte, 1855
John Stuart Mill (1772 – 1823)
9/20/2018

23. Background – Influenced by – Contributions – Impact – Critique – Questions
David Ricardo ( )
Works were published by James Mill in a school book type synopsis and given to JS Mill at the age of 13 as a political economic introduction.
John Stuart Mill (1772 – 1823)
9/20/2018

24. Background – Influenced by – Contributions – Impact – Critique – Questions
David Ricardo ( )
Introduced the labor theory of value (although later demonstrates that prices do not correspond to this), and also the idea of comparative advantage.
John Stuart Mill (1772 – 1823)
9/20/2018

25. Background – Influenced by – Contributions – Impact – Critique – Questions
David Ricardo ( )
Blamed the Corn Laws for the economic stagnation of the British economy.
Opponent of protectionism.
John Stuart Mill (1772 – 1823)
9/20/2018

26. Background – Influenced by – Contributions – Impact – Critique – Questions
Adam Smith ( )
Smith was ranked #30 in Michael H. Hart's A Ranking of the Most Influential Persons in History published 1978.
He provided a comprehensive intellectual rationale for free trade and capitalism.
John Stuart Mill (1772 – 1823)
9/20/2018

27. Background – Influenced by – Contributions – Impact – Critique – Questions
Adam Smith ( )
Developed a theory of where individuals find it in their self-interest to develop sympathy in order to appease an “impartial spectator”.
Found that although a “free market” appears to be found in chaos it is actually guided by its own “invisible hand”.
John Stuart Mill (1772 – 1823)
9/20/2018

28. Thomas Robert Malthus (1766-1834)
Background – Influenced by – Contributions – Impact – Critique – Questions
Thomas Robert Malthus ( )
Blamed most societal problems on the lower economic class.
In Michael Hart’s A Ranking of the Most Influential Persons in History he placed number 80.
John Stuart Mill (1772 – 1823)
9/20/2018

29. Thomas Robert Malthus (1766-1834)
Background – Influenced by – Contributions – Impact – Critique – Questions
Thomas Robert Malthus ( )
“The power of population is so superior to the power of the earth to produce subsistence for man, that premature death must in some shape or other visit the human race. The vices of mankind are active and able ministers of depopulation. They are the precursors in the great army of destruction, and often finish the dreadful work themselves…
John Stuart Mill (1772 – 1823)
9/20/2018

30. Thomas Robert Malthus (1766-1834)
Background – Influenced by – Contributions – Impact – Critique – Questions
Thomas Robert Malthus ( )
But should they fail in this war of extermination, sickly seasons, epidemics, pestilence, and plague advance in terrific array, and sweep off their thousands and tens of thousands. Should success be still incomplete, gigantic inevitable famine stalks in the rear, and with one mighty blow levels the population with the food of the world.” -Thomas Robert Malthus, An Essay on the Principle of Population, 1798
John Stuart Mill (1772 – 1823)
9/20/2018

31. Henri de Saint-Simon (1760-1825) Historic Founder of French Socialism
Background – Influenced by – Contributions – Impact – Critique – Questions
Henri de Saint-Simon ( ) Historic Founder of French Socialism
Uses the term “hand of greed” to describe humans primal avarice.
Insisted on a utopian socialism.
Said “that the men who organize society for productive labor are fit to rule it”
John Stuart Mill (1772 – 1823)
9/20/2018

32. Henri de Saint-Simon (1760-1825) Historic Founder of French Socialism
Background – Influenced by – Contributions – Impact – Critique – Questions
Henri de Saint-Simon ( ) Historic Founder of French Socialism
During his lifetime he had very little influence, only a few devotees who advocated his work.
The most prominent idea within his works is his social hierarchy in which each man would be placed where he is worth and rewarded justly for his works.
John Stuart Mill (1772 – 1823)
9/20/2018

33. Background – Influenced by – Contributions – Impact – Critique – Questions
Charles Fourier ( ) French Utopian Socialist, Coined the Word Féminisme
Women’s rights is the key to social progress
Worked as a traveling salesman so his philosophic works were limited.
Several communist complexes have been founded in his name, like the Phalanstere.
Each individual was assigned a level based on his job; and the job was assigned based on interests.
John Stuart Mill (1772 – 1823)
9/20/2018

34. Harriet Taylor Wife Lived 1807-1858
Background – Influenced by – Contributions – Impact – Critique – Questions
Harriet Taylor Wife
Lived
Largely remembered for her influence on her husband JS Mills
She also authored several of her own works, including The Enfranchisement of Women published

35. Background – Influenced by – Contributions – Impact – Critique – Questions
Harriet Taylor Wife
“Were I but capable of interpreting to the world one half the great thoughts and noble feelings which are buried in her grave, I should be the medium of a greater benefit to it, than is ever likely to arise from anything that I can write, unprompted and unassisted by her all but unrivalled wisdom.” -JS Mill writing about his wife after she passed.

36. Background – Influenced by – Contributions – Impact – Critique – Questions
Answered the question left by Ricardo on comparative advantage
Attempted to reconcile the works of Smith and Malthus in an analysis of future economic growth
Expansion of Ricardo’s work on value theory
John Stuart Mill (1772 – 1823)
9/20/2018

37. Contributions Rejection of Wage Fund doctrine
Background – Influenced by – Contributions – Impact – Critique – Questions
Contributions
Rejection of Wage Fund doctrine
Examination of Economic Methodology
Distinction between production and distribution
Joint supply of product complements – a precursor of optimal provision of public goods?
John Stuart Mill (1772 – 1823)
9/20/2018

38. 1. A Comparative Advantage Question Left Unanswered by Ricardo
Background – Influenced by – Contributions – Impact – Critique – Questions
1. A Comparative Advantage Question Left Unanswered by Ricardo
At the time of Mill, Ricardo’s work on comparative advantage had come under fire mostly due to his omission of how the gains from international trade would get divided up between the participating countries.
Although Mill used no mathematical techniques and the concept of elasticity had not been developed he was able to expand on Ricardo’s works.
Gives an analytically correct answer using his own undeveloped theory of elasticitys.
John Stuart Mill (1772 – 1823)
9/20/2018

39. Background – Influenced by – Contributions – Impact – Critique – Questions
Mill’s Answer
Mill explained that most of the gains from trade would go to the country with the lower demand or the country who has the greatest elasticity of demand. Although he did not use these terms he spoke of the “inclinations and circumstances of consumers of both sides” and in his development of this statement provided an introductory explanation of elasticity. He went through scenarios of demands for which the case was elastic, inelastic, and unitarily elastic.
John Stuart Mill (1772 – 1823)
9/20/2018

40. Mill’s Answer – Modern Illustration
Background – Influenced by – Contributions – Impact – Critique – Questions
Mill’s Answer – Modern Illustration P S
Gains from trade pw D2 D1 Q
John Stuart Mill (1772 – 1823)
9/20/2018

41. 2. Future Economic Growth
Background – Influenced by – Contributions – Impact – Critique – Questions
2. Future Economic Growth
In his “Principles of Political Economy” attempted to analyze future economic growth
Recognized that in the long-run outcomes cannot be predicted absolutely.
His attempts fell somewhere in the middle of Smith and Malthus and helped to link the two together.
John Stuart Mill (1772 – 1823)
9/20/2018

42. 2. Future Economic Growth
Background – Influenced by – Contributions – Impact – Critique – Questions
2. Future Economic Growth
Smith saw a society that became wealthier due to greater freedom of trade, advances in technology, and a division of labor and investment.
Malthus saw progress limited by a population expansion that was hindered by fixed resources
Mill saw both scenarios working at once and illustrated four possible future economic outcomes.
John Stuart Mill (1772 – 1823)
9/20/2018

43. Background – Influenced by – Contributions – Impact – Critique – Questions
Mill’s Four Outcomes
In accordance with Malthusian theory; population grows more quickly than capital and technology increases output. This ultimately results in lower wages and higher profits with a overall decline in the standard of living.
In accordance with Smithian theory; the opposite occurs; capital and technology grows faster than the population allowing for growth in the standard of living.
John Stuart Mill (1772 – 1823)
9/20/2018

44. Background – Influenced by – Contributions – Impact – Critique – Questions
Mill’s Four Outcomes
In accordance with Ricardian theory; capital, technology, and population grows at the same rate. There would be no change in real wages; but since the fertile land would be used up first, at which point the use of inferior land would cause costs of production to rise resulting in an increase in food prices and rent and falling profits.
Technological improvements (productivity) advance more rapidly than population and capital making it easier to grow food. This would result in a more prosperous economy.
John Stuart Mill (1772 – 1823)
9/20/2018

45. Mill on Technological Stagnation
Background – Influenced by – Contributions – Impact – Critique – Questions
Mill on Technological Stagnation
The most likely of the four, Mill felt, would be number three; the popularly feared stationary state.
Mill felt that it would be the stagnation brought about by this stationary state that would bring about a more enlightened society. Although he recognized the present societal “need” for economic growth and wealth accumulation he ultimately felt that it was this capitalist tendency that was the reason for many of societies woes. It would be only after the stagnation occurs that society would realize this and a great societal reform would occur allowing for “true” philosophical progress.

46. Background – Influenced by – Contributions – Impact – Critique – Questions
3. Value Theory
Inadvertently sets up premise for supply-and-demand functions, recognizes transportation costs play a role in trade, and that economies of scale may exist.
Believed the purpose of value theory was to explain relative prices not to find absolute value.
Though he failed to formally illustrate supply and demand curve he clearly develops that quantities supplied and quantities demanded are a function of price.
John Stuart Mill (1772 – 1823)
9/20/2018

47. Background – Influenced by – Contributions – Impact – Critique – Questions
3. Value Theory
A good must be useful to have and difficult to obtain for it to have a price; but although “use value” is what determines it’s exchange value it is the cost of production that almost always determines it’s price.
Value theory advances on Ricardo’s because of it’s accordance with supply and demand functions even without the use of curves and equations only his verbal arguments.
3 categories of goods, today known as elasticities.
John Stuart Mill (1772 – 1823)
9/20/2018

48. Group Number One: Perfectly Inelastic Goods in Supply
Background – Influenced by – Contributions – Impact – Critique – Questions
3. Value Theory
Group Number One: Perfectly Inelastic Goods in Supply
Few goods fall into this category; some examples are wines, art, rare books, coins, site value of land, and all land as population increases.
Although Mill generally regarded this category as the most useless because so few goods fall in to this category he does use this group to illustrate the case of a monopoly where the inelasticity is falsely created. S D
John Stuart Mill (1772 – 1823)

49. Group Number Two: Perfectly Elastic Goods in Supply
Background – Influenced by – Contributions – Impact – Critique – Questions
3. Value Theory
Group Number Two: Perfectly Elastic Goods in Supply
Manufactured goods fall in to this category.
Assumed that all manufactured goods are produced under constant cost circumstances. (Marginal costs do not change as output increases) S D
John Stuart Mill (1772 – 1823)
9/20/2018

50. Group Number Three: Elastic Goods in Supply
Background – Influenced by – Contributions – Impact – Critique – Questions
3. Value Theory
Group Number Three: Elastic Goods in Supply
This group encompasses agriculture.
Assumed an increasing cost situation, that as output increases so do costs.
Because the cost of production depends on producing in bad circumstances he applies the law of diminishing marginal returns to this category but not to the previous. S D
John Stuart Mill (1772 – 1823)
9/20/2018

51. To close the subject Mills writes...
Background – Influenced by – Contributions – Impact – Critique – Questions
3. Value Theory
To close the subject Mills writes...
“Happily, there is nothing in the laws of value which remains for the present or any future writer to clear up; the theory of the subject is complete.”
-JS Mills in 1848
Really?!?!
Non competitive markets? How demand and supply are derived from preferences and profit maximization? Government intervention?
John Stuart Mill (1772 – 1823)
9/20/2018

52. 4. Rejection of the Wage Fund Doctrine
Background – Influenced by – Contributions – Impact – Critique – Questions
4. Rejection of the Wage Fund Doctrine
Regarded as his most influential work that was his own.
The wage fund doctrine holds that worker’s wage are a form of capital and paid out of a fund that businesses had accumulated before producing goods.
The only way to increase both wages and employment would be an accumulation of profit.
John Stuart Mill (1772 – 1823)
9/20/2018

53. 4. Rejection of the Wage Fund Doctrine
Background – Influenced by – Contributions – Impact – Critique – Questions
4. Rejection of the Wage Fund Doctrine
Mill argued that there was, in fact, NO fixed amount that a business had to pay their labor.
The amount was actually determined by the business owner’s willingness to pay.
If a business owner would reduce their own consumption they could pay more.
Thus, there is no fixed wage fund.
Since there was a variable amount that business could pay their workers, there could also be negotiation over wages between the owner and the worker.
9/20/2018

54. 5. Examination of Economic Methodology
Background – Influenced by – Contributions – Impact – Critique – Questions
5. Examination of Economic Methodology
Mill said that the study of social, behavioral, and moral sciences; such as economics, were unlike the study of the natural sciences because controlled experiments were impossible.
Since there is no possibility of controlled experiments economic method must come from “introspection”.
Must make assumptions and deduce consequences.
Economics is a hypothetical science and must be studied using the a priori method.
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55. The a priori method This method uses the deductive technique.
Background – Influenced by – Contributions – Impact – Critique – Questions
The a priori method
This method uses the deductive technique.
Because we want to maximize our utility and we are constrained by nature we can deduce that we will work only so hard and so long.
However, Mill does state that this method must be compared to day-to-day life and if an inconsistency is found one must re-evaluate their deductions.
John Stuart Mill (1772 – 1823)
9/20/2018

56. 6. Production vs. Distribution
Background – Influenced by – Contributions – Impact – Critique – Questions
6. Production vs. Distribution
Production
Laws of production are determined by the market
These laws are unchanging, although productivity may be influenced by society, the laws of production are set by the “invisible hand”
Distribution
Laws of distribution are determined by the society and the government
The laws of distribution "are what the opinions of the ruling portion of the community makes them“, and therefore changeable.
John Stuart Mill (1772 – 1823)
9/20/2018

57. 6. Production vs. Distribution
Background – Influenced by – Contributions – Impact – Critique – Questions
6. Production vs. Distribution
The laws of production…"partake of the character of physical truths It is not so with the Distribution of Wealth. That is a matter of human institution merely“
-JS Mill, Principles of Political Economy and some of the applications to Social Philosophy (1848)
John Stuart Mill (1772 – 1823)
9/20/2018

58. 7. Joint Supply of Production Complements
Background – Influenced by – Contributions – Impact – Critique – Questions
7. Joint Supply of Production Complements
Suppose that a competitive firm’s production process generates two goods. For example beef and hides (skin) are produced jointly.
The quantities are 𝑞 1 and 𝑞2. The market prices are 𝑝1 and 𝑝2.
What are the optimal quantities of the two goods? What will be the market prices of the two goods?
John Stuart Mill (1772 – 1823)
9/20/2018

59. Joint Supply of Production Complements (using math)
Background – Influenced by – Contributions – Impact – Critique – Questions
Joint Supply of Production Complements (using math)
The firm’s problem
max 𝑞 1 , 𝑞 2 𝑝 1 𝑞 1 + 𝑝 2 𝑞 2 −𝑇𝐶 𝑚𝑎𝑥 𝑞 1 , 𝑞 2
Notice that as long as the prices are positive, the firm will always produce 𝑞1 = 𝑞2 = 𝑞. For example, producing 5 units of beef and only 4 units of skin doesn’t make sense because the 5th unit of skin is already there.
John Stuart Mill (1772 – 1823)
9/20/2018

60. Joint Supply of Production Complements (using math)
Background – Influenced by – Contributions – Impact – Critique – Questions
Joint Supply of Production Complements (using math)
The firm’s problem becomes:
max 𝑞 𝑝 1 𝑞+ 𝑝 2 𝑞−𝑇𝐶 𝑞
Where q is the quantity of steer produced. The first order condition:
𝑝 1 + 𝑝 2 =𝑇 𝐶 ′ 𝑄 =𝑀𝐶(𝑄)
John Stuart Mill (1772 – 1823)
9/20/2018

61. Joint Supply of Production Complements (using math)
Background – Influenced by – Contributions – Impact – Critique – Questions
Joint Supply of Production Complements (using math)
Thus, the optimal quantity of steer (and also the two jointly produced goods) is determined by the condition:
𝑝1 + 𝑝2 = 𝑀𝐶(𝑞)
Graphically, the joint quantity is determined at the intersection of MC curve (supply) and the vertical summation of the two demand curves.
Mill analyzed all this in his head and described this idea in words!
John Stuart Mill (1772 – 1823)
9/20/2018

62. Joint Supply of Production Complements (using math)
Background – Influenced by – Contributions – Impact – Critique – Questions
Joint Supply of Production Complements (using math)
Numerical example:
Suppose that the total cost, the demand for good 1 and the demand for good 2 are given by:
𝑇𝐶 𝑞 = 1 2 𝑞 2 𝐷 1 : 𝑝 1 =50−0.5 𝑞 1 𝐷 2 : 𝑝 2 =100− 𝑞 2
John Stuart Mill (1772 – 1823)
9/20/2018

63. Joint Supply of Production Complements (using math)
Background – Influenced by – Contributions – Impact – Critique – Questions
Joint Supply of Production Complements (using math)
The marginal cost is simply 𝑀𝐶(𝑞) = 𝑞, and the vertically aggregate demand is:
𝐷 1 : 𝑝 1 =50−0.5 𝑞 1 𝐷 2 : 𝑝 2 =100− 𝑞 2 𝐷= 𝑝 1 + 𝑝 2 =150−1.5𝑞
John Stuart Mill (1772 – 1823)
9/20/2018

64. Joint Supply of Production Complements (using math)
Background – Influenced by – Contributions – Impact – Critique – Questions
Joint Supply of Production Complements (using math)
Equilibrium quantity:
𝑝 1 + 𝑝 2 =𝑀𝐶 𝑞 150−1.5𝑞=𝑞 𝑞 ∗ =60 = 𝑞 1 = 𝑞 𝑝 1 =50−0.5∙60=20 𝑝 2 =100−60=40
The next figure illustrates the equilibrium.
John Stuart Mill (1772 – 1823)
9/20/2018

65. 𝑝 1 + 𝑝 2
𝑝 1

66. Joint Supply of Production Complements (using math)
Background – Influenced by – Contributions – Impact – Critique – Questions
Joint Supply of Production Complements (using math)
Mill solved in his head a very complicated problem of joint production.
This analysis is from “Principles of Political Economy” (1848).
Alfred Marshal in “Principles of Economics” (1890) provided a graphical illustration presented above.
John Stuart Mill (1772 – 1823)
9/20/2018

67. Influenced William James H.L.A. Hart John Rawls Peter Singer
Background – Influenced by – Contributions – Impact – Critique – Questions
Influenced
William James
John Rawls
Robert Nozick
Bertrand Russell
Karl Popper
Ronald Dworkin
H.L.A. Hart
Peter Singer
And many, many, more….
John Stuart Mill (1772 – 1823)
9/20/2018

68. Background – Influenced by – Contributions – Impact – Critique – Questions
Mill’s Legacy
In his Autobiography Mill states that his purpose in all of his work was…"how to unite the greatest individual liberty of action, with a common ownership in the raw material of the globe, and an equal participation of all in the benefits of combined labour."
Mill considered the world as a whole, with each science intertwined with the others.
John Stuart Mill (1772 – 1823)
9/20/2018

69. Background – Influenced by – Contributions – Impact – Critique – Questions
Mill’s Legacy
He was fruitfully active as a catalyst of change within society.
Through his genius he was able to write within many fields and be well respected in them all.
Unfortunately partly due to this wide encompassment as well as his place as more of a transitional figure without his own school of thought he is only vaguely remembered.
John Stuart Mill (1772 – 1823)
9/20/2018

70. Mocked for Being Feminist
Background – Influenced by – Contributions – Impact – Critique – Questions
Mocked for Being Feminist
John Stuart Mill (1772 – 1823)
9/20/2018

71. Background – Influenced by – Contributions – Impact – Critique – Questions
Mill’s Legacy
Although the cartoon shows a satire of this effort on the part of JS Mill, he was actually very serious in his efforts in women’s liberation. He felt that in order to progress society all must have the opportunity to participate. This way, through competition, the most capable person would be doing the job. This effort shows how far JS Mill was ahead of his time.
John Stuart Mill (1772 – 1823)
9/20/2018

72. Background – Influenced by – Contributions – Impact – Critique – Questions
Although knew calculus, Mill refrained from using math in his analysis. He could have had more impact had he used diagrams, models, equations.
John Stuart Mill (1772 – 1823)
9/20/2018

73. Question for Discussion
Background – Influenced by – Contributions – Impact – Critique – Questions
Question for Discussion
Mill’s view on the role of government, On Liberty (1859): “That the only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others. His own good, either physical or moral, is not a sufficient warrant. He cannot rightfully be compelled to do or forbear because it will be better for him to do so, because it will make him happier, because, in the opinions of others, to do so would be wise, or even right.”
John Stuart Mill (1772 – 1823)
9/20/2018

74. Question for Discussion
If Mill was alive today, what would be Mill’s position on legalizing drugs, legalizing prostitution, legalizing gay marriage?
Derive the theory of production substitutes 
John Stuart Mill (1772 – 1823)
9/20/2018