The author of “Principles of Political Economy” and other important works on economics, John Stuart Mill was one of the most noted philosophers and political thinkers of the 19th century. He was a staunch advocate of the philosophy of utilitarianism, which states that ethics should be directed toward providing the greatest good for the greatest number of people. An extremely progressive social reformer and early male suffrage proponent, John Stuart Mill possessed a unique outlook and a sharp, well-educated mind. In John Stuart Mill’s life, he would produce a number of texts aside from “Principles of Political Economy” on various subjects. As an economist, Mill is typically regarded as a socialist, as he thought that the distribution and allocation of wealth is something that should be handled by human society. He famously argued against the idea of a natural order to wealth distribution. The most famous of his economic texts is likely “Principles of Political Economy” which saw publication in 1848.
Before offering an analysis and summary of “Principles of Political Economy” for clarification it must be noted that it was published in seven different editions. The final edition of the text was published in 1871. The book’s subject matter, political economy, is today termed macroeconomics. In simple terms, to offer a summary of Principles of Political Economy” would mean offering a full summary and analysis of the entire economy, typically putting to use unemployment, inflation, production, and price information to provide a “big picture” of the economy in question. 18th and 19th century political economists had a fundamentally more philosophical bent than their modern brethren. The works of Adam Smith, David Ricardo, John Stuart Mill, and others are marked by a considerably less empirical approach than the work of modern economists. “Principles of Political Economy” focuses on a thorough examination of society’s basis in economic processes. Topically, the book covers production and distribution of goods and services, social progress and its correlation to production and distribution, and the role that governments play in economic systems.
Summary of the first book of “Principles of Political Economy”- This book in “Principles of Political Economy” is particularly focused on identifying the necessary conditions for the existence of production. It identifies labor and natural objects as the two criteria essential to production. In Chapter One of “Principles of Political Economy” , Mill states, “Nature does more than supply materials; she also supplies powers. The matter of the globe is not an inert recipient of forms and properties impressed by human hands; it has active energies by which it co-operates with, and may even be used as a substitute for, labor” (3).
Clearly, not all labor will lead to the production of a new physical object, however Mill writes that labor does produce three distinct types of utilities. The first utility discussed is the production of objects that will be used by humans. In the production of this utility, labor has injected external material objects with properties that make them valuable to human beings for their usefulness and overall utility. The second utility is that of service. Some of the labor performed by human beings makes their services valuable to the society they live in, or to themselves. Examples provided include instructors and physicians, whose labors enhance the lives and endeavors of their pupils and patients, respectively. Finally, the third utility is that of providing pleasure of entertainment. This does not result in any tangible product, nor does it increase the individual or society’s productivity. These three utilities are the very fundamental basis of Mill’s theories, and serve as a backdrop to “Principles of Political Economy” and is a necessary foundation for an analysis of the text.
To summarize, “Principles of Political Economy” shows Mill as he defines capital as the amassed stock of the products of labor. Capital, alongside labor and natural objects, is a prerequisite for the existence and maintenance of production. Mill goes on to discuss various manifestations of capital, notably the ideas of fixed and circulating capital. Fixed capital is an economic concept introduced by David Ricardo. Any kind of real or physical capital not entirely used in the production of a final product that is also not easily moved into the production of a new product is fixed capital. This contrasts with circulating capital, which refers to physical capital such as short-lived items that are used in production and used up entirely in the process of creating other goods or services. This can include raw materials, intermediate goods, and inventories.
Following this to continue this summary of “Principles of Political Economy” , Mill explores the different social forms of production. These include cooperation, the combination of labor, small-scale production, and large-scale production. He elaborates on increased labor, by which there is an increase in both capital and production. Finally, Mill looks into land-based production. He sees that this specific type of production is substantially different from other types, which are achieved almost entirely through labor and capital. Land-based production has limits that do not constrain other types of production. As these limits are exceedingly unlikely to increase, land-based production must be viewed, understood, and undertaken very differently from other forms of production. In Book II of Principles of Political Economy, John Stuart Mill goes about a rigorous examination of distribution in property allocation. The effects of a number of different factors that relate to distribution are analyzed. Specifically, the effects of competition, customs, slaveholding, peasant ownership, wages, profits and profiteering, and rents on distribution are subject to analysis. Mill delves into the products of labor as shared by capitalists and workers, while granting the difference between the two.
Summary of the third book of “Principles of Political Economy” : This follows John Stuart Mill approach the subjects of exchange and value. Mill’s definition of value is put into the terms of supply and demand. In the third book, Mill begins his discussion about value and exchange by stating, “The conditions and laws of Production would be the same as they are, if the arrangements of society did not depend on Exchange, or did not admit of it. Even in the present system of industrial life, in which employments are minutely subdivided, and all concerned in production depend for their remuneration on the price of a particular commodity, exchange is not the fundamental law of the distribution of produce…” (239). His vision of value is relative and dependant on the quantity of an external thing. He sees no overall rise and fall of value, as value rises only when a drop is supposed, and value dips only when a rise is expected. Mill goes further to look at money and how it relates to various economic factors. He examines the relationship to production costs, supply and demand, and credit. Following that, he moves into credit’s sway over pricing, currency function, trade and value, and interest rates.
In Book IV of “Principles of Political Economy” John Stuart Mill’s interest in social progress shines through. Throughout his life, Mill was an advocate of social reform. His publication of “The Subjection of Women” in 1869 marked one of the first instances of a man of the era coming out in favor of women’s rights and suffrage. John Stuart Mill wrote many articles and delivered a number of speeches that marked the beginning of masculine support for the liberation of women. Principles of Political Economy argues in favor of that liberation as well, speaking specifically of the entrance of women into the workforce. John Stuart Mill encourages women to enter the workforce, and encourages those in power to grant these newly empowered women the freedom to enter into the traditionally male-dominated workforce. Mill makes a call seeking the end of women’s dependence on men, citing it as an unfortunate remnant of society that should long ago have been jettisoned in favor of a more progressive system, in which gender is not the sole determining factor in a person’s potential capabilities.
In Book IV, John Stuart Mill specifically deals with the progress of society and its relationship to that society’s economic affairs. His definition of social progress is manifold. The increase, both individually and collectively, of knowledge is a key factor. The improvement of a citizenry’s protection is essential as well. This is put in terms of their health, lives, and property. Tax reform in the face of oppressive taxation is yet another component. The avoidance of unnecessary war is held up as another example for progressive society. Effective, utilitarian employment of the citizenry through education and improved business capacity is lauded. Despite his advocacy of social progress and social reform, John Stuart Mill does specifically state that social progress is not infinite. Without improvements in production and management of the flow of capital, the state of affairs can very easily stagnate. This recognition of a stationary environment brought Mill to speculation on laborers in the future, whose education could feasibly cause societal change on a massive and entirely unprecedented scale. These subjects have also been addressed at length by other economists, notably by Karl Marx, whose views of an educated proletariat labor uprising would lead to the idea of communism. Education is viewed as the greatest tool for the empowerment of the working class.
Principles of Political Economy’s fifth book probes the government’s influence on society. As a preface to his arguments about the nature of laws, he states, “Not only does the State undertake to decide disputes, it takes precautions beforehand that disputes may not arise. The laws of most countries lay down rules for determining many things, not because it is of much consequence in what way they are determined, but in order that they may be determined somehow” (310). John Stuart Mill makes a strong argument that the functions performed by the government are divisible into two categories: the necessary and the optional. Necessary functions of the government are those which are fundamentally incapable of separation from the idea of having and maintaining a government. These include security, taxation, and protection. All other functions performed by the government, the optional functions, are thought by Mill to be dubious and subject to inquiry.
John Stuart Mill was very much an advocate of personal liberty, and thought that the government had no place in the private lives of its citizenry. Mill was a believer in the concept of negative liberty, which is essentially an absence or lack of impediments, obstacles, or coercion to achieve the goal of liberty. This is distinguished from positive liberty, in which there are conditions for freedom. These might take the form of the possession of material resources, the attainment of a certain level of education or enlightenment, or the opportunity to participate in a political system. Mill argues that the government should, at all times, restrict itself to performing only the necessary functions of governance. He proposes that a government should be particularly aware of and admonish and halt individual citizens’ behavior as it negatively effects or harms other people. This includes the use and abuse of force, coercion, fraudulent activity, and general negligence. He also advanced the idea of a government that actively works to limit and, if possible, altogether eliminate the expenditure of energy in the interest of causing harm to nations by another nation. Mill was strongly in favor of harnessing that exertion that might be used for harm and putting it to more productive use. He sought the betterment of the planet’s faculties with utility in mind. Mill’s ultimate assertion is that governments should adopt a laissez-faire social policy, by which they would eschew interference in the daily lives of their citizenry, and individual citizens would be free to make choices without obstruction or constraints. This freedom, Mill thought, would allow people to pursue their interests with the utmost utility.
What is perhaps the most important feature of Principles of Political Economy is its use of scientific methodology as applied to political analysis. This provides immediate practical application to what are otherwise intangible, theoretical ideas, and does so in a field that is often confusing to the common person. The publication of Principles of Political Economy made liberal economic thought tangible by providing ideas within the framework of social and political activism, all firmly entrenched in science and reason.
Other essays and articles in the Main Archives related to this topic include : The Economics of Socialism: An Historical Perspective • Marx and Locke: Comparison of Views on Government, Property and Labor • Analysis and Summary of “General Theory of Employment, Interest, and Money” by John Maynard Keynes • Summary and Analysis ofThe Essential Adam Smith by Robert L. Heilbroner
