Question

What were John Stuart Mill's economic perspectives? Do you agree/disagree?

Answer 1

J.S. Mill’s views on economics are well represented in an article published in 1836 and in his Principles published in 1848. His position on the methodology of economics is a divergence from mathematical abstraction that Ricardo advocated. He did not completely reject the deductive method used by the economists where result was derived on the basis of abstract models.

But he cautioned against relying too much on the predictions of such models. He was critical about accepting the deductive model simply because it is not possible for the social scientists to run controlled experiments. Therefore, he advised to match the prediction of a model with moments in the history. He admitted that the assumption of rational agent but he strongly believed that human behavior can be better understood using an inter-disciplinary approach consisting of different social sciences.

Mill maintained that his single most contribution is making the distinction between the laws of production and the laws of distribution. The laws of production, according to Mill, are the same as the natural law – beyond the scope of human beings to change them. The laws of distribution are social construct and can be changed through political processes such as trade union movements or income redistribution process. He was critical of the economists who thought none of the laws can be changed. He maintained that only the laws of production are more or less fixed.

He saw that the wage was being determined through a bargaining process which depended on the social and political institutions. He believed that taxation can be one instrument of bringing equality. He favored tax of inheritance but opposed progressive taxation in the fear that it might provide disincentive against business proliferation.

He abandoned strong liberalism in favor of making exception to achieve great good. He supported laissez faire as a general rule but made room for government intervention if need arises.

Building on Ricardo’s rent theory, Mill perceived class conflict between landlords and the rest of the society and not between labor and capital. There are many other value theories of Mill .

Some can be agreed like the taxation and government intervention theory , yet the part about production law and value thoery of land and rent theory was not viable .