Principles of Political Economy

Summary

Principles of Political Economy, with Some of Their Applications to Social Philosophy, is the treatise John Stuart Mill published in London in 1848, the year of revolutions across Europe. Mill wrote it in under two years, intending to do for his own generation what Adam Smith had done in 1776: present the whole science of economics, brought up to date, together with its bearing on the practical questions of the day. The work is organized in five books. Book I, on Production, discusses labour, capital and land, the advantages of cooperation and large-scale industry, and the laws governing the growth of population, capital and agricultural output. Book II, on Distribution, opens with Mill's best-known distinction: the laws of production resemble physical truths, but the distribution of wealth is a matter of human institutions and can be changed. He examines private property and the arguments of socialists and communists, slavery, peasant proprietorship and tenancy in Europe and Ireland, and the determination of wages, profits and rent. Book III, on Exchange, sets out the classical theory of value, money, credit and international trade, including Mill's own contribution, the theory of international values, which explains how the gains from trade are divided between nations by reciprocal demand. Book IV considers the influence of progress. Here Mill argues that a stationary state of capital and population need not be feared and might bring more leisure and moral improvement, and he predicts that partnerships of workers and cooperative associations will gradually replace the relation of master and hired labourer. Book V, on Government, treats taxation, public debt and the proper functions of the state, concluding that non-interference should be the general rule while defending exceptions such as education, protection of children and some public works. Mill revised the book through seven editions to 1871, growing more sympathetic to socialist experiments without abandoning competition and private property. It remained the standard textbook of economics in English-speaking universities until Alfred Marshall's Principles of 1890. Readers have found in it both a defence of free markets and an early case for reform, which reflects the balance Mill tried to keep.

Top Lessons

• What can be changed and what cannot

  Mill separates the technical limits of production from the social rules for distribution. The distinction invites readers to ask which economic outcomes are fixed by nature and which are choices a society makes and can revise.

• A presumption for liberty with exceptions

  Mill makes non-interference the general rule but defends state action in cases such as education and the protection of children. The book shows how a single author can combine market principles with reform.

• Is more always better?

  In the chapter on the stationary state Mill questions the assumption that ever-increasing production is the goal, and suggests that a society might use wealth to make room for leisure, culture and the enjoyment of nature.

• Cooperation and the future of work

  Mill predicted that associations of workers owning their capital would increasingly replace wage labour. His hopes show how a classical liberal thinker approached the labour question through voluntary association rather than state control.

Verified Quotes