Principles of Political Economy (J.S. Mill, 1871), vol. 1
SOME OF THEIR APPLICATIONS TO SOCIAL PHILOSOPHY.
JOHN STUART MILL.
IN TWO VOLUMES.
LONGMANS, GREEN, READER AND DYER.
SAVILL, EDWARDS AND CO., PRINTERS, CHANDOS STREET.
The appearance of a treatise like the present, on a subject on which so many works of merit already exist, may be thought to require some explanation.
It might, perhaps, be sufficient to say, that no existing treatise on Political Economy contains the latest improvements which have been made in the theory of the subject. Many new ideas, and new applications of ideas, have been elicited by the discussions of the last few years, especially those on Currency, on Foreign Trade, and on the important topics connected more or less intimately with Colonization: and there seems reason that the field of Political Economy should be re-surveyed in its whole extent, if only for the purpose of incorporating the results of these speculations, and bringing them into harmony with the principles previously laid down by the best thinkers on the subject.
To supply, however, these deficiencies in former treatises bearing a similar title, is not the sole, or even the principal object which the author has in view. The design of the book is different from that of any treatise on Political Economy which has been produced in England since the work of Adam Smith.
The most characteristic quality of that work, and the one in which it most differs from some others which have equalled and even surpassed it as mere expositions of the general principles of the subject, is that it invariably associates the principles with their applications. This of itself implies a much wider range of ideas and of topics, than are included in Political Economy, considered as a branch of abstract speculation. For practical purposes, Political Economy is inseparably intertwined with many other branches of social philosophy. Except on matters of mere detail, there are perhaps no practical questions, even among those which approach nearest to the character of purely economical questions, which admit of being decided on economical premises alone. And it is because Adam Smith never loses sight of this truth; because, in his applications of Political Economy, he perpetually appeals to other and often far larger considerations than pure Political Economy affords—that he gives that well-grounded feeling of command over the principles of the subject for purposes of practice, owing to which the "Wealth of Nations," alone among treatises on Political Economy, has not only been popular with general readers, but has impressed itself strongly on the minds of men of the world and of legislators.
It appears to the present writer, that a work similar in its object and general conception to that of Adam Smith, but adapted to the more extended knowledge and improved ideas of the present age, is the kind of contribution which Political Economy at present requires. The "Wealth of Nations" is in many parts obsolete, and in all, imperfect. Political Economy, properly so called, has grown up almost from infancy since the time of Adam Smith; and the philosophy of society, from which practically that eminent thinker never separated his more peculiar theme, though still in a very early stage of its progress, has advanced many steps beyond the point at which he left it. No attempt, however, has yet been made to combine his practical mode of treating his subject with the increased knowledge since acquired of its theory, or to exhibit the economical phenomena of society in the relation in which they stand to the best social ideas of the present time, as he did, with such admirable success, in reference to the philosophy of his century.
Such is the idea which the writer of the present work has kept before him. To succeed even partially in realizing it, would be a sufficiently useful achievement, to induce him to incur willingly all the chances of failure. It is requisite, however, to add, that although his object is practical, and, as far as the nature of the subject admits, popular, he has not attempted to purchase either of those advantages by the sacrifice of strict scientific reasoning. Though he desires that his treatise should be more than a mere exposition of the abstract doctrines of Political Economy, he is also desirous that such an exposition should be found in it.
The present edition, with the exception of a few verbal corrections, corresponds exactly with the last Library Edition and with the People's Edition. Since the publication of these, there has been some instructive discussion on the theory of Demand and Supply, and on the influence of Strikes and Trades Unions on wages, by which additional light has been thrown on these subjects; but the results, in the author's opinion, are not yet ripe for incorporation in a general treatise on Political Economy. For an analogous reason, all notice, of the alteration made in the Land Laws of Ireland by the recent Act, is deferred until experience shall have had time to pronounce on the operation of that well-meant attempt to deal with the greatest practical evil in the economic institutions of that country.
THE FIRST VOLUME.
Page 1 BOOK I. PRODUCTION. Chapter I. Of the Requisites of Production. § 1.Requisites of production, what 29 2.The function of labour defined 31 3.Does nature contribute more to the efficacy of labour in some occupations than in others? 33 4.Some natural agents limited, others practically unlimited, in quantity 34 Chapter II. Of Labour as an Agent of Production. § 1.Labour employed either directly about the thing produced, or in operations preparatory to its production 37 2.Labour employed in producing subsistence for subsequent labour 39 3.—in producing materials 42 4.—or implements 44 5.—in the protection of labour 46 6.—in the transport and distribution of the produce 47 7.Labour which relates to human beings 50 8.Labour of invention and discovery 51 9.Labour agricultural, manufacturing, and commercial 53 Chapter III. Of Unproductive Labour. § 1.Labour does not produce objects, but utilities 55 2.—which are of three kinds 57 3.Productive labour is that which produces utilities fixed and embodied in material objects 58 4.All other labour, however useful, is classed as unproductive 61 5.Productive and Unproductive Consumption 64 6.Labour for the supply of Productive Consumption, and labour for the supply of Unproductive Consumption 65 Chapter IV. Of Capital. § 1.Capital is wealth appropriated to reproductive employment 68 2.More capital devoted to production than actually employed in it 71 3.Examination of some cases illustrative of the idea of Capital 74 Chapter V. Fundamental Propositions respecting Capital. § 1.Industry is limited by Capital 79 2.—but does not always come up to that limit 81 3.Increase of capital gives increased employment to labour, without assignable bounds 83 4.Capital is the result of saving 86 5.All capital is consumed 88 6.Capital is kept up, not by preservation, but by perpetual reproduction 92 7.Why countries recover rapidly from a state of devastation 94 8.Effects of defraying government expenditure by loans 95 9.Demand for commodities is not demand for labour 99 10.Fallacy respecting Taxation 111 Chapter VI. Of Circulating and Fixed Capital. § 1.Fixed and Circulating Capital, what 114 2.Increase of fixed capital, when at the expense of circulating, might be detrimental to the labourers 117 3.—but this seldom if ever occurs 121 Chapter VII. On what depends the degree of Productiveness of Productive Agents. § 1.Land, labour, and capital, are of different productiveness at different times and places 126 2.Causes of superior productiveness. Natural advantages 127 3.—greater energy of labour 129 4.—superior skill and knowledge 132 5.—superiority of intelligence and trustworthiness in the community generally 134 6.—superior security 139 Chapter VIII. Of Co-operation, or the Combination of Labour. § 1.Combination of Labour a principal cause of superior productiveness 144 2.Effects of separation of employments analyzed 147 3.Combination of labour between town and country 150 4.The higher degrees of the division of labour 152 5.Analysis of its advantages 154 6.Limitations of the division of labour 162 Chapter IX. Of Production on a Large, and Production on a Small Scale. § 1.Advantages of the large system of production in manufactures 164 2.Advantages and disadvantages of the joint-stock principle 170 3.Conditions necessary for the large system of production 176 4.Large and small farming compared 179 Chapter X. Of the Law of the Increase of Labour. § 1.The law of the increase of production depends on those of three elements, Labour, Capital, and Land 194 2.The Law of Population 195 3.By what checks the increase of population is practically limited 198 Chapter XI. Of the Law of the Increase of Capital. § 1.Means and motives to saving, on what dependent 203 2.Causes of diversity in the effective strength of the desire of accumulation 205 3.Examples of deficiency in the strength of this desire 208 4.Exemplification of its excess 216 Chapter XII. Of the Law of the Increase of Production from Land. § 1.The limited quantity and limited productiveness of land, the real limits to production 220 2.The law of production from the soil, a law of diminishing return in proportion to the increased application of labour and capital 221 3.Antagonist principle to the law of diminishing return; the progress of improvements in production 226 Chapter XIII. Consequences of the foregoing Laws. § 1.Remedies when the limit to production is the weakness of the principle of accumulation 236 2.Necessity of restraining population not confined to a state of inequality of property 237 3.—nor superseded by free trade in food 241 4.—nor in general by emigration 245 BOOK II. DISTRIBUTION. Chapter I. Of Property. § 1.Introductory remarks 249 2.Statement of the question 251 3.Examination of Communism 254 4.—of St. Simonism and Fourierism 263 Chapter II. The same subject continued. § 1.The institution of property implies freedom of acquisition by contract 270 2.—the validity of prescription 272 3.—the power of bequest, but not the right of inheritance. Question of inheritance examined 273 4.Should the right of bequest be limited, and how? 279 5.Grounds of property in land, different from those of property in moveables 284 6.—only valid on certain conditions, which are not always realized. The limitations considered 285 7.Rights of property in abuses 291 Chapter III. Of the Classes among whom the Produce is distributed. § 1.The produce sometimes shared among three classes 293 2.sometimes belongs undividedly to one 294 3.sometimes divided between two 295 Chapter IV. Of Competition and Custom. § 1.Competition not the sole regulator of the division of the produce 298 2.Influence of custom on rents, and on the tenure of land 299 3.Influence of custom on prices 302 Chapter V. Of Slavery. § 1.Slavery considered in relation to the slaves 306 2.—in relation to production 308 3.Emancipation considered in relation to the interest of the slave-owners 310 Chapter VI. Of Peasant Proprietors. § 1.Difference between English and Continental opinions respecting peasant properties 313 2.Evidence respecting peasant properties in Switzerland 315 3.—in Norway 322 4.—in Germany 326 5.—in Belgium 332 6.—in the Channel Islands 338 7.—in France 341 Chapter VII. Continuation of the same subject. § 1.Influence of peasant properties in stimulating industry 347 2.—in training intelligence 350 3.—in promoting forethought and self-control 351 4.Their effect on population 353 5.—on the subdivision of land 364 Chapter VIII. Of Metayers. § 1.Nature of the metayer system, and its varieties 371 2.Its advantages and inconveniences 372 3.Evidence concerning its effects in different countries 375 4.Is its abolition desirable? 388 Chapter IX. Of Cottiers. § 1.Nature and operation of cottier tenure 391 2.In an overpeopled country its necessary consequence is nominal rents 394 3.—which are inconsistent with industry, frugality, or restraint on population 397 4.Ryot tenancy of India 399 Chapter X. Means of abolishing Cottier Tenancy. § 1.Irish cottiers should be converted into peasant proprietors 404 2.Present state of this question 412 Chapter XI. Of Wages. § 1.Wages depend on the demand and supply of labour in other words, on population and capital 419 2.Examination of some popular opinions respecting wages 420 § 3.Certain rare circumstances excepted, high wages imply restraints on population 427 4.—which are in some cases legal 431 5.—in others the effect of particular customs 434 6.Due restriction of population the only safeguard of a labouring class 436 Chapter XII. Of Popular Remedies for Low Wages. § 1.A legal or customary minimum of wages, with a guarantee of employment 441 2.—would require as a condition, legal measures for repression of population 443 3.Allowances in aid of wages 448 4.The Allotment System 450 Chapter XIII. Remedies for Low Wages further considered. § 1.Pernicious direction of public opinion on the subject of population 456 2.Grounds for expecting improvement 459 3.Twofold means of elevating the habits of the labouring people: by education 465 4.—and by large measures of immediate relief, through foreign and home colonization 467 Chapter XIV. Of the Differences of Wages in different Employments. § 1.Differences of wages arising from different degrees of attractiveness in different employments 471 2.Differences arising from natural monopolies 477 3.Effect on wages of a class of subsidized competitors 482 4.—of the competition of persons with independent means of support 485 5.Wages of women, why lower than those of men 490 6.Differences of wages arising from restrictive laws, and from combinations 491 7.Cases in which wages are fixed by custom 493 Chapter XV. Of Profits. § 1.Profits resolvable into three parts; interest, insurance, and wages of superintendence 495 2.The minimum of profits; and the variations to which it is liable 498 3.Differences of profits arising from the nature of the particular employment 500 4.General tendency of profits to an equality 502 5.Profits do not depend on prices, nor on purchase and sale 508 6.The advances of the capitalist consist ultimately in wages of labour 510 7.The rate of profit depends on the Cost of Labour 512 Chapter XVI. Of Rent. § 1.Rent the effect of a natural monopoly 516 2.No land can pay rent except land of such quality or situation, as exists in less quantity than the demand 517 3.The rent of land consists of the excess of its return above the return to the worst land in cultivation 519 4.—or to the capital employed in the least advantageous circumstances 522 5.Is payment for capital sunk in the soil, rent, or profit? 525 6.Rent does not enter into the cost of production of agricultural produce 530 BOOK III. EXCHANGE. Chapter I. Of Value. § 1.Preliminary remarks 535 2.Definitions of Value in Use, Exchange Value, and Price 537 3.What is meant by general purchasing power 538 4.Value a relative term. A general rise or fall of values a contradiction 540 5.The laws of Value, how modified in their application to retail transactions 541 Chapter II. Of Demand and Supply, in their relation to Value. § 1.Two conditions of Value: Utility, and Difficulty of Attainment 544 2.Three kinds of Difficulty of Attainment 546 3.Commodities which are absolutely limited in quantity 548 4.Law of their value, the Equation of Demand and Supply 550 5.Miscellaneous cases falling under this law 552 Chapter III. Of Cost of Production, in its relation to Value. § 1.Commodities which are susceptible of indefinite multiplication without increase of cost. Law of their Value, Cost of Production 555 2.—operating through potential, but not actual, alterations of supply 557 Chapter IY. Ultimate Analysis of Cost of Production. § 1.Principal element in Cost of Production Quantity of Labour 562 2.Wages not an element in Cost of Production 564 3.—except in so far as they vary from employment to employment 566 4.Profits an element in Cost of Production, in so far as they vary from employment to employment 568 5.—or are spread over unequal lengths of time 569 6.Occasional elements in Cost of Production: taxes, and scarcity value of materials 574 Chapter V. Of Rent, in its relation to Value. § 1.Commodities which are susceptible of indefinite ultiplication, but not without increase of cost. Law of their Value, Cost of Production in the most unfavourable existing circumstances 577 2.Such commodities, when produced in circumstances more favourable, yield a rent equal to the difference of cost 580 3.Rent of mines and fisheries, and ground-rent of buildings 583 4.Cases of extra profit analogous to rent 586 Chapter VI. Summary of the Theory of Value. § 1.The theory of Value recapitulated in a series of propositions 588 2.How modified by the case of labourers cultivating for subsistence 591 3.—by the case of slave labour 593 APPENDIX.
- Substance of three articles in the Morning Chronicle of 11th, 13th, and 16th January, 1847, in reply to MM. Mourner and Rubichon and to the Quarterly Review, on the Subdivision of Landed Property in France
- The present state of the discussion my be learnt from a review (by the author) of Mr. Thornton's work "On Labour," in the "Fortnightly Review" of May and June, 1869, and from Mr. Thornton's reply to that review in the second edition of his very instructive book.