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WorkJohn Stuart Mill

Essays on Some Unsettled Questions of Political Economy

Five early essays, four of them left in manuscript for fourteen years, printed when a quarrel over tariffs made their argument about trade timely.

by John Stuart Mill180 passages held

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First published
(aged 38)
Original language
English

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Overview

Colonel Robert Torrens, a former Royal Marines officer and Member of Parliament, argued in The Budget in the early 1840s that Britain should lower its tariffs only for countries that lowered theirs. The claim set off a quarrel among economists, most of whom had taken from David Ricardo the lesson that free trade benefits a country whatever its neighbours do. Mill had an answer already written. In 1829 and 1830, aged twenty-three and twenty-four, he had composed five essays on questions that Ricardo's economics left open, and four of them had stayed in manuscript because, as his preface explains, public interest in such abstract discussion had lapsed. He published all five in 1844, the year after A System of Logic had made his name. The preface admits that he had held Torrens's principle for more than fifteen years, though he expected to differ over how far to apply it. The first essay is the one the controversy called for. Ricardo had shown why two countries gain by trading with each other; he had not shown how the gain is divided between them. Mill argues that the division depends on how strongly each country wants the other's goods, so that a tariff can shift the terms of exchange in a country's favour, and he adds that nothing in this justifies duties meant to protect home industries. The second essay asks whether an economy can produce more than people will buy, and concedes that in a commercial crisis there can be a general excess of goods, matched by a general wish to hold money. The fifth, the only one printed earlier, defines political economy as the study of people considered solely as beings who seek wealth, an abstraction that has to be corrected before it is applied to any real case. Mill carried the first essay's argument into his Principles of Political Economy four years later. Karl Marx, who thought little of that larger book, judged that the few original ideas Mill had were to be found in this small one.

Key concepts

What is comparative cost, the starting point of the first essay?

Comparative cost is Ricardo's finding that trade pays whenever two countries differ in the relative cost of producing goods, even if one of them makes everything more cheaply. If cloth costs England less labour, relative to linen, than it costs Germany, England gains by making cloth and buying linen. The principle shows that there is a gain. Mill's first essay starts from it and asks the further question of how the gain is shared.

What is a general glut?

A general glut is a supposed overproduction of all goods at once. Economists of Ricardo's school called it impossible, because whoever sells does so in order to buy. Mill agrees that there cannot be permanently too much of everything. He adds that money allows people to sell without buying straight away, so that in a commercial crisis there can be, for a time, an excess of all goods and a shortage of money.

What is the difference between productive and unproductive labour?

Productive labour adds to the lasting sources of enjoyment a country possesses; unproductive labour yields enjoyment directly and leaves nothing behind. Mill's example of the second is a performer on a musical instrument. He widens the older definition in one respect: a classification that calls a basket of cherries wealth and denies the name to a workman's acquired skill is arbitrary, so labour spent in teaching a productive trade is productive too.

What are disturbing causes?

Disturbing causes are the circumstances a science has left out of its assumptions, which make real results differ from the predicted ones. Political economy reasons as if people sought only wealth; custom, affection or ignorance then alter the outcome. Mill compares them to friction in mechanics: at first a rough deduction made by guess, later something studied in its own right. A conclusion may be applied to a real case only once they have been allowed for.

What is the a priori method in political economy?

It is reasoning from an assumed motive to its consequences, in place of generalising from observed economic facts. Mill thinks the second route is closed: in society too many causes act together, and no experiment can vary one while holding the others fixed. So the economist starts from what is known of human motives and works out what would follow. Observation comes afterwards, to check the result and to find what the assumptions left out.

Themes of the book

What this book returns to, gathered into themes and ordered by how much of the text each one occupies.

How two trading nations divide the gain

Two countries both gain by trading with each other, but which of them gets the larger share? Ricardo had left the question open, and Mill's answer shows that a tariff can be made to fall on foreigners.

Mill supposes England trading cloth for German linen. Anywhere between the two countries' own costs the exchange profits both, and where it settles depends on how much of each good the other country will take at each price. The side whose goods are more keenly wanted abroad gets the better bargain. A conclusion follows that free traders disliked: a tax on exports or imports can shift the rate of exchange, so that foreigners bear part of it. Mill accepts the result and limits it at once. It bears on taxes raised for revenue and on reciprocity, and lends no support to duties meant to protect home producers.

  • international trade
  • terms of trade
  • gains from trade
  • comparative advantage
  • tax incidence
  • export taxes
  • demand
  • national wealth
  • competition

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Spending, saving and unsold goods

Does a country grow rich by spending, as traders have always believed, or by saving? Mill sides with the economists and then concedes what the traders saw.

The second essay rejects the old belief that brisk spending makes a nation wealthy: production enriches, and unproductive consumption only uses up. Yet Mill observes that a large part of a country's capital always lies idle as unsold stock, so a livelier demand does put more of it to work. He admits, too, that money lets people sell without buying at once, and that in a commercial crisis all goods together are for a time in excess. The two essays that follow tidy Ricardo's vocabulary: what should count as productive labour, and how profits depend on what wages cost the employer.

  • consumption
  • production
  • general glut
  • money
  • capital
  • profit
  • wages
  • interest rates
  • productive labor
  • banking
  • wealth
  • labor

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Economics as an abstract science

What can a science claim to know if it studies people as though they wanted nothing except wealth? The last essay defines political economy by that fiction and then says how far to trust it.

Political economy, Mill says, treats a person solely as a being who desires wealth and can judge the means of getting it, with only the dislike of work and the taste for costly pleasures set against that desire. No economist supposes people are really like this. The assumption is made as geometry assumes a line without breadth, because society cannot be experimented on and conclusions must be reasoned out from known motives. Such conclusions are true in the abstract. In a real case the disturbing causes have to be added, as friction is in mechanics, and whoever has studied nothing but political economy will fail in applying it.

  • political economy
  • economic methodology
  • social science
  • philosophy of science
  • scientific method
  • definition
  • causation
  • economic terminology
  • classification

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Within this work

passages held
180
distinct concepts
244
by passages held, corpus-wide
#374

What this book thinks together

The wheel takes this book’s leading concepts and shows how often they come up together. The wider the band between two, the more of its passages speak of both. Among them, most often together: “gains from trade” and “international trade”.
Concept co-occurrence, strongest first 8 concepts, joined by 13 pairings. 90 pairings reach beyond these concepts and are not drawn.
ConceptPaired conceptShared passages
gains from tradeinternational trade17
international tradeterms of trade16
profitwages15
capitalprofit14
capitalwages7
capitalconsumption4
gains from tradeterms of trade4
political economyprofit3
political economywages3
capitalinternational trade2
consumptioninternational trade2
consumptionprofit1
consumptionwages1

Works held

The author's work in order, this book marked in place. Your-language title first, the original beneath it where the two differ; side chips show which full texts are held.

  1. 1843 A System of Logic, Ratiocinative and Inductive

    It was the first book of his own, and it made his name in 1843. Its claim that every belief must answer to experience is the ground on which the later books on morals and politics stand.

     EN
  2. 1844 Essays on Some Unsettled Questions of Political Economy (Essays on some unsettled Questions of Political Economy) you are here EN
  3. 1848 Principles of Political Economy

    Seven editions carried this treatise from 1848 to 1871, revised as his view of socialism moved. It is read here in the text of the seventh, the last Mill revised himself.

     EN
  4. 1859 On Liberty

    One of the two books Mill expected to outlast the rest, the other being the System of Logic. Its defence of individuality against majority opinion runs on into Considerations on Representative Government and The Subjection of Women.

     EN
  5. 1861 Considerations on Representative Government

    Written two years after On Liberty, it faces the same danger, a majority that overrides everyone else, and meets it with electoral machinery. It is his fullest statement on how a free people should be governed.

     EN
  6. 1861 Utilitarianism

    A defence of the ethics he inherited from Bentham and from his father, assembled from papers of the 1850s. Short as it is, it supplies the standard of right and wrong that his political books take for granted.

     EN
  7. 1862 The Contest in America

    Occasional journalism from Fraser's Magazine, written in haste before a journey to Greece. It shows Mill as a polemicist, arguing against the prevailing opinion of his own class.

     EN
  8. 1865 Auguste Comte and Positivism

    Two essays from the Westminster Review of 1865, written eight years after Comte's death. They close a relationship that began with admiring letters in 1841 and left its mark on the System of Logic.

     EN
  9. 1869 The Subjection of Women

    The most contested of his books in its day, published in 1869 after his one term in Parliament. It carries the reasoning of On Liberty into marriage and the household.

     EN
  10. 1879 Socialism

    Left unfinished at his death, these are the posthumous "Chapters on Socialism", first drafts for a book planned in 1869. They return to a question that the Principles of Political Economy had reopened from one edition to the next.

     EN
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