English philosopher, economist and civil servant son of the economic historian and philosopher James Mill, John Stuart Mill was one of the greatest English thinkers of liberalism. Driven by his father, he showed early academic skills. He knew Greek and Latin at the age of 8 years. He joined the East India Company in 1822, where his father worked. He soon joined the work of the School of the philosopher Jeremy Bentham (1748-1832) and contributed to the "Treaty of evidence in court."
John Stuart Mill distinguished himself first as a journalist in journals advocating a radical liberalism. From 1835 to 1840, he led the "Review of London and Westminster", organ of the Radical Party. Disciple and friend of Auguste Comte who provided financial support, he was profoundly influenced by positivism. From 1856 to 1858, John Stuart Mill held the position of his father at the East India Company, and then moved into his house in France near Avignon. Elected to the House of Commons in 1865, he defended the right to vote and empowerment of women, becoming a pioneer of feminism.
The interpretation John Stuart Mill gave of law of economics is important and ambiguous. It is important because, until the publication of the General Theory, many economists were loyal to the classical tradition and relied on it to develop their analysis. It proposed, in effect, a response that, after the controversy between Malthus and Sismondi on one hand, Say and Ricardo on the other hand, appeared to be central: does the law of markets involve the negation of commercial crises? If the law of markets does not imply such a denial, how can we reconcile the existence of excess aggregate supply of goods with the idea that supply creates its own demand? Ricardo and Say had certainly responded to this point the arguments of Malthus and Sismondi, but in a way that seemed to many to be unsatisfactory.
Mill, by developing its analysis of commercial crises, sought a solution to this problem by suggesting that the appearance of an excess supply of goods does not result from excessive production of goods but of the reversal of what he called after Smith, an over-trading, in other words an unfortunate speculation in the market for goods. But as Say argued in his complete course of practical political economy (1828-1829: 474-475) that the commercial crises had their origins in excessive emission of notes, Mill, who was very hostile to regulation of banking, thought that the origin of the crisis lies in the mistakes that traders can commit when they anticipate the future evolution of prices of goods.
For Mill, the political economy is "the science dealing with the psychological and moral laws of production and distribution of wealth." The laws of production are given by the technical conditions. And the laws of distribution are governed by "human institutions", "laws and customs of society." Utilitarianism which it adheres is that of Jeremy Bentham. It does not mean that economic rationality obeys a principle of maximizing individual utility quantifiable, but simply that the economic motive, isolated from other human behavior, is to "prefer more wealth to less wealth" in a social context : there is no eternal laws of political economy. Thus, for Mill, the structure of society into three social classes (workers, capitalists and landlords) with different interests is related to an English or Scottish convention is not universal: property rights on the ground separated from the capital and labor in agriculture are not the usual situation on the continent at that time. It shows that the question of the distribution cannot be posed without reference to institutions.
Mill supported the principle of population developed by Malthus, who believed that, unchecked, the population would increase dramatically because faster than agricultural production, but notes that education and rising standards of living have led in France at a rate of lower birth. So thinly veiled, it is calling for measures of birth control and equal rights between men and women to reduce over-population and encourage "moral progress, social and even intellectual" by the instruction and a system of compulsory state exam.
According to Mill, the increase in population faster than agricultural production whose returns are diminishing, leading to the falling rate of profit and puts an end to capital accumulation. The steady state (without accumulation) resulting and also speak with Adam Smith and David Ricardo is desirable for him, because he can "freely cultivate the arts which embellish life" easier and reduce inequalities, but it cannot be achieved as there are desires of accumulation. This is the abstinence from consumption this: so it's a sacrifice that deserves compensation. It is necessary for capital formation consists mainly of advances in wages for workers (note that this theory of abstinence was strongly criticized, as well as advances in salary). Profits play a role in growth and employment. But Mill's analysis goes further than Ricardo, repeating the argument of the latter on the improvements to mitigate the diminishing returns in agriculture; it shows that in England, technical progress has avoided the rise wheat prices.
Robbins, Lionel. (1967), “Introduction”, Essays on Economics and Society, in The Collected
Works of John Stuart Mill, vol. IV, Toronto: University of Toronto Press, London: Routledge & Kegan Paul, 1967.
Sowell, Thomas. (1972), Say’s Law: An Historical Analysis, Princeton N.J.: Princeton
University Press, traduction française, Paris: Litec, 1991.