In England, in the works of Ricardo, classical economics reached its last line, and the 20-30s of the 19th century were a period of new interpretation of the main postulates of the classical school: the theory of value and additional value, sources of wealth, income distribution, etc.
Of the numerous theoretical problems raised by J. and Mill, it is difficult to put any one in the first place.
Taking into account the recognition of J. S. Mill* himself, in his theoretical and methodological views he is indeed in many respects close to his idol D. Ricardo. Positions that are perceived as a "logical conclusion" from the teachings of D. Ricardo, and positions that demonstrate the creative achievements of J. S. Mill, are concentrated in his best work - "Fundamentals ...".
As can be seen already from the first book of the Pentateuch, J. S. Mill adopted the Ricardian view on the subject of political economy, bringing to the fore the laws of production and the laws of distribution. Moreover, the author of "Fundamentals ..." almost repeats his predecessors in the "school", noting that in economic development one cannot but reckon with the "opportunities of agriculture."
Research Methodology
In the field of methodology, J. S. Mill's research contains both a repetition of what the classics achieved and significant new provisions. So, in the third book of "Fundamentals ..." he agrees with the established concept of "neutrality" of money: "Money by itself does not satisfy any needs." The scientist seems to forget about the function of money as a measure of the cost of inventory, although he is well aware of it throughout the book "Fundamentals ...".
Hence, through the underestimation of the function of money as a measure of the value of the commodity stock, J. S. Mill derives a simplified description of wealth. The latter, in his opinion, is determined by the amount of goods that are bought and sold on the market.
At the same time, the opposition between the laws of production and the laws of distribution is specific to the methodology of the author of "Fundamentals...". The former, he believes, are unchanging and specified by technical conditions, that is, like "physical truths" they have a character "inherent in the naturalistic sciences", "there is nothing in them that would depend on freedom." And the second, because they are controlled by "human institutions", such that they are "made by the thoughts and desires of the ruling part of society, and are very diverse in different centuries and in different countries." It is the laws of distribution, which are influenced by "the laws and customs of a given society," which determine in advance on the personal level the distribution of property through the distribution of income among the "three main classes of society." From this methodological reference of the formation of the laws of distribution by human decisions, J. S. Mill then develops his own recommendations for the social reform of society. In doing so, J. S. Mill laid the foundational principles for reformism.
Another new point in the research methodology of J. S. Mill is legitimately recognized as attempts to discover the difference between the terms "statics" and "dynamics" borrowed by him in O. Comte. In the fourth book, he notes that all economists have been striving to know the laws of the economy of a "stationary and unchanging society", and that now it is necessary to add "the dynamics of political economy to its statics." In Mill, however, "dynamics" means the analysis of historical changes, while statics refers to what we now call statistical analysis. So, the "dynamics" of the author of "Foundations ..." is not connected with the analysis and identification of those variables in economic relations that can be taken into account temporarily, which has now been done thanks to mathematical models using differential calculations.
Theory of Productive Labor
Let's start with the theory of productive labor. In essence, this theory, he is in full solidarity with A. Smith. In its defense, the author of "Fundamentals ..." argues that only productive labor (labor, the results of which are obtained) creates "wealth", that is, "material wealth". The novelty of the position here is only in the fact that Mill also proposes to recognize as productive the work aimed at protecting property and obtaining qualifications that allow increasing savings. According to J. S. Mill, income from productive labor is consumed in a productive form if this consumption "supports and increases the productive forces of society." And any income from unproductive labor, he believes, is just a simple redistribution of income created by productive labor. Even the consumption of workers' wages, according to Mill, is productive if it provides the minimum funds necessary to support the worker and his family, and unproductive insofar as it provides "luxury goods."
J. S. Mill, regarding the essence of wages, adhered basically to the same views as D. Ricardo and T. Malthus. Describing it as wages for labor and believing that it depends on the supply and demand for labor, the author of "Fundamentals ..." repeated the conclusion of these scientists about the inevitability of a minimum wage for workers, which became the basis of his "working fund" doctrine. According to the latter, there is no class struggle, nor trade unions can prevent the formation of wages at the subsistence level. But in 1869, in one of his articles, J. S. Mill formally repudiated the provisions of the "working fund" doctrine, recognizing that labor unions do influence the wage-limiting action that competition in the labor market can bring about. it should be noted that according to Mill, wages, other things being equal, are lower if the work is less attractive Finally, J. S. Mill, like D. Ricardo, does not identify the concept of "minimum wage" with the concept of "physiological minimum", explaining that the former quantitatively exceeds the latter, while the author of Fundamentals considers a certain "capital reserve" to be the source for the payment of wages.
Substantiating the need for a certain "reserve of capital" for the organization of production, J. S. Mill expresses his view on the essence of profit or interest. They should be a reward for the "sacrifice" or "containment" of those who can afford to wait for the final product to appear.
Capital, value, money
According to the theory of capital, which J. S. Mill characterizes as "the accumulated stock of products of past labor", in "Fundamentals ..." he develops an interesting position that capital creation as the basis of investment allows you to expand employment and can stop unemployment if , to tell the truth, "unproductive expenses of the rich" are not meant.
Another common position in the views of J. S. Mill and D. Ricardo is their understanding of the theory of rent. The author of "Fundamentals ..." accepts D. Ricardo's position on rent-making factors, seeing in rent "compensation" that is paid for the use of land. But, as J. S. Mill clarifies, it should be borne in mind that, depending on the form of use of the land allotment, it can either provide rent, or, conversely, require costs that exclude this income.
Without going into details of J. S. Mill's theory of income distribution, that is, the distribution of wages, rents and profits, we note that the author of the Fundamentals ... in his main conclusions regarding these categories fully joined the "camp" of the Malthusians. Judging by the first book of "Foundations ...", T. Malthus' theory of population is simply an axiom for him, especially when he states that in England for 40 years after the population census in 1821, the means of subsistence did not outstrip the population growth rate. In the second book, various arguments are again given regarding the restriction of the family through the voluntary reduction of the birth rate, the emancipation of women, and so on.
But more eloquently his adherence to the Malthusian theory of population, J. S. Mill expressed in his own "Autobiography", where there are such lines: "The principle of population of Malthus was for us the same unifying flag as any opinion of Bentham. argument against the theory of unrestricted human progress, we warmly and zealously took up, giving it the opposite content, as a pointer to the only means of ensuring the realization of full employment and high wages for the entire working population by voluntarily limiting the growth of this population.
J. S. Mill turned to the theory of value in the third book of the Pentateuch. He considers the concept of "exchange value", "consumed value", "value" and some others, also draws attention to the fact that the cost (value) cannot grow for all goods at the same time, since value is a relative concept. And then the author of "Fundamentals..." repeats the thesis of D. Ricardo about the creation of value by labor, which is necessary for the production of commodity goods, stating that it is the quantity of labor that "is of paramount importance" in the event of a change in value.
This book also deals with the theory of money. Here, J. S. Mill reveals his adherence to the quantity theory of money, according to which an increase or decrease in the amount of money affects the change in the relative prices of goods. According to him, ceteris paribus, the value of money itself changes inversely with the amount of money: any increase in quantity reduces their value, and any decrease increases it in the same proportion. "Further, the author emphasizes that the prices of commodities are regulated primarily by the amount of money that moment are in circulation, since the gold reserve is so large, he believes that possible changes in the cost of gold mining for a given year cannot immediately affect the price adjustment. money is reduced to saying that "in the social economy there is nothing more insignificant in nature than money, they are important only as an ingenious tool that serves to save time and labor. This is a mechanism that allows you to quickly and efficiently do what would be done without it, although not so quickly and efficiently, and, like many other mechanisms, its obvious and independent influence appears only when it fails.
Judgment on socialism
Among the outstanding representatives of classical political economy, the first judgments and interpretations about socialism and the socialist system of society belong to J. S. Mole. He touched on these issues, violating the problem of property.
But for all his benevolence towards "socialism", the author of "Fundamentals ..." fundamentally distinguishes himself from the socialists on the issue that social injustice seems to be connected with the right of private property as such. In his opinion, the task is only to overcome individualism and abuses that are possible with the recognition of property rights. He notes that the ideal of life cannot be regarded as "a struggle for flourishing, because only in the backward countries of the world is the increase in production the most important task, and in the more developed countries the improvement of distribution is considered economically necessary." J. S. Mill admits that the "transformation of society" towards the willful transformation of the accumulation of capital into the property of "those who use it for production" could provide "the combination most suitable for the organization of industry." At the same time, his main conclusion is unequivocal: although the solution of practical problems requires "the spread of the socialist worldview", "laissez faire must become a social principle, and every deviation from it, not dictated by considerations of some higher good, is an obvious evil."
The ideas of enhancing the participation of the state in the socio-economic development of society and the related reforms permeate all the works of J. S. Mill. For example, he notes that it is advisable for the state to orient the central bank towards the growth (increase) of bank interest, since this will be followed by an influx of foreign capital into the country and an increase in the national exchange rate, and accordingly measures will be taken to prevent the outflow of gold abroad. J. Mill interprets Hume's law much broader*. He shows that the influx reduces the rate of interest, even if it leads to higher prices. As soon as the rate of interest falls, short-term capital is declining abroad, which leads to the equalization of the exchange rate. J. S. Mill was one of the first to point out that the central bank can protect its reserves during the outflow of gold abroad by raising bank interest and thereby helping to raise the market rate of interest, which is already happening as a result of the outflow of gold from the country. An increase in the rate of interest encourages the attraction of capital from abroad. There is a demand for domestic bills, and as their price rises, it becomes profitable to sell gold bars for them. Thus, the exchange rate is set in favor of the country, where government policy is aimed at keeping the growth of bank interest. This mechanism of the rotation of bank interest with the movement of gold in the world market was described in detail by George Homen in The Theory of the Exchange Rate (1861). However, the essence of the process was already outlined by J. S. Mill and, to some extent, by Thornton.
Being confident that "the social principle should be laissez faire", J. S. Mill nevertheless understands that there are various spheres of social activity - spheres of "powerlessness of the market", where the exclusively market mechanism is unacceptable.
And in order to ensure its improvement without liquidating the "private property system" and to provide every member of society with the full right to participate in the benefits created by it, in order to strengthen the order in which "no one is poor, no one tries to become rich and there is no reason to fear being thrown back by the efforts of others who are pushing forward, "the author of Fundamentals ..." draws attention to the state's ability to create infrastructure, develop science, repeal laws that prohibit or restrict trade unions, and the like.
J. S. Mill's doctrine of social reform "owes" its emergence to his assumption that it is impossible only to change the laws of production, and not the laws of distribution. This shows a complete misunderstanding of the fact that "production and distribution are not separate spheres; they mutually and almost completely penetrate each other." Through this, one can feel the tendentiousness of the main provisions of the reforms he proposed, which can be reduced to three positions:
1) the destruction of wage labor with the help of a cooperative production association;
2) socialization of land rent with the help of the land tax;
3) limiting the unevenness of wealth by limiting the right to inherit.
The quality of education, for Mill, is not immediately, and in order not to allow the government to "sculpt the thoughts and feelings of people from a young age," he recommends introducing not a public public education, but a system of private schools or compulsory home education from a certain age. Public schools, in his opinion, can be an exception only for certain areas. The public educational minimum, put on a private basis, the author of "Fundamentals ..." believes, must be combined with a system of state examinations (collecting a tax from parents for failure in the exam would be compensation for continuing education), obliging the state to provide "monetary support to elementary schools" .
PLAN
Introduction
John Stuart Mill is one of the finalists of classical political economy and a recognized authority in scientific circles, whose research goes beyond technical economics.J.S. Mill published his first "Experiments" in political economy when he was 23 years old in 1829. In 1843, his philosophical work "System of Logic" appeared, which brought him fame. The main work (in five books, like that of A. Smith) entitled "Fundamentals of Political Economy and Some Aspects of Their Application to Social Philosophy" was published in 1848. Taking into account the recognition of J.S. Mill himself, in the theoretical and methodological in terms of which he is really close in many respects to his idol D. Ricardo. Meanwhile, the positions taken as a “logical conclusion” from the teachings of D. Ricardo, and positions that demonstrate the creative achievements of J.S. Mill directly, are concentrated “in his best work -“ Fundamentals ... ”
J.S. Mill accepted the Ricardian view on the subject of political economy, highlighting the "laws of production" and "the laws of distribution."
In the field of research methodology, J.S. Mill clearly shows both repetition achieved by the classics and significant progressive progress. So, and in the seventh chapter of book III, he identifies with the established concept of the "neutrality" of money, and in a number of subsequent chapters of this book, his adherence to the quantitative theory of money is undeniable. Hence, through the underestimation of the function of money as a measure of the value of the commodity stock, J. S. Mill follows a simplified characterization of wealth. The latter, in his opinion, is defined as the sum of goods bought and sold on the market.
"Fundamentals of Political Economy" became a textbook for several generations of European economists. As the author states in the preface, he was tasked with writing an updated version of Adam Smith's The Wealth of Nations and Ricardo's Principia, taking into account the increased level of economic knowledge and ideas, "the general practical principle should remain laissez-faire (non-intervention) and any departure from it is a definite evil."
1. Factors in the formation of the views of J. S. Mill
In the Victorian era of British history, there is hardly a more influential political thinker than John Stuart Mill (1806-1873). As a scientist and philosopher, he left his mark in almost every branch of knowledge about man and society. As a major publicist, whose opinion left no one indifferent, he was nicknamed "the conscience of the nation" during his lifetime.Mill's books accompanied the English of the 19th century everywhere: they were published in numerous editions in scientific series and for "people's" libraries; they were quoted in state meetings and in the pages of periodicals. This was a man whose books shaped the world of ideas of an entire era.
His influence on the political process of Great Britain is especially noticeable in the 50-70s, an important and dramatic period of British history in the 19th century. He was a direct participant in the development and adoption of the second suffrage reform of 1867, the discussion of the Irish question within the walls of Parliament. He drew the attention of public opinion to such unpopular in the middle of the XIX century. topics such as women's suffrage, the cruelty and injustice of colonial rule, the threat to democracy from the "tyranny of the majority", political dissent and atheism.
The originality of Mill's thoughts and actions determines the academic significance of their research in terms of studying the era, the relations of society, its institutions and an individual outstanding personality in the middle - second half of the 19th century.
Mill made an important contribution to the development of the bourgeois methodology of scientific knowledge of socio-political phenomena, as well as to the further development of the normative foundations of the political theory of liberalism.
Mill focuses his attention on the analysis of the forms of socio-political thinking. Considering that they determine reality, he is looking for ways to streamline the "facts of experience" in politics. In his normative political theory, several "floors" can be distinguished: ethics, social and political philosophy, as well as constitutional and legal views.
Justice, according to Mill, is based on utility and constitutes the main part of all morality. Everything that leads to the achievement of happiness is just. Justice - those moral requirements that in total occupy the highest place among the requirements of the common good "and therefore have a higher obligation than other requirements." In terms of its material content, the category of justice is revealed through the interpretation of the main problem of Mill's socio-political philosophy - the relationship between the individual and society. Mill clearly formulated the liberal interpretation of this relationship, characteristic of the era of the apogee of pre-monopoly capitalism. In defining these relationships, Mill proceeds from the interests and welfare of the bourgeois individual. The acute class struggle in England, witnessed by Mill, dispelled the illusion that the interests of the ruling and those ruled by universal suffrage could be identical, and on the other hand, set before the ruling class the urgent task of stabilizing and strengthening strong power in the conditions of bourgeois democracy.
Mill looks at the choice of a political institution more from a moral and educational point of view than from the point of view of material interests. Mill reveals the value of the common good as a mutual consideration of conflicting interests not only of individuals, but also of classes. In his ethics, he acts as the immediate predecessor of solidarity concepts. He believed in the possibility of moral self-improvement of a person, but at the same time considered it necessary to prevent the consequences of selfish principles in a person that were harmful to the “common good” with the help of constitutional restrictions. Mill accuses contemporary political doctrines of suppressing the free development of individuals, and places the concepts of freedom and progress at the center of his philosophy of history and social philosophy. He considers freedom the only inexhaustible source of progress, because thanks to it there can be as many independent centers of progress as there are individuals. He deeply believes in the naturalness and necessity of pluralism of opinions and political positions, referring to W. Humboldt as his predecessor.
One of the first bourgeois-liberal ideologists, he pointed out the danger for the bourgeois individual of the growing importance of the mass of "average" people, danger for the individual and progress itself. Mill's contemporary democracy was not the actual rule of the people, that is, the majority of the working people, but only the rule of the majority within the ruling class. It is against the vices of this bourgeois rule of the majority, in favor of an enlightened minority, that Mill speaks.
Mill's views on politics changed throughout his life.
Mill's position is typically liberally ambivalent: he is against conservative institutions and politics, and against real democracy, the rule of the "unenlightened" grassroots. Mill's credo is "smoothing out those irregularities with which fate has unfairly endowed all of humanity, within the framework of the current social order." The unequal distribution of property, for example, although unfair, is useful in practice, the denial of the right to private property and its inheritance is even more unfair.
To justify the rights of the individual, it proceeds from the principle of benefit, both for the individual and for society. I am absolutely convinced that the rights of the individual are a sphere free from state interference, and there are very few exceptions to this rule. Interventions are possible only for self-preservation, but not for personal benefit.
The main principle of the activity of the state: it should not interfere with the freedom of activity of individuals and their associations, but is called upon to help them in this activity, to do everything to develop a spirit of amateur activity and enterprise in society.
The state is led by an "enlightened minority", both men and women who have reached the age of majority have the right to vote, excluding the illiterate, the poor, bankrupt, tax evaders.
So, Mill proposed a project to save the bourgeois system at the beginning of its long crisis evolution. He placed his main stake on improving the organization of capitalist society on the basis of the moral improvement of its members, limiting the number of "lower classes" and the beneficial role of the bourgeois elite for the moral progress of the whole society.
2. Features of Mill's methodology
John Stuart Mill most consistently approached the systematization and generalization of various aspects of the teachings of the classics. His life path and work were largely influenced by the ideas and views of his father, the economist James Mill, D. Ricardo's closest friend.In general, the methodology of J. S. Mill's research is close to the school of classics, however, a feature of the methodology of Mill's economic theory is the separation of the laws of production from the laws of distribution. The first, in his opinion, are constant and set by technical conditions, there is nothing in them that depends on the will, the second, since they are controlled by human intuition, are transient, depend on the laws and customs of society, change depending on the stage of historical development. He writes: “The laws and conditions for the production of wealth have the character of truths characteristic of the natural sciences. Otherwise, with the distribution of wealth. Distribution is wholly a matter of human institution." Thus, he recognizes the objective nature of the laws of production and the subjective nature of the laws of distribution. Another new approach in J.S. Mill's research methodology is associated with his attempt to add the dynamics of political economy to the studied laws of an unchanging society. The functioning of the economy that maintains constant parameters, he calls statics, the change in the economic parameters of the social economy in the direction of growth or decline is characterized by him as economic dynamics. Raising the problem of economic growth, he focuses his attention on the factors that can ensure positive economic dynamics, highlighting among them those that directly affect the production process, and those that contribute to the expansion of economic ties and optimization of the distribution process.
His views on productive labor are similar to those of A. Smith. Arguing that only productive labor creates material wealth, he takes a slightly different approach to the interpretation of productive labor, including in its composition work to improve skills, protect property, etc. According to J. S. Mill, income from productive labor constitutes productive consumption only on condition that it maintains and increases the productive forces of society. Income from unproductive labor, he believes, gives rise to "... unproductive expenditure of individuals, which will ... lead to the impoverishment of society, and only the productive expenditure of individuals will enrich society."
J. S. Mill's views on wages merge with the approaches of D. Ricardo and T. Malthus. Understanding it as a payment for labor, he made the amount of wages dependent on the supply and demand for labor. J. S. Mill advanced working fund theory. According to this theory, society has a stable fund of subsistence, the reserves of which go to the maintenance of workers. He believed that neither the class struggle nor the trade unions were able to change the process of wage formation at the subsistence level, although the minimum wage in his understanding exceeded the physiological minimum. The theory of the working fund did not stand the test of time, subsequently J. S. Mill abandoned it, realizing the role of trade unions.
J. S. Mill addressed the problems of cost and price in the third part of the book, which was called "Exchange". Using the terms "value", "exchange value", "use value", he does not delve into the essence of these categories, which leads to a confusion of concepts. Paying attention to the fact that the cost cannot increase for all goods at the same time, he uses the concept of D. Ricardo "relative cost". And although J. S. Mill claims that the quantity of labor is of paramount importance in the creation of value, in essence, he reduces value to the cost of production. He puts the pricing process in dependence on the magnitude of supply and demand. When analyzing the impact of price changes for individual goods on the magnitude of demand, he is ahead of A. Marshall, in fact, raising the problem of price elasticity of demand.
Of particular interest is J. S. Mill's idea of social evolution, which manifested itself in his proposals for social reforms. Trying to reconcile his assumptions about the changing nature of the laws of distribution with the idea of social justice, he proposed to gradually reform the distribution relations in society, without affecting its economic foundations. Linking distribution relations with property relations, J. S. Mill spoke of the impotence of the market in resolving issues of a fair distribution of income and proposed using “reasonable legislation” to transform contemporary capitalist society into a more humane and just one. Based on this, he proposed a system of social transformations, including the creation of corporate associations that eliminate wage labor, the socialization of land rent with the help of a special land tax, and the reduction of inequality in the distribution of wealth by limiting the right to inherit.
J. S. Mill saw the ideal of a social structure in the optimal combination of freedom of enterprise with state regulation of economic processes. Adhering to the position of "economic liberalism", he simultaneously understands that there are zones of "market impotence", where the market mechanism fails. In order to improve the existing system without radically changing it, to create conditions under which "... no one is poor, no one strives to become richer and there is no reason to fear being thrown back due to the efforts of others to push forward", he is ready to resort to help of the state. Rejecting direct state regulation of the economy, he sees the need for the state to participate in creating infrastructure, developing science and stimulating scientific and technological progress, in helping members of society who, due to objective reasons, cannot exercise their equal rights.
3. The main postulates of Mill's economic doctrine
3.1. Cost, price, money
J.S. Mill turned to the theory of value in the third book of the Pentateuch. In its first chapter, having considered the concepts of "exchange value", "use value", "value" and some others, he draws attention to the fact that cost (value) cannot increase for all goods simultaneously, since value is a relative concept. . And in the fourth chapter of book III, the author of "Fundamentals ..." repeats the thesis of D. Ricardo about the creation of value by labor required for the production of commodity goods, stating that it is the quantity of labor that "is of paramount importance" in the event of a change in value.Wealth, according to Mill, consists of goods that have an exchange value as a characteristic property. “A thing for which nothing can be obtained in return, no matter how useful or necessary it may be, is not wealth ... For example, air, although it is an absolute necessity for a person, has no price on the market, since it can be obtained practically free of charge." But as soon as the limitation becomes tangible, the thing immediately acquires an exchange value. The monetary expression of the value of a commodity is its price.
The value of money is measured by the number of goods that can be bought with it. "Other things being equal, the value of money changes inversely with the amount of money: any increase in the amount lowers their value, and any decrease increases it in exactly the same proportion ... This is a specific property of money." We begin to understand the importance of money in the economy only when the monetary mechanism fails.
Prices are directly set by competition, which arises from the fact that the buyer tries to buy cheaper, and sellers try to sell more expensive. Under free competition, the market price corresponds to the equality of supply and demand. On the contrary, "the monopolist may, at his discretion, charge any high price, so long as it does not exceed that which the consumer cannot or will not pay; but he cannot do this only by limiting the supply" 1 .
In a long period of time, the price of a commodity cannot be lower than its cost of production, since no one wants to produce at a loss. Therefore, the state of stable equilibrium between supply and demand "occurs only when objects are exchanged for each other in proportion to their production costs."
3.2. Capital and profit
Mill calls capital the accumulated stock of products of labor arising from savings and existing "through its constant reproduction." Saving itself is understood as "refraining from current consumption for the sake of future benefits." Therefore, savings increase with the rate of interest.Production activity is limited by the amount of capital. However, "every increase in capital leads or can lead to a new expansion of production, and without a certain limit ... If there are people capable of working and food for their livelihood, they can always be used in any kind of production." This is one of the main provisions that distinguish classical economics from later ones.
Mill acknowledges, however, that other limitations are inherent in the development of capital. One of them is the reduction in income from capital, which he explains by the fall in the marginal productivity of capital. Thus, an increase in the volume of agricultural output "can never be achieved otherwise than by increasing the expenditure of labor in a proportion that increases that in which the volume of agricultural output increases" 2 .
On the whole, in stating the question of profit, Mill tends to adhere to the views of Ricardo. The emergence of an average rate of profit leads to the fact that profits become proportional to the capital employed, and prices become proportional to costs. “In order for profit to be equal where costs, i.e., production costs, are equal, things must be exchanged for each other in proportion to their production costs: things that have the same production costs must also have the same value, because only in this way are the same costs will generate the same income.
There is, says Mill, a more specific kind of profit, similar to rent. We are talking about a manufacturer or trader who has a relative advantage in business. Since his competitors do not have such advantages, then "he will be able to supply his product to the market with production costs less than those that determine its value. This ... likens the owner of the advantage to the recipient of rent."
Mill explains the cause of profit in the same way as Smith and Ricardo: “Profit does not arise from exchange ... but from the productive power of labor ... If the product produced by all the working people of the country is 20% more than the product consumed by the working people in the form of wages , then the profit is 20%, whatever the prices."
The profit received by the capitalist must be sufficient for the three types of payments. First, rewards for temperance, i.e. for the fact that he did not spend capital for his own needs and kept it for productive use. This value should be equal to the loan interest if the owner of the capital leaves the business to another.
If the owner of capital applies it directly, then he is entitled to count on a greater income than the loan interest. The difference should be enough to pay for the risk and for skillful money management. The total profit "should provide a sufficient equivalent for the abstention, compensation for risk, and reward for the labor and skill necessary to control production." These three parts of the profit can be represented as interest on capital, insurance premium and wages for management of the enterprise.
If the total amount of profit were insufficient, then "capital would be withdrawn from production and unproductively consumed until, as a result of the indirect effect of reducing its quantity ... the rate of profit does not increase." Such "seizures" of capital are carried out in cash, and not in material form. “When an entrepreneur finds that, owing to either an oversupply of his commodity, or some reduction in the demand for it, the commodity is sold more slowly or at a lower price, he reduces the scale of his operations and does not apply to bankers or other financiers with requests for new loans ... On the contrary, some booming business opens up prospects for profitable application and ... entrepreneurs turn to financiers with requests for large loans." This prepares the ground for the subsequent understanding of capital as a monetary, rather than material, reserve.
3.3. Theory of money, credit and trade crises
Book III also deals with the theory of money. Here J.S. Mill shows his adherence to the quantity theory of money, according to which an increase or decrease in the quantity of money affects the change in the relative prices of goods. According to him, ceteris paribus, the value of money itself "changes inversely with the amount of money: any increase in the amount lowers their value, and any decrease increases it in exactly the same proportion." Further, as can be seen from the tenth chapter, the prices of commodities are regulated primarily by the amount of money in circulation at a given moment, since the gold reserve is so large, he argues, that possible changes in the cost of extracting gold in a given year cannot immediately affect the price adjustment. At the same time, the above-mentioned thesis of the author of "Fundamentals ..." about the "neutrality" of money boils down to the statement that "in the social economy there is nothing more insignificant in nature than money, they are important only as an ingenious tool that serves to save time and This is a mechanism that allows you to do quickly and conveniently what was done without it, although not so quickly and conveniently, and like many other mechanisms, its obvious and independent influence is detected only when it fails.Mill analyzes the essence of money on the basis of a simple quantitative theory of money and the theory of market interest. He emphasizes that a mere increase in the quantity of money does not lead to an increase in prices if the money is hoarded in stocks, or if the increase in its quantity is commensurate with the increase in the volume of transactions (or total income).
The rate of interest is subject to change due to changes in the supply and demand for loan funds, regardless of the rate of return. However, at the equilibrium point, the market rate of interest must equal the rate of return on capital. The rate of interest is therefore ultimately determined by real forces.
The value of the interest rate, Mill is also associated with the operation of "Hume's law", which governs the inflows and outflows of gold into and out of the country. He shows that the influx of gold lowers the rate of interest, even if it leads to higher prices. As soon as the rate of interest falls, short-term capital flows abroad, which equalizes the exchange rate. Accordingly, the Central Bank can protect its reserves by raising the discount rate and thereby facilitating an increase in the market rate. The increase in the rate of interest attracts capital from abroad, the demand for domestic bills grows, which become profitable to exchange for gold, and the exchange rate changes in the opposite direction. As a result, it is aligned.
Inflation, says Mill, raises the rate of interest when it is caused by government spending financed by issuing paper money that is not convertible into gold. Rising prices reduce the real value of debts and therefore works in favor of debtors and against creditors.
Mill then moves on to consider the nature of credit and its role in the economy. Here Mill shows a deep and original researcher, and not just a talented popularizer of the ideas of Smith and Ricardo: "Credit does not increase the country's productive resources, but thanks to it they are more fully used in productive activities." The source of credit is capital in the form of money, which at the present time has no productive use. The main instrument for issuing interest-bearing loans are deposit banks. At the same time, a bank loan will affect prices in the same way that an increase in the supply of gold would affect them.
The loan radically changes the trading environment, expanding effective demand and influencing the proposals of the subjects. "When there is a general opinion that the price of some commodity is likely to rise...the merchants tend to profit from the expected rise in prices. By itself, this propensity contributes to the realization of the expected result, i.e., the rise in prices , and if this growth is significant and goes further, it attracts other speculators ... They make new purchases, which increase the amount of loans issued and, thereby, the price increase, for which there were known reasonable grounds at the beginning, ... goes far beyond these grounds.After some time, the rise in price stops, and the holders of the commodity, believing that the time has come to realize their profit, hasten to sell it.The price begins to fall, the owners of the commodity, in order to avoid even greater losses, rush to the market, and since in this state the buyers' market is small, the price falls much faster than it rose" 3 .
Small fluctuations of this kind occur even in the absence of credit, but with the same amount of money, the rush demand for some goods reduces the prices of others. But when using credit, economic entities "draw from a bottomless, unlimited source. Speculation thus supported can cover ... even all goods at once." The result is a trade crisis.
Typical of a trade crisis is "a rapid fall in prices after they have risen under the influence of ... a speculative revival ... It would seem that they would have to fall only to the level from which they began to rise, or to a level that is justified by consumption and However, they fall much lower, because ... when everyone suffers losses, and many suffer complete bankruptcy, even solid and well-known firms can hardly get the credit they are used to ... This is because ... ... no one feels sure that part of his funds, which he has loaned to others, will return to him in time ... In emergency conditions, these arguments of reason are supplemented by panic ... Money is borrowed for a short period and at almost any interest, and in the sale of commodities on terms of immediate payment no regard is paid to any loss. Thus, during a commercial crisis, the general level of prices falls as much below the usual level as it has risen above it during the denial of the period of speculation that preceded the crisis". In essence, this is the first exposition in the history of economic thought of the monetary side of the dynamics of an economic downturn.
Mill considers in detail the change in the interest rate. During a revival, credit expands and interest decreases. In a recession, on the contrary, the interest rate rises. However, "when several years pass without a crisis, and no new areas of supply of capital appear, such a large mass of free capital accumulates, seeking employment for itself, that the rate of interest is substantially lowered." The formation of joint-stock companies with limited liability, on the contrary, increases the percentage. By subscribing to shares, the owners of free capital "divert part of the capital of the funds that feed the loan market, and become themselves competitors for the rest of these funds. This naturally leads to an increase in interest."
etc.................
Mill considers wealth: as the material conditions of people's lives, as material wealth, the accumulated result of the production of previous periods and replenished as a result of modern production.
Mill divides labor into productive and unproductive in relation to the increase in the material product. He repeats much of Smith's argument, but adds the idea that the labor of protecting wealth, educating the worker, as well as the labor of storing and moving the product, is productive labor, without which wealth could not exist. It should be noted that Mill expands the idea of productive labor in many ways, since he considers cooperation progress, those. interdependence of people in society.
He singles out the consumption of productive workers: "Only productive workers can be productive consumers, including the labor of managers and the labor of performers." But even they consume productively only to the extent that their really important needs are satisfied. "But consumption, consisting in obtaining pleasures or in acquiring luxury goods ... is unproductive consumption, since it does not aim at production or any form of development of production" .
Expert opinion
Distinguishing between productive and unproductive consumption, Mill concludes that it is necessary to have a certain supply of such "productive" commodities in order to constantly maintain production, and he considers the refusal of capital owners from part of their unproductive consumption to be the source of this "productive consumer fund". Mill comes to working fund doctrine and to the psychological treatment of the accumulation of capital, to the "theory of temperance."
Mill sees working capital in kind as food needed by the worker while he is in production but has not yet produced any new, additional food. He formulates this position as follows: “If a worker does not have his own supply of food before starting work, or cannot get it from someone else, and in sufficient quantities to feed himself until production is completed, he is only able to take on such work. , which can be done in fits and starts, combined with earning a livelihood" .
Consider Mill's doctrine of capital and try to interpret his famous formula: "Demand for commodities is not a demand for labor, but gives more consumer products and better quality."
The demand for goods is not the demand for labor. The demand for goods determines in which particular branch of production labor and capital will be applied, it determines the direction of labor, and not this or that amount of labor itself or its maintenance and payment. These latter depend on the amount of capital or other funds directly allocated to the subsistence and remuneration of workers. This view corresponds to economic practice, the organization of production, and also reproduces the well-known theories of Say, Senior, McCulloch. Meanwhile, this provision caused discussions that do not stop to this day.
Mill's theory of capital is fully reflected in his theory of wages, i.e. in the famous doctrine of the "working fund", which Mill repudiated in 1869 under the influence of numerous critical statements. Meanwhile, this doctrine is an integral part of classical theory(it was laid down by W. Petty and A. Smith). The worker cannot consume more than his share of the workers' stable consumption fund, which is determined both by the productivity of agriculture and by the savings of the capitalists. Mill, as always, formulates the classical theories so clearly and convexly that not only all their merits become clear, but also contradictory provisions, conventions caused both by the peculiarities of the historical conditions of life and the historical conditions of thinking.
Expert opinion
Mill's theory of capital had a very broad response in economics. The most varied conclusions were drawn from it. For Marx, here the "transformed" form of all economic processes in capitalist society became quite obvious. If we firmly stand on the positions of the theory of surplus value, then the economic practice of advancing the worker by the capitalist appears as a complete distortion of the essence of the relationship between them. Marx noted that from the point of view that all these previous advances were also made by the hands of the worker, the capitalist's advance of the worker is only a form that distorts its own content.
Neoclassicists (A. Marshall, G. Sidgwick, W. Jevons) repeatedly opposed Mill's theory of capital, considering it unsuccessful and poorly formulated. But modern neoclassical scientists (for example, A. Ekelund, to whom Takashi Negishi refers, or M. Blaug) have rehabilitated Mill's theory, showing that, by introducing certain premises, one can use his theory as an integral part of the short-term theory of production.
At the end of his study of the production of J.-S. Mill defines his understanding of the laws of economic growth. Following Ricardo, he notices the existence of obstacles to the growth of the gross domestic product as a whole and per capita. The main obstacle to economic growth is the decrease in soil fertility with an excess of population. On the other hand, it testifies to significant advances in engineering, technology and labor productivity in agriculture. In addition, he notes that population growth is not as rapid and straightforward as it seemed to Malthus, in particular, people clearly consciously calculate their per capita income and do not strive for all-round childbearing. Another obstacle to the decline in per capita income is, according to Mill, the accumulation of capital.
Mill sees capital accumulation as a function of two variables: "the size of the fund from which savings can be made, and the strength of the propensity to save" . All capital is a product of savings. Here lies, as it were, a dividing line between Mill, a supporter of the labor theory of value, and Mill, the forerunner of marginalism. Marx had to build a complex and contradictory theory in order to link the accumulation of capital with labor through the category of surplus value. Menger and Böhm-Bawerk, as well as Jevons, had to construct no less sophisticated theories in order to finally break with the labor theory of value, but Mill needed neither. He boldly lists labor as the source of wealth in general, but he makes the abstinence of the capitalist the main engine for the growth and perfection of wealth., his psychological inclination and readiness to make a decision either about his own consumption or about transferring consumption to other people in exchange for the opportunity to increase his consumption in the future.
Summarizing the consideration of the views of J.-S. Mill for production, there are several important features:
- 1) Mill completes the system of classical political economy and identifies a number of objective, general historical laws, the operation of which determines the process of production and the growth of wealth, but the specific forms of their operation and the development of these forms depend on the historical, cultural, and political characteristics of countries;
- 2) he refers to such laws the division of labor, the increase in its productivity; the dependence of labor demand on capital, and capital on savings; the dependence of capital accumulation on the growth of the net product and the propensity to save; the law of diminishing fertility of the earth; population law;
- 3) in the formulation of his laws, Mill reveals a certain duality of approach to the main categories of political economy: labor, wages, capital, social product. Along with an objective interpretation, he develops a psychological theory of capital (and ultimately profit), considers the effect of scale as a long-term trend in capital accumulation and as a factor that can slow down economic growth.
- Mill J.-S. Decree. op. T. 1. S. 114.
- There. S. 145.
- There. S. 119.
- Cm. Marx K., Engels F. Works: in 39 t. M .: Gospolitizdat, 1959–1966. T. 23. S. 624-625.
- Mill J.-S. Decree. op. T. 1. S. 285.
INTRODUCTION 3
1 J.S. MILL ON THE FEATURES OF THE LAWS OF DISTRIBUTION 4
2 J.S. MILL ON MONEY NEUTRALITY 6
3 J.S. MILL ON THE "WORKING FUND" DOCTRINE 8
CONCLUSION 10
REFERENCES 11
INTRODUCTION
The decline in the Russian economy has slowed in recent years, but the overall economic situation in the country is still tense. There are a number of problems that stand in the way of the country's development and, therefore, require the mobilization of economic resources, the development of a clear and specific plan of action to overcome the difficulties of the transition economy. The relevance of this work lies in the fact that in practice it is impossible to make the right decision without a deep knowledge of the laws governing economic activity, understanding the structure and functions of the economic system. All the more significant and relevant are the teachings of classical bourgeois political economy, which laid down the postulates of the market of free competition and created the first interconnected and interdependent economic system. But this knowledge is needed not only for a correct understanding of today's realities, but also for understanding history.
Mercantilism has historically outlived its usefulness in a new era, when not commercial, but industrial capital began to dominate the economy. It was replaced by classical political economy. This direction of economic theory recognized the production of material goods as a real source of wealth. It began to consider economic activity in the form of production, distribution, exchange and consumption of useful things. Classical political economy turned to the study of the essence of economic phenomena (for example, the exchange of goods for money) and the laws of economic development.
Close to the representatives of classical political economy is the English. economist Mill (1806-1876). He believed that the laws of production do not depend on the socio-economic system, while distribution can be regulated. He reduced the cost only to production costs, was a supporter of reforms that restrained population growth.
The economic ideas of the classical school have not lost their significance to this day. It is not in vain that John Mill's Foundations of Political Economy served for half a century, and still serves as a guide in most universities where teaching is conducted in English. Teachings about surplus value, profit, taxes, land rent are relevant today.
1 J.S. MILL ON THE FEATURES OF THE LAWS OF DISTRIBUTION
Mill John Stuart (May 20, 1806, London - May 8, 1873, Avignon) was an English economist, philosopher and sociologist, the last representative of the classical school of political economy and "a recognized authority in scientific circles, whose research goes beyond technical economics."
Born into the family of James Mill, who was close to I. Bentham and D. Riccardo, wrote works on political economy, which could not but influence the choice of the eldest of nine children, who received, although at home, but a very good education. His father strictly followed the upbringing of his son. Therefore, the younger Mill, already at the age of 10, had to review world history and Greek and Latin literature, and at the age of 13 he wrote the history of Rome, while continuing to study philosophy, political economy and other sciences. His upbringing ended by the age of 14. Such premature mental development led to severe overwork and prepared a mental crisis that almost led Mill to suicide. Of great importance in his life was a trip to southern France in 1820. She introduced him to French society, French economists and public figures and aroused in him a strong interest in continental liberalism, which did not leave him until the end of his life. He began his career as a minor official in the East India Company. He was early interested in issues of social development, in particular, the correlation of historical traditions and the reasonable organization of society.
J.S. Mill published his first "Experiments" in political economy when he was 23 years old, i.e. in 1829. In 1843, his philosophical work "System of Logic" appeared, which brought him fame. The main work (in five books, like that of A. Smith) entitled "Fundamentals of Political Economy and Some Aspects of Their Application to Social Philosophy" was published in 1848.
J. S. Milla adopted the Ricardian view on the subject of political economy, highlighting the "laws of production" and "the laws of distribution." In defining the subject of political economy, J. S. Mill put forward the "laws of production" and "laws of distribution" to the fore, practically repeating his predecessors. The specificity of J. S. Mill is in the opposition of these laws. The former, he believes, are unchanging and set by technical conditions, like the physical quantities of the natural sciences, "there is nothing in them that depends on the will." The second is governed by "human intuition", they are "what the opinions and desires of the ruling part of society make them, and are very different in different centuries and in different countries." It is the laws and customs of the distribution of a given society that predetermine the personal distribution of property through the distribution of income among the "three main classes." From this methodological premise, J.S. Mill developed his recommendations for the social reform of society.
In the theory of income distribution, J. S. Mill is a supporter of T. Malthus. The theory of population is an axiom for him, especially since in England after the census in 1821 for 40 years the means of subsistence did not outpace the rate of population growth.
A new moment in the methodology of J. S. Mill's research is an attempt to identify differences in the concepts of "statics" and "dynamics". He notes that all economists tend to strive to know the laws of the economy of a "stationary and unchanging society", but now it is necessary to add "the dynamics of political economy to its statics"
2 J.S. MILL ON MONEY NEUTRALITY
Having considered the concepts of "exchange value", "use value", "value" and some others, J.S. Mill draws attention to the fact that cost (value) cannot increase for all goods at the same time, since value is a relative concept. He repeats the thesis of D. Ricardo about the creation of value by labor required for the production of commodity goods, stating that it is the quantity of labor that is of paramount importance in the event of a change in value.
Wealth, according to Mill, consists of goods that have an exchange value as a characteristic property. “A thing for which nothing can be obtained in return, no matter how useful or necessary it may be, is not wealth ... For example, air, although it is an absolute necessity for a person, has no price on the market, since it can be obtained practically free of charge." But as soon as the limitation becomes tangible, the thing immediately acquires an exchange value. The monetary expression of the value of a commodity is its price.
Considering the theory of money, J.S. Mill shows his adherence to the quantity theory of money, according to which an increase or decrease in the amount of money affects the change in the relative prices of goods. According to him, all other things being equal, the value of money itself "changes inversely with the quantity of money: every increase in quantity lowers its value, and every decrease raises it in exactly the same proportion." Commodity prices are primarily governed by the amount of money currently in circulation, since the gold supply is so large, he argues, that possible changes in gold mining costs in a given year cannot immediately affect price adjustments. At the same time, the above-mentioned thesis of the author of "Fundamentals ..." about the "neutrality" of money boils down to a statement according to which "in the social economy there is nothing more insignificant in nature than money, they are important only as an ingenious tool that serves to save time and labor. This is a mechanism that allows you to do quickly and conveniently what was done without it, although not so quickly and conveniently, and like many other mechanisms, its obvious and independent influence is revealed only when it fails.
Prices are directly set by competition, which arises from the fact that the buyer tries to buy cheaper, and sellers try to sell more expensive. Under free competition, the market price corresponds to the equality of supply and demand. On the contrary, “the monopolist may, at his discretion, charge any high price, so long as it does not exceed that which the consumer cannot or will not want to pay; but it cannot do this, only by limiting the supply.
In a long period of time, the price of a commodity cannot be lower than its cost of production, since no one wants to produce at a loss. Therefore, a state of stable equilibrium between supply and demand occurs only when objects are exchanged for each other in proportion to their production costs.
Mill analyzes the essence of money on the basis of a simple quantitative theory of money and the theory of market interest. He emphasizes that a mere increase in the quantity of money does not lead to an increase in prices if the money is hoarded in stocks, or if the increase in its quantity is commensurate with the increase in the volume of transactions (or total income).
3 J.S. MILL ON THE "WORKING FUND" DOCTRINE
J. S. Mill, on the essence of wages, adhered mainly to the views of D. Ricardo and T. Malthus. Characterizing it as wages for labor and believing that it depends on the supply and demand for labor, the author of "Basics ..." repeated their conclusion about the inevitable minimum wage for workers, which became the basis of his "working fund" doctrine. According to the latter, no class struggle. nor unions can prevent the formation of wages at the living wage. But in 1869 in one of his articles, J.S. Mill formally repudiated the provisions of the "working fund" doctrine, acknowledging that labor unions do influence wage-limiting actions that "competition in the labor market" can do. In addition, it should be noted that, according to Mill, wages, other things being equal, are lower if the work is less attractive. Finally, as can be seen from Chapter 4 of Book I, J. S. Mill, like D. Ricardo, does not identify the concept of a minimum wage with the concept of a physiological minimum, explaining that the first exceeds the second. At the same time, the author of "The Fundamentals ..." calls a certain capital reserve the source for the payment of wages.
Chapters 4-6 of book I J.S. Mill devotes to the theory of capital, which he characterizes as "a previously accumulated stock of products of past labor." Chapter 5, in particular, develops the position that that capital formation, as the basis of investment, allows for the expansion of employment and can prevent unemployment, if, however, one does not mean "unproductive spending by the rich."
Another common position of J. S. Mill and D. Ricardo is the understanding of the theory of rent. The author of "Fundamentals ..." accepts the provisions of D. Ricardo on rent-forming factors, seeing rent as "compensation paid for the use of land." But, as J. S. miles specifies, it should be taken into account that, depending on the form of use of the land plot, it can either provide rent, or, conversely, require costs that exclude this income.
Without going into other details of J.S. Mill's theory of income distribution, i.e. distribution of wages, rents and profits, it is worth noting that the author of the "foundations ..." in the main conclusions on this matter, wholly joined the "camp" of the Malthusians. judging by chapter 10 of book I, T. Malthus' theory of population is simply an axiom for him, especially when he states in the third section of this chapter. that in England for 40 years after the 1821 census. means of subsistence did not outstrip the rate of population growth. Then, in chapters 12 and 13 of book II, we see a variety of arguments for measures to limit the family through a voluntary reduction in the birth rate, the emancipation of women, and so on.
In essence, wages J.S. Mill relies on D. Ricardo and T. Malthus - this is wages for labor, which depends on the supply and demand for labor, the minimum wage for workers is inevitable. This statement became the basis of his doctrine of the "working fund", according to which the class struggle, trade unions cannot prevent the formation of wages at the subsistence level .. In 1869, he recognized the possibility of the influence of trade unions on wage growth. His idea is interesting that, other things being equal, wages are lower if the work is less attractive.
CONCLUSION
On basic theoretical questions, Mill remained faithful to his main teachers, Ricardo and Malthus; he accepts all the most important theories of Ricardo - his doctrine of value, wages, rent - and at the same time, according to Malthus, recognizes the danger of unlimited population multiplication. Under the influence of the French socialists, Mill recognized the transitory nature of unlimited competition and private property. Mill divides the laws of political economy into two categories: the laws of production, which do not depend on our will, and the principles of distribution, determined by the desires and opinions of the people themselves and changing depending on the characteristics of the social system, as a result of which the rules of distribution do not have the nature of necessity that is characteristic of laws. first category. Mill himself recognized the division of the principles of political economy into necessary and historically changeable ones as his main merit in the field of economic science; it was only thanks to this division that he escaped, as he said, those bleak conclusions about the future of the working class that his teachers, Ricardo and Malthus, arrived at. But, as Chernyshevsky rightly noted, Mill does not maintain this division in practice and introduces historical elements into the laws of production. Indeed, social relations are undoubtedly one of the factors of production; on the other hand, the opinions and desires of men, which determine the modes of distribution, are in their turn the necessary result of a given social order and modes of production. Therefore, the principles of distribution and the laws of production are equally historically necessary; Mill's distinction seems superfluous.
LIST OF USED LITERATURE
1. Yadgarov economic doctrines. - M: Economics, 1996.
2., Ershov's economic doctrines: Textbook. - Rostov-on-Don: Phoenix, 1999.
3. Anikin science: Life and ideas of economic thinkers before Marx. - 4th ed. – M.: Politizdat, 1985.
4. Mikhailov Economic Teachings: Educational and methodological guide. - Arkhangelsk, 2009.
John Stuart Mill (1806-1873) - one of the finalists of classical political economy and a recognized authority in scientific circles.
Creative achievements directly J.S. Mill, are concentrated mainly in his best work, the full title of which is "Fundamentals of Political Economy and Some Aspects of Their Application to Social Philosophy".
Subject and method of study
In his study, J.S. Mill puts forward the laws of production and the laws of distribution . The first, as he believes, are unchanged and set by technical conditions. , those. they have a character characteristic of the natural sciences. And the latter depend on the will and consciousness of people. It is the laws of distribution, which are influenced by the laws and customs of a given society, predetermine the personal distribution of property through the distribution of income among the three main classes of society. From this methodological premise of the formation of distribution laws by human decisions, J.S. Mill then develops his own recommendations for the social reform of society.
Another new point in the research methodology of J.S. Mill - an attempt to identify differences in the concepts of statics and dynamics . In Chapter 1 of Book IV, he notes that all economists have been striving to know the laws of economics of a "stationary and unchanging society" and that it is now necessary to add "the dynamics of political economy to its statics."
Theory of Productive Labor
J.S. Mill argues that only productive labor (labor, the results of which are tangible) creates "wealth", i.e. "material goods". The novelty of his position here is only in the fact that he also recommends that labor for the protection of property and the acquisition of qualifications, which makes it possible to increase accumulation, be recognized as productive. According to J.S. Mill, income from productive labor has productive consumption if this consumption "supports and increases the productive forces of society." And any income from unproductive labor, he believes, is only a simple redistribution of income created by productive labor . Even the consumption of workers' wages, according to Mill, is productive if it provides the minimum necessary to support the worker and his family, and unproductive in so far as it supplies "luxury goods."
income theory
J.S. Mill on Wages adhered mainly to the views of D. Ricardo and T. Malthus. Describing it as wages and believing that it depends on the supply and demand for labor, the author of "Fundamentals ..." repeated their conclusion about the inevitable minimum wage of workers, which became the basis of his "working fund" doctrine . In accordance with the latter, neither the class struggle nor the trade unions can prevent the formation of wages at the subsistence level. But in 1869, in one of his articles, J.S. Mill formally repudiated the provisions of the "working fund" doctrine, acknowledging that labor unions do influence the wage-limiting actions that competition in the labor market can "make. In addition, it should be noted that, according to Mill, wages, other things being equal, are lower if the work is less attractive.
Mill characterizes capital as a previously accumulated stock of products of past labor. Investment expands employment and can prevent unemployment, unless, of course, you mean "unproductive spending by the rich."
Another common position of J.S. Mill and D. Ricardo is the comprehension of the theory of rent . The author of "Fundamentals ..." accepts the provisions of D. Ricardo on rent-forming factors, seeing in rent compensation paid for the use of land . But, as J.S. Mill, it should be borne in mind that, depending on the form of use of the land plot, it can either provide rent, or, conversely, require costs that exclude this income.
Without going into other details of the income distribution theory of J.S. Mill, i.e. distribution of wages, rents and profits, we note that the author of "Fundamentals ..." in the main conclusions on this subject, wholly joined the "camp" of the Malthusians. The theory of population of T. Malthus is simply an axiom for him, he states that in England for 40 years after the 1821 census, the means of subsistence did not outstrip the rate of population growth. In his book, we see a variety of arguments for measures to limit the family through a voluntary reduction in the birth rate, the emancipation of women, and so on.