History of Economic Thought. Economic views of John Stuart Mill (most important)

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History of Economic Thought. Economic views of John Stuart Mill (most important)

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30. THE ECONOMIC VIEWS OF JOHN STUART MILL

On economic views John Stuart Mill (1806-1873), an English philosopher and economist, was quite strongly influenced by the views D. Ricardo.

Treatise "Fundamentals of Political Economy and Some Aspects of Their Application to Social Philosophy" (1848) is a guide to political economy.

The main sections of the book: production, distribution, exchange, the progress of capitalism and the role of the state in the economy. Like Ricardo, who believed that the main task of political economy is to determine laws that govern the distribution of the product between classes Mill assigns a central place to the analysis of these laws.

The difference between the views of Mill and D. Ricardo lies in the fact that Mill shares the laws of production and distribution, believing that the latter are governed by the laws and customs of a given society and are the result of human relations. This premise was the basis of his idea of the possibility of reforming distribution relations on the basis of private capitalist property. The distribution does not interact with price processes, being a product of historical chance.

Under cost (value) of goods he understands its purchasing power in relation to other goods.

The exchange value and price of a commodity are established at the point where demand and supply are equal. This statement is true in a situation with perfectly elastic supply.

Ideas Mill about the functional relationships between market price, supply and demand resulted in a study of the category "price elasticity".

But in matters of productive labor, the factors of capital accumulation, wages, money, and rent, he entirely stands on the positions of classical political economy.

Like Ricardoand Say, Mill I thought that under capitalism, crisis-free production is possible: population growth will lead to an increase in prices for agricultural products, an increase in rent and a decrease in profits. The latter will lead to economic stagnation. To avoid this, it is necessary technical progress and export of capital to other countries. The possibility of economic progress lies in the confrontation between technological progress and the diminishing returns of agriculture. The salary depends on the demand and supply of labor.

Mill considered aggregate demand (ratio between population and capital) labor force inelastic.

Mill did not disregard the theory of interest of the English economist Nassau William Senior (1790-1864). Senior considered percentage as a reward for the "sacrifice" to the capitalist, which consists in the fact that the capitalist refrains from consuming the current income from property, turning it into means of production. Developing this position Mill argues that labor has no right to the full product, since the "supply price of abstinence" in society is a positive value. Profit is measured by the current interest rate under the most favorable security. BUT interest rate determined by the comparative value attributed to the present and future in a given society.

Author: Tatarnikov E.A.

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