Reference > Cambridge History > The Victorian Age, Part Two > Philosophers > James Mill
  The economics of Ricardo Analysis of the Phenomena of the Human Mind  

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The Cambridge History of English and American Literature in 18 Volumes (1907–21).
Volume XIV. The Victorian Age, Part Two.

I. Philosophers.

§ 2. James Mill.


II. JAMES MILL AND OTHERS
The economic doctrines which are characteristic of the utilitarian school were elaborated by a writer who cannot be regarded as a member of it and who, indeed, was not interested in philosophy or even in the larger questions of social theory. This was David Ricardo, the son of a Dutch Jew who had settled in London and become a member of the Stock Exchange. Thrown on his own resources, Ricardo soon made a fortune as a stockbroker, retired from business at an early age and devoted his leisure to economics. It was not until he had already made his mark as a writer on the currency that he became acquainted with James Mill, by whose encouragement, as well as by that of other friends, he was induced, in 1817, to publish his chief work, Principles of Political Economy and Taxation. Ricardo received his impetus towards economic study from Adam Smith. He did not share the latter’s breadth of social outlook or his psychological insight; but he had a masterly power of abstract reasoning which enabled him to present economic doctrines in the form of a deductive science. He was concerned not so much with the “nature and causes” as with the distribution of wealth. This distribution has to be made between the classes concerned in the production of wealth, namely, the landowner, the capitalist, and the labourer; and Ricardo seeks to show the conditions which determine the share of each. Here, his theory of rent is fundamental. He did not claim originality for this theory, which goes by his name, but attributed it to Malthus’s Inquiry into the Nature and Progress of Rent and Edward West’s Essay on the Application of Capital to Land, both of which appeared in 1815; while his editor, J. R. McCulloch, discovered the same doctrine in a work by James Anderson, entitled Enquiry into the Nature of Corn-Laws and published in 1777. But Ricardo made the doctrine his own. Rent, he argued, does not enter into the cost of production; it varies on different farms according to the fertility of the soil and the advantages of their situation. But the price of the produce is the same for all and is fixed by the conditions of production on the least favourable land which has to be cultivated to meet the demand; and this land pays no rent. Rent, therefore, is the price which the landowner is able to charge for the special advantages of his land; it is the difference between its return to a given amount of capital and labour and the similar return of the least advantageous land which has to be cultivated. Consequently, it rises as the margin of cultivation spreads to less fertile soils. Obviously, this doctrine leads to a strong argument in favour of the free importation of foreign goods, especially corn. It also breaks with the economic optimism of Adam Smith, who thought that the interest of the country gentleman harmonised with that of the mass of the people, for it shows that the rent of the landowner rises as the increasing need of the people compels them to have resort to inferior land for the production of their food.   4
  The value of an article is determined, according to Ricardo, by the amount of labour required to produce it under the least favourable conditions; and this value has to be shared between wages and profits (interest on capital and earnings of business management not being distinguished in his analysis). Wages depend on the price of necessaries (that is, chiefly, of food); the law of population (which he takes over from Malthus) prevents any further rise. On the other hand, profits depend on high or low wages. Thus, in the progress of society, the “natural tendency” of profits is to fall, until “almost the whole produce of the country, after paying the labourers, will be the property of the owners of land and the receivers of tithes and taxes.”   5
  There is, therefore, an opposition of interests within the body economic; and this opposition is held to be the result of natural and inevitable law—“happily checked,” however, at repeated intervals, by improvements and discoveries. For their effect Ricardo made allowance. But he took no account of other than economic motives in human conduct; he may be said to have invented the fiction of the “economic man,” though he did not use the phrase. And he regarded the economic structure of society as rigid, though his doctrines often read like satires upon it, and they became, in the hands both of contemporary 3  and of later socialist writers, a powerful argument for fundamental social changes.   6
  Ricardo’s method was to proceed from a few very general propositions about society and human nature, and to draw out their consequences deductively. That his premisses were one-sided generalisations, and that his conclusions at best had only hypothetical validity, he did not recognise. This method was also characteristic of the Benthamite reasoning in political theory generally. Thus it was that, in economics, James Mill professed himself Ricardo’s disciple. Mill’s Political Economy (1821) reduces Ricardo’s doctrines to text-book form, and states them with the concise and confident lucidity which distinguished the author. For Mill, however, unlike Ricardo, economics was only one amongst a large number of topics, social and philosophical, which were open to the same general method of treatment, and which appealed to his interest. Mill was closely associated with Bentham—at any rate, from 1808 onwards—and it is difficult to find any originality in the fundamental doctrines of his creed. At the same time, he had certain points of superiority. Much inferior to Bentham in jurisprudence and all that concerned the details of law, he had, perhaps, a clearer view of political theory and certainly a wider knowledge of historical conditions. He was, of course, a whole-hearted adherent of the greatest happiness principle, and added nothing to its statement; but he was better equipped for its defence on philosophical grounds and he could supplement Bentham’s deficiencies as a psychologist. But the necessity of making an income by literary work and, afterwards, the demands of official employment, as well as, always, the engrossing interest of public affairs, left him little leisure for philosophy.   7
  Mill’s systematic work in political theory is contained in certain articles, especially an article on government, contributed to the supplement of The Encyclopaedia Britannica, edited by Macvey Napier (1820). In these articles, the author proceeds, methodically, to determine the best form of political order by deductive reasoning; and his method was the object of severe criticism by Macaulay in an article contributed to The Edinburgh Review in 1829, but not republished in his collected Essays. This article contained also an attack on the utilitarians generally; and Mill’s rejoinder, so far as he made any, is to be found in A Fragment on Mackintosh (1835). This consists of “strictures on some passages” of A Dissertation on the Progress of Ethical Philosophy which Sir James Mackintosh had contributed to the seventh edition of The Encyclopaedia Britannica. Like Mill, Mackintosh was keenly interested in philosophy, although his career gave him little time for its pursuit. In this, his only contribution to the subject, he reviewed the work of the English moralists with appreciation and insight. It contained criticisms of the utilitarians and of their intellectual predecessors which aroused Mill’s hostility, and its occasional lack of precision of thought laid it open to attack. Mill’s “strictures” are limited to a few points only, and expose the weaknesses of his antagonist’s positions in a manner which would have been more effective if it had been less violent—although his friends had induced him to moderate its tone before making it public.   8

Note 3. See the bibliography by Foxwell, H. S., in appendix II (pp. 191–297) of the English translation of A. Menger’s Right to the Whole Produce of Labour (1899). [ back ]

CONTENTS · VOLUME CONTENTS · INDEX OF ALL CHAPTERS · BIBLIOGRAPHIC RECORD
  The economics of Ricardo Analysis of the Phenomena of the Human Mind  
 
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