Nassau William SeniorSeptember 26, 1790 - June 4, 1864

Scientific Economics

The first holder of the Drummond Chair at Oxford Chief Works

– An Outline of the Science of Political Economy• "Report on the State of Agriculture", 1821, Quarterly Review • "Some Ambiguous Terms Used in Political Economy", 1826, in

Whateley, editor, Elements of Logic, Encyclopedia Metropolitana,  • Three Lectures on the Transmission of Precious Metals from Country

to Country and the Mercantile Theory of Wealth, 1827. • Two Lectures on Population, 1829 .• Three Lectures on the Rate of Wages, 1830.• On the Cost of Obtaining Money and on some effects of private and

government paper money, 1830.

Scientific Economics

– An Outline of the Science of Political Economy• On the Cost of Obtaining Money and on some effects of private and

government paper money, 1830. • Letter on a Legal Provision for the Irish Poor. 1831. • An Outline of the Science of Political Economy, 1836.• Statement of the Provision for the Poor in America and Europe. 1835. • An Outline of the Science of Political Economy, 1836. • Letters on the Factory Act, 1837. • Three Lectures on the Value of Money 1840. • Lecture on the Production of Wealth, 1847. • "J.S. Mill on Political Economy", 1848, Edinburgh Review • Four Introductory Lectures on Political Economy, 1852. • Essays on Fiction, 1864. • Historical and Philosophical Essays, 1865.

Scientific Economics

He argues that political economy is:– the science which treats of the nature, the production,

and the distribution of wealth he was one of the initiators of Supply-and-Demand - together with Longfield and Say - with utility-based demand and cost-of-production-based supply and thus is an important Anti-Classical

Nassau William Senior (cont)

BUT ABOVE ALL: HE IS AMONG THE FIRST TO TRY TO

GET THE POLITICAL OUT OF ECONOMY

For instance, in his Three Lectures on the Rate of Wages, 1830, he addresses some of the turbulence affecting London by disgruntled workers

Nassau William Senior (cont)

“The principal means by which-the fund for the maintenance of labourers can be increased, is by increasing the productiveness of labour. And this may be done, --”

“First, By allowing every man to exert himself in the way which, from experience, he finds most beneficial; by freeing industry from the mass of restrictions, prohibitions, and protecting duties, with which the Legislature, sometimes in well-meaning. ignorance, sometimes in pity, and sometimes in national jealousy, has laboured to crush or misdirect her efforts; and,”

Nassau William Senior (cont)

“Secondly, By putting an end to that unhappy system which, in the southern counties, has dissociated labour from subsistence--has madd wades not a matter of contract between the master and the workman, but a right in the one, and a tax on the other; and, by removing the motives for exertion, has rendered, as far as it has been possible, the labourer unworthy of his hire.”

Nassau William Senior (cont)

“The only effectual and permanent means of preventing the undue increase of the number to be maintained, is to raise the moral and intellectual character of the labouring population; to improve, or, I fear we must say, to create habits of prudence, of self-respect, and of self-restraint; to equalize, as by nature they are equal, the wages of the single and the married, and no longer to make a family the passport to allowance. But these are necessarily gradual measures -- they are preventive, not remedial. The only immediate remedy for an actual excess in one class of the population, is the ancient and approved one, coloniam deducere.” (this means that when a law was passed for founding a colony, persons were appointed to superintend its formation)

Nassau William Senior (cont)

In the next lecture he deals with how to estimate appropriate wage level. He argues there had been three definition of high/low wages:

“First. Wages have been .termed high or low, according to the amount of money earned by the labourer within a given period, without any reference to the commodities which that money would purchase; as when we say that wages have risen since the reign of Henry VII, because the labourer now receives 1 s. 6d. or 2.s. a day, and then received only 4½d.”

Nassau William Senior (cont)

“Secondly. They have been termed high or low, according to the quantity and quality of the commodities obtained by the labourer, without any reference to his receipts in money; as when we say that wages have fallen since the reign of Henry VII, because the labourer then earned two pecks of wheat a day, and now earns only one.”

Nassau William Senior (cont)

“Thirdly. They have been termed high or low, according to the share or proportion which the labourer receives of the produce of his own labour, without any reference to the total amount of that produce.”

Nassau William Senior (cont)

“The first nomenclature, that which measures wages simply by their amount in money, is the popular one. The second, that which considers wages simply with reference to the quantity and quality of the commodities received by the labourer, or to speak more correctly, purchaseable with his money wages, was that generally adopted by Adam Smith. The third, that which considers wages as high or low, simply with reference to the labourer's share or proportion of what he produces, was introduced by Mr. Ricardo, and has been continued by many of his followers.”

Nassau William Senior (cont)

THE FOUR POSTULATES:– That every man desires to obtain wealth with as

little sacrifice as possible– That the population of the world, or in other

words, the number of persons inhabiting it, is limited only by a fear of a deficiency of those articles of wealth which the habits of the individuals of each class of its inhabitants lead them to require

THE FOUR POSTULATES:(cont)

That the powers of labour, and of other instruments which produce wealth, may be indefinitely increased by using their products as the means of further production.

That, agricultural skill remaining the same, additional labour employed on the land within a given district produces in general a less proportionate return….

MONOPOLY

FOUR DEGREES OF MONOPOLY– Monopolist does not have exclusive producing

powers but has exclusive facilities (e.g. patents)– Monopolist is the only producer but production

is limited (e.g. wine in France)– Monopolist is the only producer and production

cost decrease as production increases (books)– Monopolist is not only producer but increased

production decreases the power (agriculture)

John S. MillMay 20, 1806-May 8, 1873

John S. Mill

The particulars of Mill's life are laid out in his famous Autobiography (1873)

In a nutshell: son of the Ricardian economist James Mill, trained from an early age to be a genius,

"lent" by his father to utilitarian philosopher Jeremy Bentham, became a utilitarian, followed his father into the British East India

Company, broke with Bentham, had an existentialist crisis, turned to the doctrines of Saint-Simon and Comte, met Harriet Taylor and waited twenty years for her husband to die became a Whig politician, etc., etc.

Difficult Childhood

Father James Mill, disciple of Jeremy Bentham MADE HIM a CHILD PRODIGY

3 yrs read Greek 8 yrs had read the

Greeks in their own language

Childhood

8-13 read Hume and other philosophers and was taught mathematics by his father

At 13 learn Latin and became teacher to his siblings

At twenty suffered mental depression

Works

A System of Logic (1843) Principles of Political Economy (1848) On Liberty (1859) Considerations of Representative Government

(1861) Utilitarianism (1863) Auguste Comte and Positivism (1865) The Subjection of Women (1869)

The Subjection of Women (1869)

There is much debate whether he authored this or he was a ghost writer for Harriet Taylor Mill

He (or she) addresses such issues as wage disparity.

While later on we will deal more with this topic, suffice it to say here that he (or she or they) state(s)

The Subjection of Women (1869)

When, however, we ask why the existence of one-half the species should be merely ancillary to that of the other – why each woman should be a mere appendage to a man, allowed to have no interests of her own, that there may be nothing to compete in her mind with his interests and his pleasure, the only reason that can be given is, that men like it.

Main Topics

The problem of Method in the Social Sciences

The Clarification of the Principle of Utility (BENTHAM)

Individual Freedom Theory of Representative Government

The Clarification of the Principle of Utility

It is clear that for Mill, the principle of utility was very important. He states in his autobiography:– When I laid down the last volume of Traité,* I had become a

different being….I had now opinions; a creed, a doctrine, a philosophy; in one of the best senses of the word, a religion…..And I had a grand conception laid before me of changes to be effected in the condition of mankind through that doctrine….[T]he vista of improvement which [Bentham] did open was sufficiently large and brilliant to light up my life, as well as to give definite shape to my aspirations. (Mill, ch. 3)

– * Referring to: Jeremy Bentham’s work titled Traité de Législation Civile et Pénal

Depression

In order to deal with his Depression he read romantic novels

He saw the criticism of Dickens and Ruskin (and others) that Political Economy was -the Science of Industrialism- to blame for fostering the social erosion (human compassion)

J.S. Mill argued against them

MILL AND COMTE

Comte argued for induction or empiricism Mill was favorable towards but remained

convinced that the deduction of Ricardian Economics was still needed

Economic Concepts

Production -fairly similar to Ricardo (hence he argued for the Say’s Law)

Economic Growth - Agreed with the concept of Diminishing Returns BUT saw the move from a progressive to a static state not a necessary evil– He Argued for Income Distribution

Theoretical Contributions

Discussed the Equilibrium Price in terms of Supply and Demand

Joint Supply He introduced the construction of the Price

of Internationally traded goods:– THE THEORY OF RECIPROCAL DEMAND

Reciprocal Demand

Y

X

(PX/PY)1OCA

OCB

X1X2

At (PX/PY)1, country A wishesto export X1 units, but country B is only interested in importing X2

units. That is, there is an excess supply of good X.

Moving Towards Equilibrium

Y

X

(PX/PY)1 OCA

OCB

Wealth redistribution

Redistribution of Wealth NOT Income

“Reap the Fruits of their own Industry” (income)

BUT accumulation of Wealth as an end to itself good

Role of Government

NECESSARY AND OPTIONAL NECESSARY:

– Power to Tax– Coin Money– Establish Uniform System of Weights and

Measurements– Protection against Force and Fraud

Necessary Government Role

Administration of Justice and enforcement of Contracts

Establishment and Protection of Property Rights

Protection of Minors and Mental Incompetents

Necessary

Provision of certain Public Goods and Services:– roads

– canals

– dams

– bridges

– harbors

– lighthouses

– sanitation

Optional Role of Government

Interference of the Government into the market could be required by some great good.

Thus,– Consumer Protection

– EPA

– FDA

– Public utility regulation

– etc.

THE JOHN STUART MILL INSTITUTE The policy think tank for liberals

OBJECTIVES: "to advance the education of the general public in social, economic and international affairs, in particular as they relate to the rights of the individual, the environment and communities".

The John Stuart Mill Institute is an independent policy think tank operating in the UK

Its starting point and core philosophy is liberalism, based on the concepts of the

freedom of the individual and responsible democratic participation. It aims to stimulate debate on political, economic, environmental and social

issues through issuing publications and organizing lectures, discussion meetings

and conferences. http://www.users.dircon.co.uk/~dbrack/jsmi/index.html