Answer Key
- The Mercantile System assumed that wealth consisted solely of money (gold and silver). Its policy was to heap up precious metals in a country through foreign trade. Mill deems it an absurdity because money is only an instrument for facilitating the distribution of industry’s produce; its worth is in its use to be converted into useful things, not as an end in itself.
- The laws and conditions of the Production of wealth are like physical truths; they are not optional or arbitrary but are imposed by nature and the properties of matter and mind. In contrast, the Distribution of wealth is a matter of human institution, depending on the laws and customs of society, which can be altered if mankind chooses.
- The three elements determining the productiveness of labor are: first, the “natural advantages” such as fertility of soil and climate; second, the “energy of labour” including the skill and knowledge of laborers; and third, the skill and knowledge of those who direct the labor.
- The law of the increase of production from land, also known as the law of diminishing return, states that after a certain point, every increase of produce from land is obtained by a more than proportional increase in labor. It is the most important proposition because this limited productiveness of land is the real ultimate limit to the increase of production for a growing society.
- Cottier tenancy is a system where a laborer contracts for land directly, and the rent is determined by competition, not custom. Because population growth creates intense competition for a fixed amount of land, rent is forced to the highest possible point. This leaves the cottier with no ability to improve his condition through industry or prudence, as any extra produce would just go to the landlord, thus removing all motive for exertion.
- The stationary state is a condition where capital and population cease to increase. Mill views it favorably because it would represent an end to the competitive struggle of “trampling, crushing, elbowing, and treading on each other’s heels.” In such a state, with population controlled, minds could cease to be engrossed by “the art of getting on” and could focus on moral and social progress and improving the Art of Living.
- The two necessary conditions are universal education and a due limitation of the numbers of the community (population control). With these two conditions realized, Mill argues there could be no poverty, and the question of which economic system is best becomes a matter of comparative advantage for a future society to decide, rather than an escape from current evils.
- The first theory is that of “dependence and protection,” where the lot of the poor is regulated for them by the higher classes, who act as paternalistic guides. The second theory is that of “self-dependence,” where the working classes take their interests into their own hands, and their well-being depends on their own justice, self-government, and rational conduct.
- Mill predicts the “master and work-people” relationship will be replaced by partnership in one of two forms. The first is the association of laborers with the capitalist. The second, which he expects to eventually predominate, is the association of the laborers themselves on terms of equality, collectively owning the capital and working under managers they elect and can remove.
- Authoritative intervention is when a government controls the free agency of individuals by interdicting actions, requiring authorization for them, or prescribing specific things to be done. Non-authoritative intervention is when a government, instead of issuing commands, gives advice, promulgates information, or establishes its own agency to pursue an object of general interest, leaving individuals free to use their own means for the same purpose.