Essay Questions
The following questions are designed for longer, more analytical responses. No answers are provided.
- Analyze Mill’s argument that “the institution of private property has never yet had a fair trial in any country.” What historical injustices and legal flaws does he identify, and what reforms does he suggest to align the principle of private property with social justice and economic well-being?
- Mill makes a critical distinction between “competition” and “custom” as the two determining agencies for the division of produce. Explain the role and influence of each, using examples from the text concerning land tenure and prices. How does this distinction challenge the assumptions of other English political economists?
- Discuss Mill’s vision for the “probable futurity of the labouring classes.” Why does he reject the “theory of dependence and protection”? What role do co-operative associations, education, and the social and industrial independence of women play in his conception of a just and prosperous future?
- While a strong proponent of the laisser-faire principle, Mill outlines numerous and significant exceptions where government intervention is justified. Detail the general arguments against government interference and then explain, with specific examples from the text, the counter-considerations that can overrule these objections.
- Explain the “law of the tendency of profits to a minimum.” What causes this tendency in a progressive state of wealth, and what are the primary “counteracting circumstances” that prevent the economy from quickly reaching the stationary state?
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Glossary of Key Terms
| Term | Definition |
| Abstinence | The act of refraining from present consumption for the sake of a future good; a core component of saving and capital formation. |
| Capital | The product of saving or abstinence, consisting of the accumulated stock of the produce of former labor. It is distinguished between Circulating Capital, which is consumed in a single use (e.g., wages, materials), and Fixed Capital, which consists of durable instruments of production (e.g., machinery, buildings). |
| Colonization | The removal of population from overcrowded countries to unoccupied parts of the earth. Mill views it as a key remedy for population pressure and an efficient way to increase the aggregate produce of the world’s labor and capital. |
| Communism | An economic system implying the entire abolition of private property, where land and instruments of production are owned by the community, and produce is distributed equally. |
| Competition | One of the two determining agencies in the division of produce (along with Custom). It is the principle through which prices, wages, and profits are regulated by the free interaction of buyers and sellers, or employers and laborers. |
| Co-operation | The combined action of numbers in production. Mill distinguishes between Simple Co-operation (several people helping each other in the same employment) and Complex Co-operation (several people helping each other in different employments, i.e., the division of labour). |
| Cottier Tenancy | A system where a laborer contracts for land without a capitalist farmer intermediary, and rent is determined by competition rather than custom. Mill identifies it with the pre-famine Irish peasantry, arguing it drives rents to the maximum possible level and removes incentives for industry. |
| Custom | A determining agency for the division of produce, often preceding competition. It consists of fixed usages and traditions that regulate transactions and engagements, particularly the relationship between landowner and cultivator, protecting the weak against the strong. |
| Direct Tax | A tax demanded from the very persons who it is intended or desired should pay it, such as an income tax or a house-tax. |
| Distribution | One of the two great departments of Political Economy. Unlike Production, its laws are a matter of human institution, depending on the laws and customs of society that determine how wealth is shared. |
| Division of Labour | A form of complex co-operation where a process of industry is broken down into parts, with each laborer confining himself to a small number of simple operations. |
| Fourierism | A form of Socialism that does not abolish private property or inheritance but proposes that industry be carried on by associations (“phalanxes”). The produce is shared among Labour, Capital, and Talent, with a minimum subsistence guaranteed to all. |
| Indirect Tax | A tax demanded from one person with the expectation that he will indemnify himself at the expense of another, such as customs or excise duties on commodities. |
| Joint Stock Company | A business formed by the combination of many small capital contributions, allowing for undertakings that require capital beyond the means of an individual. Mill discusses the advantages (e.g., large scale, publicity) and disadvantages (e.g., inferior interest of hired managers). |
| Laisser-Faire | The principle of non-interference; the general practice that the business of society should be left to the individuals most interested in it, and that every departure from this by government is a certain evil unless required by some great good. |
| Law of Diminishing Return | The law of production from land; it states that in a given state of agricultural skill, increasing the labor on a piece of land does not increase the produce in an equal degree. |
| Mercantile System | An economic theory, which Mill refutes, that assumed wealth consisted solely of money (gold and silver) and that a nation’s policy should be to maximize its holdings of precious metals, typically by encouraging exports and discouraging imports. |
| Metayer Tenancy | A system of land tenure where the produce is divided between the cultivator and the landlord, typically in equal shares. The landlord generally furnishes the stock and the land, while the laborer provides the labor. |
| Peasant Proprietors | A system where laborers own the land they cultivate. Mill praises this system for fostering “superhuman industry,” prudence, intelligence, and self-control among the peasantry. |
| Price | The value of a thing in relation to money; the quantity of money for which it will exchange. |
| Production | One of the two great departments of Political Economy. Its laws and conditions partake of the character of physical truths, being imposed by the constitution of external things and human nature. Its requisites are Labour, Capital, and Land. |
| Productive Labour | Labour that is productive of wealth. Mill restricts this to exertions that produce utilities embodied in material objects, or that have an increase of material products as their ultimate consequence (e.g., the labor of government in providing security for industry). |
| Profit | The remuneration of the capitalist, derived from the surplus of the produce of labor after supplying the necessaries of life to all concerned in production. Its cause is that labor produces more than is required for its own support. |
| Socialism | A word used in a larger sense than Communism, applied to any system where the land and instruments of production should be the property of communities, associations, or the government, rather than individuals. |
| Stationary State | The ultimate point of industrial progress, where the increase of capital and population ceases. Mill views this state favorably, believing it would allow for moral and social progress once humanity is freed from the struggle of “getting on.” |
| Unproductive Labour | Labour of which production of material wealth is not the object, even if it is highly useful (e.g., the labor of saving a life, a clergyman’s work). It diminishes the stock of material products. |
| Value | When used without adjunct, it means value in exchange; a thing’s general power of purchasing; the command its possession gives over purchasable commodities in general. |
| Wages | The remuneration of hired labor. Wages depend mainly on the proportion between the laboring population and the circulating capital expended in the direct purchase of labor. |
| Wealth | Defined as all useful or agreeable things which possess exchangeable value; or, all useful or agreeable things except those which can be obtained without labor or sacrifice. Mill focuses on material wealth. |