1. Agents of Production and Their Productiveness

Mill identifies three primary requisites of production:

1. Labour: Both muscular and nervous exertion.
2. Natural Objects: The raw materials of the globe.
3. Capital: The accumulated stock of the products of previous labor, which includes subsistence for laborers, materials, and tools.

The degree of productiveness is determined by several key factors:

• Natural Advantages: Fertility of soil, climate, and mineral resources.
• Energy and Skill of Labour: Mill emphasizes the importance of the moral and intellectual qualities of the laboring population, including trustworthiness, intelligence, and practical skill. He cites observers who noted that educated and sober continental workmen were often more reliable and adaptable than their uneducated English counterparts.
• Security: Defined as “the completeness of the protection which society affords to its members,” both by the government and against the government. Arbitrary exactions by the state are identified as the most “paralysing” form of insecurity.

1. Co-operation and the Division of Labour

Mill expands on the traditional concept of the division of labour, placing it within the broader principle of Co-operation, or the combined action of numbers.

• Simple Co-operation: Several persons helping each other in the same employment (e.g., lifting a heavy weight).
• Complex Co-operation (Division of Labour): Several persons helping each other in different employments. This is fundamental to industrial civilization.

Following Adam Smith, Mill notes that the division of labour increases dexterity and promotes invention. However, he questions Smith’s emphasis on the “saving of the time which is commonly lost in passing from one species of work to another,” arguing that a change of occupation can be a form of rest and that versatility is an asset, particularly visible in the varied work performed by women. He adds a key advantage noted by Charles Babbage: the more economical distribution of labor by classifying work-people according to their capacity, assigning the most difficult tasks to the most skilled.

1. The Laws of Population, Capital, and Land

• Law of the Increase of Labour (Population): Mill adopts the Malthusian principle that the human “power of increase is indefinite” and would be “extraordinarily rapid” if unchecked. He identifies two categories of checks:
  • Positive Checks: Actual want, starvation, and disease, which keep population down by an excess of deaths.
  • Preventive Checks: Prudence and foresight, which limit population by a limitation of births. Mill argues that as societies improve, the preventive check should predominate. He strongly condemns views encouraging unrestrained procreation and sees population control as essential to solving the problems of poverty.
• Law of the Increase of Capital: Capital is the product of saving, which depends on the size of the “fund from which saving can be made” (the surplus of production over necessaries) and the “strength of the dispositions which prompt to it” (the effective desire of accumulation).
• Law of the Increase of Production from Land: This is described as “the most important proposition in political economy.” The law of diminishing returns states that after a certain point, “every increase of produce is obtained by a more than proportional increase in the application of labour to the land.” This creates a natural limit to production, in contrast to manufacturing, where the tendency is toward a continually diminishing proportional cost.