William Thompson (1775-1833) — The Wealth Distribution

William Thomson Biography

William Thompson was another champion of social reform during the 19th century. Interestingly, Thompson's economic theory attempted to combine the labor theory of value with Bentham's utilitarianism (or utility theory of value) and Owen's cooperative movement. His primary concern was the distribution of wealth and happiness.

Thompson fully embraced Ricardo's labor theory of value. Thompson especially accepted the notion that only labor created wealth. Hence, the quantity of labor was the chief determinant of value of commodity. Interestingly, although he believed in the labor theory of value, Thompson also embraced certain aspects of Bentham's writings and seemingly attempted to reconcile Bentham's utilitarian notions with the labor theory of value.

Thompson took Bentham's axiom regarding the individual goal of maximizing pleasure and minimizing pain and concluded that the key to maximizing utility, as well as pleasure and happiness, was strictly through optimal distribution of wealth. In other words, the distribution of wealth was the key factor that determined a member of a society's pleasure and happiness. Hence, if all members of society were treated equally, they would then have equal pleasure and happiness. As put by Thompson "equality of distribution is the rule of justice" (Thompson, 1850, p. 111). Thompson felt that capitalism had far greater extremes of wealth and poverty than could be justified in a utilitarian philosophy. Redistribution of wealth was justified according to Thompson because as a person's wealth increased at equal increments it would give him smaller increments of pleasure.

Because of these beliefs, Thompson supported even greater radical reforms than Bentham ever suggested. For instance, Thompson agreed that legal reform should restrict free market capitalism. Based on Thompson's observations, capitalism would never be a "system of security" (Thompson, 1850, p. xxix), and that capitalism was inevitably a system of exploitation, degradation, instability, suffering, and grotesque extremes of wealth and income.

One of Thompson's greatest works was his analysis of the forces of competition. For one thing, Thompson concluded that a political economy based on exchange or a market could only be fair if all workers would own their own capital and if all restrictions on free competition were removed. Thompson also suggested that there were essentially five evils inherent in the principle of competition: selfishness and rivalry, systematic oppression of women, economic instability, economic insecurity, and concealment or retardation of the advancement and dissemination of knowledge.

William Thompson suggested that the best form of society would ultimately be a planned, cooperative socialist society that included mutually coordinated, self-governing, cooperative communities, similar to the Owenite movement. Thompson wrote An Inquiry into the Principles of the Distribution of Wealth Most Conducive to Human Happiness (1824), and Labour Rewarded, the Claims of Labour and Capital Conciliated (1827).