John Stuart Mil Laissez Faire, Mill Intervention or Socialism

Mill Chapters On Socialism

Mill's eclecticism in economic theory carries over to his views on economic and social policy. His writing is such a strange admixture of opinions that he defies classification as an advocate of laissez faire, of intervention, or even of socialism. Possibly the best way to characterize such a subtle and complex thinker as Mill is to say that in terms of public policy he represents a midpoint between classical liberalism and socialism. His socialism was not Marxian, and Mill evidently had little contact with Marx. Yet he did distinguish between revolutionary socialists and philosophic socialists, his own views being more closely allied with the latter. The distinction that is usually made between left (revolutionary) and right (evolutionary) socialists is based on the strategy that they consider appropriate to achieve the goals of socialism. However, Mill's preference for the right-wing evolutionary position of the philosophic socialists was based on their conception of the good society.

What were Mill's views of the role of government in society and of the economic, political, and social framework of the good society? In his essay On Liberty (1859), Mill tried to state his view of the proper relationship between government and the people. A strong dose of classical liberalism is contained in his statement that the only rightful exercise of power by a government over an individual against his will is "to prevent harm to others. His own good, either physical or moral, is not a sufficient warrant."10 In his discussion of practical social actions, however, Mill was forced to abandon this strong liberal position and found exception upon exception to the general rule. At one place, he makes a forceful liberal statement such as "Laissez-faire, in short, should be the general practice: every departure from it, unless required by some great good, is a certain evil."11 At another, he backs away from a strict laissez-faire position and asserts that "it is not admissible that the protection of persons and that of property are the sole purposes of government. The ends of government are as comprehensive as those of the social union. They consist of all the good, and all the immunity from evil, which the existence of government can be made either directly or indirectly to bestow." In other words, Mill acknowledged that the absence of government intervention does not necessarily result in maximum freedom, for there are many other restraints on freedom that only legislation or government can remove.

Although Adam Smith considered the operation of the market to be funda­mentally harmonious, he had acknowledged the existence of conflict in the fact that "landlords love to reap where they have never sowed." Mill, building on the foundation of Ricardian rent theory, similarly perceived a class conflict between landlords and the rest of society. His condemnation of the landlords was biting, and his policy recommendations would have taken all further increases in rent and land values away from landowners. Landlords "grow richer, as it were in their sleep, without working, risking, or economizing. What claim have they, on the general principle of social justice, to this accession of riches?" He went on to advocate a tax on all increases in rent. Mill did not emphasize the existence of a class conflict between labor and the rest of society, particularly the capitalists; yet his entire social philosophy and the major programs he advocated, such as universal education, redistribution of income through inheri­tance taxes, the formation of unions, the shortening of the working day, and the limitation of the rate of growth of population, all implied that there were conflicts and disharmonies in the system besides those associated with land ownership.

Mill's treatment of private property reflects his blend of classical liberalism with social reform. Property rights are not absolute, and society can abrogate or alter these rights when it judges them to be in conflict with the public good. Indeed, in his chapter on property, in which he discussed communism as an alternative economic system, he said:

If, therefore, the choice were to be made between Communism with all its chances, and the present (1852) state of society with all its sufferings and injustices; if the institution of private property necessarily carried with it as a consequence, that the produce of labour should be apportioned as we now see it, almost in inverse ratio to the labour—the largest portions to those who have never worked at all, the next largest to those whose work is almost nominal, and so on in a descending scale, the remuneration dwindling as the work grows harder and more disagreeable, until the most fatiguing and exhausting bodily labour cannot count with certainty on being able to earn even the necessities of life; if this or Communism were the alternative, all the difficulties, great or small, of Communism would be but as dust in the balance.'

Mill then qualified this approval of communism by pointing out that it is not appropriate to compare communism at its best with the economic order of his time, and that he would prefer a system of private property, at its best, to communism. If the laws of private property were changed to give a more equitable distribution of income and a closer conformity between individuals' contributions to the economy and their incomes, "the principle of individual property would have been found to have no necessary connection with the physical and social evils which almost all Socialist writers assume to be insepa­rable from it."

Just as he rejected the socialists' argument that private property was a major cause of the evils of society, Mill also failed to accept their argument that competition was a cause of social difficulties. In this regard Mill followed the tradition running from Adam Smith to modern orthodox theory that sees competition as beneficial and that predicts misallocation of resources in markets where monopoly power prevails. Competition is beneficial to society; "every restriction of it is an evil, and every extension of it, even if for the time injuriously affecting some classes of labourers, is always an ultimate good."16 The inconsis­tency of these views favoring competition with Mill's support of trade unions and other attempts to improve labor's position through the exercise of monopoly power caused him some difficulty. After some rather tortuous reasoning, Mill concluded that trade unions, "far from being a hindrance to a free market for labour, are the necessary instrumentality of that free market; the indispensable means of enabling the sellers of labour to take due care of their own interests under a system of competition."