John Stuart Mill's Compromise

John Stuart Mill's Compromise

Protectionism as a policy of international trade was not confined to the outspoken opponents of classical theory. Yet most of the other economists who supported protection against free trade tried to stay within the general bounds of classical tradition as outlined by Smith. John Stuart Mill, in spite of his adherence to classical economy, found certain instances where he believed protection was justified, when in a young nation new industries were being developed. Since the superiority of industries in older nations may merely be that of time, it is necessary to protect the new industry during the formative period when it is adapting itself to the new conditions and gaining strength to compete against the well established foreign firms. Mill warned his readers, however, that although a duty on imports was one way in which a nation could tax itself for the period of experimentation, it should not be conceived as a permanent subsidy to an industry unfitted by nature to its new location or extended beyond the time necessary for the industry to be fairly established. For the most part, however, Mill defended the doctrine of free trade against the arguments of the protectionists. He especially challenged the ideas of Henry Carey, who advocated a thoroughgoing nationalistic policy for America.