Tuesday, December 17, 2013

John Stuart Mill and The Limits to Growth

John Stuart Mill's The Principles of Political Economy, like the later books of Alfred Marshall and Paul Samuelson, taught a generation of economists the fundamentals of their subject and was the basis for what might be called a "classical moment" within the field.

Today the book is remembered less for its original theoretical contributions than for its summation of what came before. When cited for its own ideas, it is usually a matter of a libertarian in search of authoritative quotations to back up his position seizing on Mill's argument that
To tax the larger incomes at a higher percentage than the smaller is to lay a tax on industry and economy; to impose a penalty on people for having worked harder and saved more than their neighbours.
However, as people who love to throw around authoritative quotations commonly do, they tend to forget the sentence that immediately follows this: "It is not the fortunes which are earned, but those which are unearned, that it is for the public good to place under limitation"--and that Mill explicitly supported estate taxes as a means of preventing inheritance from creating wide inequalities.

This was far from being the only case where Mill took a position less than congenial to proponents of economic orthodoxy, Mill frequently doing so on matters such as labor laws and the government regulation of industry--and even the idea of the zero-growth economy.1 He discusses exactly this in a chapter (4.3) titled "Stationary state of wealth and population dreaded by some writers, but not in itself undesirable." In it he contended that the stationary state was not only inevitable, but rejected the claim that "the condition of the mass of the people . . . must be pinched and stinted in a stationary condition of wealth" to argue that he is "inclined to believe that it would be, on the whole, a very considerable improvement on our present condition."

His argument seems surprisingly contemporary, and indeed, not dissimilar from what The Limits to Growth had to say--namely that it is "in the backward countries of the world that increased production is still an important object."2 He also contended that
It is scarcely necessary to remark that a stationary condition of capital and population implies no stationary state of human improvement. Even the industrial arts might be as earnestly and as successfully cultivated, with this sole difference, that instead of serving no purpose but the increase of wealth, industrial improvements would produce their legitimate effect, that of abridging labor.
In short, there are goods in life besides the consumption of material product--the "graces of life"--which might be better cultivated in a more leisured, less money-driven society.

Of course, looking back few of us would regard the level of even the wealthiest nations circa 1850 as representing, or even approaching, a satisfactory stopping point. Clearly the possibilities for growth remained vast, expanding by a factor of fifty from his time to the 1980s, per-capita GWP by a factor of fifteen in that same time frame. And certainly it is difficult for us to imagine a universally decent standard of living at the level of Britain at the time (some $4,000 per capita in today's terms, about a tenth of the level the country now enjoys), even were really egalitarian and efficient distribution of the product practicable with the means to hand in that era.

Nonetheless, the fact does not deprive his argument of all its interest or relevance, what he said then perhaps more applicable at a later date. And even if that is not the case, the fact that it appeared in Mills' Principles is a reminder that the idea is not so new or so radical as it is often made to seem--and a reminder, too, of the narrowness of the range of ideas we seem to regard as acceptable within a public debate.

1. Indeed, he went so far as to say in Book 5, Chapter 11, that "Whatever, if left to spontaneous agency, can only be done by joint-stock associations, will often be as well, and sometimes better done, as far as the actual work is concerned, by the state"--a far cry from the claim that the private sector is intrinsically more efficient than the public, which has been at the root of much conservative economic policy in recent years.
2. The authors of Limits were, of course, aware of Mills' writing, and cited him on this point.

Reassessing 1972's The Limits to Growth

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