Economic Sociology: The Recursive Economic System of J. S. Mill (original) (raw)

2005, Journal of the history of economic thought

In a recent paper, R. Ekelund and D. Walker (1996) argue that, "[i]ncentives, utilitarian principles, and the diffusion of property rights are the key to understanding Mill on the statics and dynamics of 'equity and justice'"(p. 576). Their paper, which deals with John Stuart Mill's views on taxation, reads very much like a modern defense of popular capitalism. 1 From the static point of view, it is imperative not to interfere with the internal relationship between economic variables and thus, distort incentives (proportional income tax). 2 From the dynamic point of view, "inheritance taxes [are] the essential mechanism of an evolutionary change towards an efficiently functioning capitalism" (p. 578, italics added). Implied by this is the view that for Mill, the fundamentals of the capitalist system, with its social institutions, hold universally. The obvious difficulties with existing arrangements, and in particular, with the distribution of ownership, do not lead to a reexamination of the sustainability of such a system. Instead, a mere correction of these "disturbing factors" will lead to the blissful coincidence where ethical objectives perfectly coincide with economic expediency. Further more, ethical principles seem to be somewhat secondary to the objective of an efficient capitalist system as "[t]he tax system was to be used to support the decentralisation and security of property rights. .. as a conduit for growth" (p. 579, italics added). This is very much in line with Samuel Hollander (1985) who insists on continuity between David Ricardo, Mill, and neo-classical economics, as well as with Daniel Hausman's (1992) 3 reading of Mill's defense of the isolated study of economics.