(
JOHN STUART MILL ON
COLONIES AND COLONIZATION
By
R.N. Ghosh
Department of Economics
University of Western Australia
Discussion Paper 85.10
August 1985
ISSN 0811-6067
ISBN 0 86422 737 X
1.
I
The main purpose of this paper is two-fold:
(i) to examine how
John Stuart Mill applied the Classical macro-economic theories to an
understanding of the significance (or otherwise) of colonies; and
(ii) to explain.the essential ambivalence of J.S. Mill's attitude
towards colonies and colonization in view of his own modification and
synthesis of the various elements of the Classical Political Economy.
It is this latter aspect of Mill's economic thought and its application
that might have contributed to the eventual decline of Classical
Economics~
It is well known that in the early years of his intellectual
development, J.S. Mill was greatly influenced by his father James Mill,
who was not only an orthodox exponent of Ricardian economics but
himself contributed to the growth of the Benthamite utilitarian
philosophy.
In the History of British India, which was first published
in 1818, James Mill pushed his belief in the superiority of Western
culture.
He almost passionately upheld the "idea of progress" or the
conception of "different stages of civilization 11 •
In Book II of that
celebrated work, he offered the darkest possible picture of Hindu
society and condemned virtually every aspect of Hindu civilization.
This idea of progress, involving a belief in the superiority of
Western culture, was one of James Mill's most important contributions
to utilitarianismi and it was "a scientific solution of the problem of
the influence of time and place in legislation".
But Mill's philosophy
of history was also, as one comparatively recent writer has pointed out,
11
teleological, an article in the Rationalist religion of humanity.
was Mill who made of utilitarianism a militant faith ....
Marxist philosophy of history, the utilitarians'
It
Like the
'idea of progress'
was both science and religion, a belief in the future based on a
'scientific' interpretation of the past"
(1)
.
It is well known that
James Mill supported the imperial conquest of India not only in order
to be able to carry out Bentham 1 s and his own great utilitarian
2.
experiments in social reform but also as a means of spreading what he
regarded as superior British civilization and culture all over the
world. (2 )
J.S. Mill, like his father, dreamt of an imperial conquest of
the whole of India by liquidating all native States.
Although war
was otherwise abhorrent to him, he thought it could still be something
noble if fought for the realization of a noble principle: "War is an
ugly :thing, but not the ugliest of things: the decayed and degraded
state of moral. c.r:d patriotic feeling which thinks nothing worth a war,
is worse
A war to protect other human beings against tyrannical.
injustice; a war to give victory to their (a nation's) own ideas of
right and good, and which is their own war, carried on for an honest
purpose by their free choice .... is often the means of their
regeneration" . ( 3 )
Given what he regarded as the moral decay of Indian society and
also the tyrannical nature of native States, J.S. Mill did not hesitate
to suggest British conquest of India not only to bring oppression and
tyranny to an end for the sake of "the good of the governed" but also to
liberate the minds of Indians from superstitions by exposure to Western
cultural values.
Truly it has been remarked that "It was India which most clearly
exposed the paradox in utilitarianism between the principle of liberty
and the principle of authority". ( 4 )
II
As a liberal economist, who was brought up by his father on the
Ricardian tradition, J.S. Mill accepted the wages-fund doctrine with
all its implications.
Briefly, the idea of the wages-fund was this:
a capitalist was said to employ a portion of his capital for the
employment of labour.
The aggregate of this portion of capital (at the
disposal of capitalists) was called the wages-fund, which was at any
particular time assumed to be a pre-determined amount.
In general, it
was held that an increase in the accumulation of capital would increase
the wages fund.
From this Mill, writing in the Westminster Review
in 1825, reached the conclusion that "the ratio between population and
3.
capital had been the regulator of wages". (S)
Mill's belief in the
wages-fund doctrine continued until his famous recantation in the
Fortnightly Review in 1869 on reading Thornton's On Labour: its
Wrongful Claims and Rightful Demands (1869).
J.S. Mill was also a bitter critic of the Malthusian doctrine
of general market-gluts.
Like his father, he was convinced of the
5
impossibility of a general overproduction of commodities. ( ) As
acceptance of this doctrine of general market-gluts formed the major
argument for the case against colonization, let us examine Mill's
views on it a little more carefully.
At first in a short article in the·Morning Chronicle of· 5th
September 1823, Mill reviewed Malthus's book on "The Measure of
Value", in which he criticised Malthus for his "labour-commanded"
measure of value and also for his belief in the "mischievous doctrine"
of general market-gluts.(?)
About a year later, he took the opportunity
of reviewing William Blake's book called "Observations on the Effects
produced by the Expenditure of Government ... " (London, 1823) to point
out at some length the fallacy of the doctrine of a general overproduction of commodities. ( 9 )
By 1829-1830, however, Mill's ideas on the impossibility of general
overproduction underwent some interesting modifications.
In the essay
on "The Influence of Consumption upon Production" written at this time
(1829-1830) but published as part of the Essays on Some Unsettled
Questions of Political Economy (1844), although he still expressed his
belief in the validity of what is loosely called the Say's Law, he was
willing to introduce some qualifications to that doctrine.
In the beginning of this Essay, Mill challenged the old mercantile
doctrine which showed a positive correlation between a large consumption
(i.e., an
11
extensive demand", a "brisk circulation" and "a great
expenditure of rnoney 11 )
and a situation of economic prosperity.
mercantile doctrine and its corollaries were branded as
11
absurdities", and Mill argued that against this doctrine,
This
palpable
11
it was
triumphantly established by political economists, that consumption
4.
9
never needs encouragement". C l
The proof of the impossibility of
general overproduction was said to lie in: (i)
The 'saving is spending' theorem:
11
The person who saves
his income is no less a consumer than he who spends it: he consumes
it a different way; it supplies food and clothing to be consumed,
.
(10)
tools and materials to be used, by productive labourers."
(ii)
The identity of aggregate demand and supply: "To produce
implies that the producer desires to consume; why else should he give
himself useless labour?
He may not wish to consume what he himself
produces, but his motive for producing and selling is the desire to
buy.
Therefore, if the producers generally produce and sell more and
.
more, they certainly also buy more and more 11 •
(11)
But now an additional argument was introduced.
So long as some
people in a community would have unsatisfied wants, it would be
impossible to speak of a general overproduction: "No further capital
could find useful employment" only "if all the wants of all the
inhabitants of a country were fully satisfied!'. (l 2 ) But as wants as
a whole are unlimited and insatiable, it follows that a general overproduction of commodities is extremely unlikely.
However, Mill agreed that in real life, there existed a "perpetual
non-employment of a large proportion of capital".
reality of business fluctuations:
11
He accepted the
Except during short periods of
transition, there is al.most always either great briskness of business
or great stagnation; either the principal producers of almost all the
leading articles of industry have as many orders as they can possibly
execute, or the dealers in almost all conunodities have their warehouses
full of unsold goods".
(13)
Indeed, he went to the extent of saying
that "at any one time, no more than half the productive capital of the
4
country would really be performing the functions of capital,"(l )
implying that the other half would remain in a state of idleness.
The phenomena of commercial crises with the chronic non-employment
of capital were attributed to the complications introduced by money.
The simple condition of the identity of aggregate demand with aggregate
supply holds true under conditions of barter, but breaks down with the
5.
Although Mill thought that money was not
(15)
, he argued that the assumption of a
desired for its own sake
introduction of money.
monetary economy did alter the condition of barter in a significant
way.
Under barter, the operation of buying and selling is performed
as 'one indivisible act'.
But with the introduction of money:
11
Although
he who sells, really sells only to buy, he need not buy at the same
moment when he sells; and he does not therefore necessarily add to the
6
immediate demand for one commodity when he adds to the supply of another."(l )
Thus by separating buying from selling, the introduction of money
might create market situations in which a "general inclination to sell
with as little delay as possible [may be] accompanied with an equally
general inclination to defer all purchases as long as possible". (l?)
And such indeed were the situations "described as periods of general
excess".
This analysis was path-breaking, but unfortunately it was not
followed up.
On the contrary, there was an attempt to underestimate
the importance of monetary disequilibrium, and to preserve the validity
of the doctrine of the impossibility of a general overproduction of
commodities.
Mill pointed out that if money itself was treated as a
commodity, the anomaly in the concept of a general excess of commodities
would be seen.
What really happens in a period of depression is
"a superabundance of all commodities relative to rnoney 11
•
(lB)
In other
words, in a period of crisis, although the demand for general commodities is low, the demand for money is great: "It must, undoubtedly,
be admitted that there cannot be an excess of all other commodities
. e". (19) In this ingenious way,
and an excess o f money at the Same tllil
Mill thought that he was able to save the validity of Say's Law Markets,
for his ultimate conclusion was this: "Nothing can be more chimerical
than the fear that accumulation of capital should produce poverty and
not wealth, or that it will ever take place too fast for its own end.
Nothing is more true than that it is produce, which constitutes the
market for produce, and that every increase of production .... creates,
or rather constitutes its own demand". ( 2 0)
6.
In the Principles (1848), money was described as a mere veil.
The dynamic role of money in the economic system was, on the whole,
ignored:
"The mere introduction of a particular mode of exchanging
things for one another by first exchanging a thing for money, and
then exchanging the money for something else, makes no difference in
2
the essential character of transactions". ( l)
III
It would then appear that, in spite of certain serious qualifications, Mill was a believer in Say's Law of Markets.
He did not
admit of the possibility of any surplus capital (except temporarily
during a commercial crisis) by expressing his support of the doctrine
of the impossibility of general overproduction.
On the contrary, his
belief in the theory of the wages-fund suggested the positive idea
that any accumulation of capital was beneficial in so far as it raised
the wages-fund and the level of employment.
Therefore, the central
economic argument in favour of colonization as a profitable outlet for
surplus domestic capital was missing from Mill 1 s economic thought.
Add to this his idea of free trade, and this removed the economic
justification for monopolies and the Colonial System.
And although in
his youth, he fell under the influence of Francis Place so as to look
upon with favour the principle of artificial checks to population( 22 ),
he was always a thorough-going Malthusian, in the sense that he largely
shared Malthus's view that population has a tendency to recover its lost
numbers; and this should have made him at best a lukewarm advocate of
emigration, because of the fear that the vacuum in population created
by emigration soon gets filled up again.
Yet surprisingly we find that J.S. Mill was an active supporter
of the National Colonization Society in the 183D's.
He was not only
an original member of that Society in any passive sense of the term,
but he actually wrote frequently short articles, or notices, or reviews,
in the Examiner, and the Morning Chronicle between 1831 and 1834 in
defence of Wakefield and his scheme of colonization.
7.
In an article in the Examiner of the 27th February 1831, Mill
called upon Lord Howick to try the Wakefield method of colonization,
which was described as 'the best mode of enabling emigration to pay
its own expenses'.
This plan, he pointed out, involved 'fixing a
price upon waste land, the highest which could be levied without so
crowding the inhabitants as to lower wages below their highest rate'.
(23)
The United States, it was pointed out by Mill, had already adopted the
principle of selling lands, and the same principle had been 'adopted in
part by the present ministry, in the colonies of New South Wales and
Van Diemen 1 s Land.•
Then, it was added that
11
All that is wanting is,
that the minimum price of waste land should be higher; that the system
should be established by act of parliament, not by a mere regulation,
revocable at the pleasure of any colonial minister; and finally, that
the produce of the sales of land should be wholly devoted to emigration,
and to the emigration of young couples, in order that the greatest effect
may be produced on the future growth of population, by the removal of the
24
smallest number of individuals". ( J Thus Mill made a virtual repetition
. ld Pl an o f co 1 oniza
' t'ion. ( 2S)
Of the Wak e f ie
Again, in a short article on 'The New Colony' in the Examiner
dated 6th July 1834, he referred to the Wakefield Plan.
It was said
that the "merits of the plan are indeed so clear and so striking to any
one who will examine it, that it has triumphed over the strongest prepossessions". <25 J The great merit of the plan was that it would make
'emigration pay its own expenses'. ( 2 ?)
Not only did J.S. Mill share Wakefield's views on the technique
of colonization, but also accepted Wakefield's rationale of colonization.
In reviewing Wakefield's book 'The New British Province of South
Australia' in the Examiner of the 20th July 1834, he pointed out: "The
proportion of land to labour and capital, in England, is too small; in
the backwoods of America, too great: between these two extremes, there
is a proportion which is the best possible, and to which the founders
.
(28)
of the new colony will endeavour to approximate".
By following
Wakefield's principles of colonization, he argued that it would be
possible to so "limit the appropriation and occupation of land, as to
keep both wages and profits at the highest rate possible". 29 )
8.
It would then appear that Mill's active support of colonization
in the 1830's had gone against his own 'classical' economic ideas,
although it is possible that he himself hardly realised it.
The only
suitable explanation of Mill's paradoxical position in the 1830's may
be that he himself did not believe that the teachings of Wakefield,
although revolutionary otherwise, conflicted in any serious way with
the premises of Ricardian economics.
IV
In later years, however, J.S. Mill introduced certain·new elements
to his thought, which made his position ambivalent vis-a-vis the main
trend of Classical Economics. <3 Dl
not ever openly make a break
It is, of course, true that he did
with the fundamental 'classical' doctrines,
such as, the law of population, the principle of free trade, the
impossibility of general gluts, etc.: but in other respects, his ideas
increasingly moved away from the postulates and prescriptions of the
so-called 'orthodox school'.
One such important idea was his recognition
that in the case of a backward country at least, public works could be
a suitable measure for increasing the level of economic activity.
The
other important idea which he put forward was that the introduction of
small peasant-holdings might be a cure for the problem of pauperism in
Ireland.
Both of these new ideas were expressed in a fairly straightforward
manner in a series of about forty articles on Irish affairs, which Mill
3
wrote for the Morning Chronicle for about six months in 1846-1847. C ll
In most of these articles he called upon the government to participate
with private enterprise in the reclamation of waste land in order to
establish a band of prosperous peasant-proprietors out of the pauper
and the cattier class in Ireland.
He advocated that the scheme of
colonization abroad should be supplemented by an intensive home
colonization in Ireland (i.e., the reclamation of waste lands) to solve
the problem of Irish poverty. <32 l
9.
The doctrine that governmental expenditure on home colonization
could reduce poverty and unemployment was a definite challenge to the
orthodox belief in the existence of a fixed capital-fund.
Similarly,
the idea of establishing small peasant-proprietors instead of the
usual capitalist farming was also highly unconventional.
In the Principles Mill's support of peasant-proprietorship became
even more clear-cut.
Here he described the cattier system as the most
33
important economic evil of Ireland. C l
The orthodox prescription for
the evil of the cattier tenantry was the application of the British
system of large-scale farming with hired labourers to Ireland.
Mill did not accept this orthodox solution.
But
His own solution was the
introduction of small peasant-proprietors in that country:
11
Those who,
knowing neither Ireland nor any foreign country, take as their sole
standard of social and economical excellence English practice, propose
as the single remedy for Irish wretchedness, the transformation of the
cottiers into hired labourers.
But this is rather a scheme for the
improvement of Irish agriculture, than of the condition of the Irish
people ••..
Far other would be the effect of making them peasant
proprietors
A permanent interest in the soil to those who till it,
is almost a guarantee for the most unwearied laboriousness: against
over~population,
though not infallible, it is the best preservative
yet known, and where it failed, any other plan would probably fail
much more egregiously; the evil would be beyond the reach of merely
34
economic remedies". C l And in order to effect this transition of the
cottiers into peasant-proprietors, he proposed mainly the unconventional
device of reclamation of waste lands by government expenditure, i.e.,
home colonization. C35 l
Colonization abroad could also be a suitable remedy.
In
fact,
in the third edition of the Principles (1852), Mill introduced one
paragraph to show how the effect of self-supporting emigration had
already been felt in Ireland in a diminution of the pressure of
35
population on land and in an improvement in the status of the cottiers. C l
The same policy of home colonization and colonization abroad ---
along with the spread of education among the working class inducing
them to restrict their number --- was regarded as a suitable remedy
10.
for the evil of low wages and poverty of the labourers
.
in
England.
(37)
Now Wakefield was quite frankly opposed to the system of peasantownership, and always exaggerated the merits of large-scale capitalist
farming.
The British type of farming was the model for him, which he
wanted to impose on the colonies.
Did Mill's growing belief in the efficiency of peasant-holdings,
mean that he broke off his agreement with Wakefield?
Mill himself thought that Wakefield's plan did not conflict with
his own support of peasant-proprietors.
Although he charged Wakefield
with misrepresentation and overstatement in claiming that the British
type of large-scale farming was twice as productive as the French type
.
of small-scale farming
(38)
, he thought at the same time that the
Wakefield System did not create any real bias in favour of large-scale
farming.
Mill's basic argument was that whatever be the nature of farming,
the productiveness of agriculture would depend upon the availability
of a large 'town population'
(implying non-agricultural population)
39
and/or of a large export trade in agricultural produce. ( l And he
thought that the peculiar merit of the Wakefield plan of colonization
was that it recognised the importance of demand as an exogenous factor
in the long term progress of agriculture:
"His (Wakefield's) system
consists of arrangements for, securing that every colony shall have
from the first a town population bearing due proportion to its
agricultural, and that the cultivators of the soil shall not be so
widely scattered as to be deprived by distance of the benefit of that
town population as a market for their produce.
The principle on which
the scheme is founded, does not depend on any theory respecting the
superior productiveness of land held in large portions, and cultivated
by hired labour" . ( 40 )
11.
v
In the Principles the ambivalence of Mill's economic ideas
4
continued outwardly at least. C l) On the one hand, he continued his
support of Say's Law of Markets; and, on the other hand, he accepted
Wakefield's explanation of falling profits (which, was based. on an
explicit rejection of Say's Law) to develop a strong economic argument
in favour of colonization.
In Book IV, chapter IV of the Principles Mill made a detailed
examination of the causes of a fall of profits in the long run.
After
rejecting Smith's theory of profits, which related the decline of
profits to the increasing competition amongst capitalists, he supported
Wakefield's explanation.
Wakefield's views:
is briefly this.
With characteristic lucidity, he summarized
"Mr Wakefield's explanation of the fall of profits
Production is lirnited not solely by the quantity of
capital and of labour, but also by the extent of the 'field of employment'.
The field of employment for capital is two-fold: the land of
the country, and the capacity of the foreign markets to take its
manufactured commodities.
On a lirnited extent of land, only a lirnited
quantity of capital approaches this lirnit, profit falls; when the lirnit
is attained, profit is annihilated; and can only be restored through
an
extension of the field of employment, either by the acquisition of
fertile land, or by opening new markets in foreign countries, from which
food and materials can be purchased with the products of domestic
capital". (
42
)
Mill said that
11
these propositions are, in my opinion,
substantially true; and, even to the phraseology in which they are
expresse d .....
"(43)
The fear of the falling tendency of prof its is not to be dismissed
as unreal..
Mill urged that in many 'old' countries
the rate of profits
is habitually within, as it were, a hand's breadth of the minimum". <44 l
11
In the circumstances, one major airn of economic policy should be to find
out a method of avoiding the continued depression of profits.
And Mill
suggested that colonization of new countries on the technique of
Wakefield would be one of the most effective remedies.
In fact, he
argued that colonization had been "for many years one of the principal
12.
causes by which the decline of profits in England has been arrested.
It has a two-fold operation.
In
the first place, it does what a fire,
or an inundation, or a commercial crisis would have done: it carries
off a part of the increase of capital from which the reduction of
profits proceeds.
Secondly, the capital so carried off is not lost,
but is chiefly employed either in founding colonies, which become larger
exporters of cheap agricultural produce, or in extending and perliaps
improving the agriculture of older communities 11
•
(45)
From this conception of surplus capital, Mill derived other
important policy-implications:
(i)
It would justify the expenditure of public money on certain
humanitarian projects "such as the industrial regeneration of Ireland,
or a comprehensive measure of colonization or of public education",
etc.,
(46)
(ii)
It would justify expenditure of capital on emigration of
population: "If one-tenth of the labouring people of England were
transferred to the colonies, and along with them one-tenth of the
circulating capital of the country, either wages, or profits, or both,
would be greatly benefited by the diminished pressure of capital and
population upon the fertility of the land". ( 47 l
(iii) It would justify the conversion of a portion of circulating
capital into fixed capital in the form of railways, ships, canals, mines,
works of drainage and irrigation, because such measures would not only
reduce the level of employment for labour but in fact create the essential
infra-structure of the economy within which private enterprise could
function smoothly.
Thus from Wakefield's theory of profits --- which might at first
sight have been supposed to be a minor qualification to Say's Law --Mill was led to champion the economic case for colonization and to
support a wider range of economic activity for government in order to
prevent the stagnation of the economic system.
13
VI
After the publication of the first edition of the Principles
Mill retained very little interest in the economic aspects of
colonization.
This was probably because of the prevalence of general
economic prosperity in Britain for roughly two decades and a half
after 1848.
But during this time a grave constitutional crisis
.
(48)
threatened the stability of the British Empire.
It was not
unnatural that Mill should therefore be seen to be concerned more
with the constitutional problems of the Empire towards the remaining
few years of his life.
In accepting Wakefield's scheme of colonization, J.S. Mill accepted
also the principle of
self~government
for colonies.
Even apart from
1
Wakefield s influence, he might have reached the same conclusion
independently.
When, on the advice of Charles Buller and Wakefield,
Lord Durham proposed self-government for Canada as a measure to prevent
any future rebellion in that colony, he became the target of bitter
criticism from all sides.
At this time, Mill wrote three interesting
49
articles in the Westminster Review ( l in defence of Lord Durham and
his measures.
In the last of these articles, written in December 1838,
he expressed himself unequivocally in favour of Lord Durham.
"He (Lord Durham) had been thwarted, but he has not failed.
He
had shown how Canada ought to be governed; and if anything can allay
her dissensions, and again attach her to the mother country, this will.
He has at the critical moment taken the initiative of a healing policy;
that which seeks popularity, not by courting it, but by deserving it,
and conciliation, not by compromise, but by justice --- by giving to
everybody, not the half of what he asks, but the whole of what he ought
to have.
If this example had not been set at that juncture, the colony
was lost; having been set, it may be followed, and the colony may be
saved". ( 5 0l
Later in his Autobiography, Mill claimed that Lord Durham had
openly admitted to him that to this article in the Westminster Review
"might be ascribed the almost triumphal reception which he (Durham)
met with on his arrival in England". (5 ll
14
Mill gave a detailed consideration to the problem of administration
of colonies in his essays on Representative Government.
Here the
colonies of Britain were divided into two categories: (i) regions
colonized by Englishmen, such as the British possessions in America
and Australia; and (ii) regions ruled by Englishmen but predominantly
inhabited by another population, such as India. ( 52 l
For all the colonies coming in the first
was prescribed as an ideal.
c~ategory,
self--government
As a matter of fact, colonial self-
government was said to be good for two reasons: first, because these
colonies being 'composed of people of similar civilization to the ruling
country' were 'capable of, and ripe for, representative government';
secondly, because these colonial possessions involved a monetary burden
on Britain.
Hence the dissolution of the political ties were desirable.
But Mill supported the continuance of a 'slight bond of connexion', so
long as it was not disagreeable to either party.
Such a 'slight bond'
would keep open the overseas markets, increase England's prestige, and
what is more important - add to
11
the moral influence and weight in the
councils of the world, of the Power (i.e. Britain) which, of all in
existence, best understands liberty". (53 )
For the colonies coming within the second category, Mill's
constitutional prescription was different.
Here, as stated earlier,
the influence of the Scotch 'idea of progress', inherited from his
father, was easily discernible.
As the 'barbarous' and 'semi-barbarous'
people like the Indians were not fit to govern themselves, they ought
to be governed by a civilized country like Britain.
Mill's own ideal
for Indian administration was the appointment by the Crown of a
delegated body from Britain of a 'comparatively permanent character•
for the purpose of government.
VII
CONCLUSION
The following aspects of J.S. Mill's views of colonies and colonization
should be noted:
First, he was not opposed to the continuance of British rule in India and
also in (what he regarded as) other "backward regions" of the world.
15
As has been stated earlier, it is very difficult to explain this
aspect of his views of colonies and in particular colonial
administration in terms of his broad liberal philosophy as an economist.
There cannot be any denying that he was one of the most forceful
exponents of the doctrine of economic freedom and individualism.
The only suitable explanation might be offered in terms of J.S. Mill's
passionate belief in a utilitarian philosophy, which he learnt from
both James Mill and Jeremy Bentham.
This brand of utilitarianism
could never satisfactorily resolve the contradictions between the
principle of liberty and the principle of authority.
The former
principle was extolled by J.S. Mill as a means to achieve the objective
of the maximum happiness of the maximum nmnber in a population; while
he viewed the latter principle as a moral responsibility of the more
civilized nations to educate and civilize the backward peoples.
Second, J.S. Mill was a consistent and firm believer in the benefits
of free trade.
Therefore he was opposed to the old Colonial System,
with its restrictions and monopoly practices on trade between the
mother country and her colonies.
As is wellknown, under the influence
of the mercantilist philosophy, the Colonial System, comprising a
series of restrictions on trade had been slowly built up over two
centuries before the publication of the Wealth of Nations (1776).
All the Classical Economists, including J.S. Mill, opposed the utility
of colonies as providing far the mother country a secure market, and
advocated free trade as the best means of improving world trade through
an international division of labour.
Third, J.S. Mill became a convert to the Wakefield System of
colonization.
Indeed, in the comparatively early stages of the
controversy between R.J. Wilmot-Horton and E.G. Wakefield on the
rationale and method of colonization, J.S. Mill supported the latter
in an unequivoC:al 1!13IlI'1eL.
In a letter to John Sterling, dated 20th -
22nd October, 1831, he wrote:
prosperously.
11
The Colonization scheme is going on
They have formed a plan for a new colony, to be settled
on their principles on the coast of Southern Australia ...•.
Wakefield
now moves openly in the thing, though it is not declared publicly that
he was the originator of it; but there is no reason now for keeping
16
his connection with it altogether a secret, as he has made himself very
advantageously known to the public by, really, a most remarkable book
on the punishment of death, founded on the observations he made while
in Newgate.
You are aware that our old enemy, Wilmot Horton, has gone
to Ceylon as governor, so that he no longer stands in the way of a
rational scheme of colonization."
4
(S )
Mill continued to support the Wakefield System almost up to the
end of his life.
In a letter, dated 8th May, 1869, written to one
A.M. Francis, of Brisbane, Queensland, he expressed himself totally in
favour of the Wakefield System of colonization by selling colonial land
(55)
to private capitalists.
Now, by recommending c_clo11ization as a means of 'extension of mark.ets' ,
Wakefield hinted at a serious flaw in Say•·s. Law and pointed out the
possibility of a general glut of capital because of a decline in
domestic demand.
He went a step further in describing colonization
as a means also of "the enlargement of the field for employing capital".
"This end of colonization 11 , he argued, nis distinct from that enlarge-
ment of the field for employing capital, which would come by the
creation of extensive markets for the purchase of cheap corn with the
produce of domestic industry." C55 l
In his Principles, J.S. Mill had said that Wakefield's theory of
surplus capital was not opposed to that of Ricardo:
"The error which
seems to me imputable to Mr. Wakefield is that of supposing his
doctrines to be in contradiction to the principles of the best school
of preceding political economists, instead of being, as they really
are, corollaries which, perhaps, would not always have been admitted
by those political economists themselves." (S?)
The weight of contemporary opinion is clearly against J.S. Mill's
interpretation of Wakefield's economic theory.
Lord Robbins, for
example, has forcefully argued that Wakefield's theory on the falling
tendency of profits gave us an early version of the modern stagnation
theory and that it involved a principle which was altogether alien
to Ricardo's.
(SB)
17
The more carefully Wakefield is read the less it would be possible
to defend J.S. Mill's position that the Wakefield theory could be
looked upon as an extension of Ricardian economics.
Wakefield differed
basically from Ricardo in his approach to some macroeconomic problems.
By challenging the validity of Say's Law, Wakefield violated a
fundamental premise of the Ricardian system.
It would be also
impossible to reconcile Wakefield's views of savings and investment
with those of the Classical Economists.
Ricardo envisaged that the
emergence of the stationary state would put a stop to any further
accumulation.
But wakefield did not accept this view.
On the contrary,
he was fearful that savings would continue to be made in the stationary
state.
In his edition of the Wealth of Nations, he expressed this
fear of savings going to waste in the stationary state:
"When capital
is superabundant, then that portion of it which cannot be employed
with profit will either be employed without profit, or with loss, or
be consumed, or sent abroad, and might be used for providing a
metallic currency without in the least diminishing the wealth of the
nation." (S 9 )
This idea of savings going to waste was essentially un-Ricardian.
Ricardo made savings fully dependent upon the rate of profit, and held
that in the absence of the profit-incentive, savings would vanish
altogether.
But Wakefield made savings partly independent of the
influence of profit so that in his view, the propensity to save could
continue to be positive even at zero or nearly zero profit.
By giving almost unqualified support to Wakefield's economic
argrnnents of colonization, J.S. Mill moved away--without of course
recognition of the full implications--frorn some of the fundamental
postulates of Classical Economics, and indirectly became responsible
for its eventual decline.
FOOTNOTES
1.
Forbes, Duncan, 'James Mill and India', The Cambridge Journal,
Vol. 5, 1951-52, pp. 31-32.
2.
See Bain, A., James Mill - a biography, p. 348.
3.
J.S. Mill's article on 1 The Contest in America' in
Fraser's Magazine, February 1862: reprinted in Dissertations
and Discussions, 1867, Vol. III, pp. 204-5.
4.
Stokes, Eric, The English Utilitarians and India, 1959,
preface, viii.
5.
See J.S. Mill's review article 'Quarterly Review - Political
Economy' in the Westminster Review, Vol. III, January 1825,
p.224.
6.
For J.S. Mill's views on Say's Law of Markets, see Bela A.
Balassa's article 'John Stuart Mill and the Law of Markets'
in the Quarterly Journal of Economics (1959), pp 263-274.
7.
See the Morning Chronicle, 5th September 1823, p.5.
8.
See the Westminster Review, July 1824, Vol. II, Art. II pp.27-48.
9.
Essays on Some Unsettled Questions, p.48.
10.
Ibid, p.48.
11.
Ibid, p.49.
12.
Ibid, p.73.
13.
Ibid, p.68.
14.
Ibid, p.55.
15.
see Ibid, p.69.
16.
Ibid, p.70.
17.
Ibid, p.70.
18.
Ibid, p.72.
19.
Ibid, p.71.
20.
Ibid, p.73.
21.
Principles (Ashley's edition), p.487.
22.
There is a rumour that Mill, while a boy of seventeen, was
arrested by the London police for allegedly participating in
the distribution of Place's 'diabolical handbills' in crowded
public places. But quite independent of this rumour, it is
on record that he wrote at this time three articles in 'Wooler's
illicit weekly' The Black Dwarf (27th November 1823, 10th December
1823 and 7th January 1824) in defence of the neo-Malthusian
principle of artificial birth-control.
23.
The Examiner, 27th February 1831, p.131.
24.
Ibid, p.131.
25.
Also see Mill's letter in the Morning Chronicle of 23rd October
1834, p.3, on 1 New Australian Colony'. Here, again, he made a
restatement of the Wakefield System.
26.
The Examiner, July 6, 1834, p.419.
27.
Also see the True Sun, 22nd February 1837, p.3, where in an
unheaded article Mill strongly supported Wakefield's plan of
using the land-fund as an emigration-fund.
28.
The Examiner, 20th July 1834, p.454.
29.
Ibid, 20th July 1834, p.454.
30.
See, for instance, W.L. Courtney's Life of J.S. Mill, (London,
1889) , for a short but interesting analysis of various
ambiguities in Mill's writings on Political Economy, pp.104-109.
31.
See M. St. John Packe, The Life of John Stuart Mill, London,
1954, pp.296-300, for a good account of these articles.
32.
See Mill's article on the subject of Emigration from Ireland
in the Morning Chronicle of 7th April 1847, p.4.
33.
See the Principles (Ashley's edition), p.329.
34.
Ibid, pp.331-332.
35.
Ibid, pp.335-336.
36.
Ibid, pp.330-331.
37.
Ibid, p. 382.
38.
see Ibid, pp.150-153.
39.
See Ibid, pp.120-121.
40.
Ibid, p.121. It is, however, really doubtful whether Wakefield
would have himself agreed with Mill's interpretation of his
system.
One has to remember that Herman Merivale, who was
extremely balanced as a critic, thought that the main weakness
of the Wakefield System lay in its attribution of an exaggerated
importance to large-scale farming.
41.
See Hutchison,
pp.351-353.
42.
Principles (Ashley's edition), p.727.
43.
Ibid, p.727.
44.
Ibid, p.731.
45.
Ibid, pp.738-739.
46.
Ibid, p.741.
47.
Ibid, p.742.
48.
Westminster Review, Vols. XXVIII, January 1838; XXIX, August
1838; and XXXII, December 1838.
49.
Reference to the fear of secession by New Zealand from the
British Empire.
50.
Mill's article on 'Lord Durham 1 s Return' in the Westminster
Review, Vol. XXXII, Art. VIII, pp.259-260.
51.
Mill, J.S. Autobiography, London, 1873, p.216.
52.
Mill, J.S. Considerations on Representative Government, London,
1865, p.131.
53.
Ibid, p.133. This explains why Mill did not like the idea of
separation between England and New Zealand, see his letter to
Judge Chapman in New Zealand, dated 14th January 1870, published
in Letters of J.S. Mill, edited by H.S.R. Elliot, Vol. II, p.237.
54.
Elliott, H.S.R. (edited), The Letters of John Stuart Mill, London,
1910, Vol. I, p.19.
55.·
Ibid, Vol. II, p.201.
56.
England and America, Vol. Ii, p.107.
57.
Principles (Ashley's edition), p.728.
58.
See Robbins, L. Robert Torrens and the Evolution of Classical
Economics, 1958, p.248. T.W. Hutchison supported Robbins in the
Economic History Review, Second Series, Vol. XI, No.2, 1958,
pp.318-9.
59.
Wakefield's edition of the Wealth of Nations, Note on Chapter II,
Book II, Vol. II, p.342.
T.W., A Review of Economic Doctrines (1953),