Nassau William Senior September 26, 1790 - June 4, 1864
Scientific Economics • The first holder of the Drummond Chair at Oxford • Chief Works • An Outline of the Science of Political Economy • "Report on the State of Agriculture", 1821, Quarterly Review • "Some Ambiguous Terms Used in Political Economy", 1826, in Whateley, editor, Elements of Logic, Encyclopedia Metropolitana, • Three Lectures on the Transmission of Precious Metals from Country to Country and the Mercantile Theory of Wealth, 1827. • Two Lectures on Population, 1829 . • Three Lectures on the Rate of Wages, 1830. • On the Cost of Obtaining Money and on some effects of private and government paper money, 1830.
Scientific Economics • An Outline of the Science of Political Economy • On the Cost of Obtaining Money and on some effects of private and government paper money, 1830. • Letter on a Legal Provision for the Irish Poor. 1831. • An Outline of the Science of Political Economy, 1836. • Statement of the Provision for the Poor in America and Europe. 1835. • An Outline of the Science of Political Economy, 1836. • Letters on the Factory Act, 1837. • Three Lectures on the Value of Money 1840. • Lecture on the Production of Wealth, 1847. • "J.S. Mill on Political Economy", 1848, Edinburgh Review • Four Introductory Lectures on Political Economy, 1852. • Essays on Fiction, 1864. • Historical and Philosophical Essays, 1865.
Scientific Economics • He argues that political economy is: • the science which treats of the nature, the production, and the distribution of wealth • he was one of the initiators of Supply-and-Demand • - together with Longfield and Say • - with utility-based demand and • cost-of-production-based supply • and thus is an important Anti-Classical
Nassau William Senior (cont) • BUT ABOVE ALL: • HE IS AMONG THE FIRST TO TRY TO GET THE POLITICAL OUT OF ECONOMY • For instance, in his Three Lectures on the Rate of Wages, 1830, he addresses some of the turbulence affecting London by disgruntled workers
Nassau William Senior (cont) • “The principal means by which-the fund for the maintenance of labourers can be increased, is by increasing the productiveness of labour. And this may be done, --” • “First, By allowing every man to exert himself in the way which, from experience, he finds most beneficial; by freeing industry from the mass of restrictions, prohibitions, and protecting duties, with which the Legislature, sometimes in well-meaning. ignorance, sometimes in pity, and sometimes in national jealousy, has laboured to crush or misdirect her efforts; and,”
Nassau William Senior (cont) • “Secondly, By putting an end to that unhappy system which, in the southern counties, has dissociated labour from subsistence--has madd wades not a matter of contract between the master and the workman, but a right in the one, and a tax on the other; and, by removing the motives for exertion, has rendered, as far as it has been possible, the labourer unworthy of his hire.”
Nassau William Senior (cont) • “The only effectual and permanent means of preventing the undue increase of the number to be maintained, is to raise the moral and intellectual character of the labouring population; to improve, or, I fear we must say, to create habits of prudence, of self-respect, and of self-restraint; to equalize, as by nature they are equal, the wages of the single and the married, and no longer to make a family the passport to allowance. But these are necessarily gradual measures -- they are preventive, not remedial. The only immediate remedy for an actual excess in one class of the population, is the ancient and approved one, coloniam deducere.” (this means that when a law was passed for founding a colony, persons were appointed to superintend its formation)
Nassau William Senior (cont) • In the next lecture he deals with how to estimate appropriate wage level. He argues there had been three definition of high/low wages: • “First. Wages have been .termed high or low, according to the amount of money earned by the labourer within a given period, without any reference to the commodities which that money would purchase; as when we say that wages have risen since the reign of Henry VII, because the labourer now receives 1 s. 6d. or 2.s. a day, and then received only 4½d.”
Nassau William Senior (cont) • “Secondly. They have been termed high or low, according to the quantity and quality of the commodities obtained by the labourer, without any reference to his receipts in money; as when we say that wages have fallen since the reign of Henry VII, because the labourer then earned two pecks of wheat a day, and now earns only one.”
Nassau William Senior (cont) • “Thirdly. They have been termed high or low, according to the share or proportion which the labourer receives of the produce of his own labour, without any reference to the total amount of that produce.”
Nassau William Senior (cont) • “The first nomenclature, that which measures wages simply by their amount in money, is the popular one. The second, that which considers wages simply with reference to the quantity and quality of the commodities received by the labourer, or to speak more correctly, purchaseable with his money wages, was that generally adopted by Adam Smith. The third, that which considers wages as high or low, simply with reference to the labourer's share or proportion of what he produces, was introduced by Mr. Ricardo, and has been continued by many of his followers.”
Nassau William Senior (cont) • THE FOUR POSTULATES: • That every man desires to obtain wealth with as little sacrifice as possible • That the population of the world, or in other words, the number of persons inhabiting it, is limited only by a fear of a deficiency of those articles of wealth which the habits of the individuals of each class of its inhabitants lead them to require
THE FOUR POSTULATES:(cont) • That the powers of labour, and of other instruments which produce wealth, may be indefinitely increased by using their products as the means of further production. • That, agricultural skill remaining the same, additional labour employed on the land within a given district produces in general a less proportionate return….
MONOPOLY • FOUR DEGREES OF MONOPOLY • Monopolist does not have exclusive producing powers but has exclusive facilities (e.g. patents) • Monopolist is the only producer but production is limited (e.g. wine in France) • Monopolist is the only producer and production cost decrease as production increases (books) • Monopolist is not only producer but increased production decreases the power (agriculture)
John S. Mill • The particulars of Mill's life are laid out in his famous Autobiography (1873) • In a nutshell: son of the Ricardian economist James Mill, trained from an early age to be a genius, • "lent" by his father to utilitarian philosopher Jeremy Bentham, • became a utilitarian, followed his father into the British East India Company, • broke with Bentham, had an existentialist crisis, • turned to the doctrines of Saint-Simon and Comte, • met Harriet Taylor and waited twenty years for her husband to die • became a Whig politician, etc., etc.
Difficult Childhood • Father James Mill, disciple of Jeremy Bentham MADE HIM a CHILD PRODIGY • 3 yrs read Greek • 8 yrs had read the Greeks in their own language
Childhood • 8-13 read Hume and other philosophers and was taught mathematics by his father • At 13 learn Latin and became teacher to his siblings • At twenty suffered mental depression
Works • A System of Logic (1843) • Principles of Political Economy (1848) • On Liberty (1859) • Considerations of Representative Government (1861) • Utilitarianism (1863) • Auguste Comte and Positivism (1865) • The Subjection of Women (1869)
The Subjection of Women (1869) • There is much debate whether he authored this or he was a ghost writer for Harriet Taylor Mill • He (or she) addresses such issues as wage disparity. • While later on we will deal more with this topic, suffice it to say here that he (or she or they) state(s)
The Subjection of Women (1869) • When, however, we ask why the existence of one-half the species should be merely ancillary to that of the other – why each woman should be a mere appendage to a man, allowed to have no interests of her own, that there may be nothing to compete in her mind with his interests and his pleasure, the only reason that can be given is, that men like it.
Main Topics • The problem of Method in the Social Sciences • The Clarification of the Principle of Utility (BENTHAM) • Individual Freedom • Theory of Representative Government
The Clarification of the Principle of Utility • It is clear that for Mill, the principle of utility was very important. He states in his autobiography: • When I laid down the last volume of Traité,* I had become a different being….I had now opinions; a creed, a doctrine, a philosophy; in one of the best senses of the word, a religion…..And I had a grand conception laid before me of changes to be effected in the condition of mankind through that doctrine….[T]he vista of improvement which [Bentham] did open was sufficiently large and brilliant to light up my life, as well as to give definite shape to my aspirations. (Mill, ch. 3) • * Referring to: Jeremy Bentham’s work titled Traité de Législation Civile et Pénal
Depression • In order to deal with his Depression he read romantic novels • He saw the criticism of Dickens and Ruskin (and others) that Political Economy was -the Science of Industrialism- to blame for fostering the social erosion (human compassion) • J.S. Mill argued against them
MILL AND COMTE • Comte argued for induction or empiricism • Mill was favorable towards but remained convinced that the deduction of Ricardian Economics was still needed
Economic Concepts • Production -fairly similar to Ricardo (hence he argued for the Say’s Law) • Economic Growth - Agreed with the concept of Diminishing Returns BUT saw the move from a progressive to a static state not a necessary evil • He Argued for Income Distribution
Theoretical Contributions • Discussed the Equilibrium Price in terms of Supply and Demand • Joint Supply • He introduced the construction of the Price of Internationally traded goods: • THE THEORY OF RECIPROCAL DEMAND
Reciprocal Demand OCA (PX/PY)1 Y OCB At (PX/PY)1, country A wishes to export X1 units, but country B is only interested in importing X2 units. That is, there is an excess supply of good X. X2 X1 X
Moving Towards Equilibrium OCA (PX/PY)1 Y OCB X
Wealth redistribution • Redistribution of Wealth NOT Income • “Reap the Fruits of their own Industry” (income) • BUT accumulation of Wealth as an end to itself good
Role of Government • NECESSARY AND OPTIONAL • NECESSARY: • Power to Tax • Coin Money • Establish Uniform System of Weights and Measurements • Protection against Force and Fraud
Necessary Government Role • Administration of Justice and enforcement of Contracts • Establishment and Protection of Property Rights • Protection of Minors and Mental Incompetents
Necessary • Provision of certain Public Goods and Services: • roads • canals • dams • bridges • harbors • lighthouses • sanitation
Optional Role of Government • Interference of the Government into the market could be required by some great good. • Thus, • Consumer Protection • EPA • FDA • Public utility regulation • etc.
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