THE REVISIONIST VIEW OF THE LAWS OF PRODUCTION AND DISTRIBUTION
Perhaps the most significant of Mill's modifications in the orthodox classical tradition was his re-interpretation of the laws governing economic activity generally and of income distribution most particularly.
At an abstract level Mill shared many of the standard conclusions about the likely redistributional effects of economic growth. He agreed with the classical mainstream that a period of expansion would generate tendencies towards rising rents, falling profits, and rising money (though not real) wages. But he also argued that there might be counteracting forces to relieve the cramp on the working class.Mill proceeded by distinguishing between two types of economic laws. Those of the first type governed production; they were immutable, fixed by nature and technology. Men could adjust to these laws, but were powerless to amend them. The laws governing the distribution of the social product, however, fell into a different category. In this case the outcome was socially determined and subject to human control.10 In support of this proposition Mill examined at length the different sets of distribution arrangements associated with various types of social organization. His point was not simply that a variety of distributional systems had existed. More important was his assertion that the prevailing distribution of income could be altered.
Mill perceived clearly that the Malthusian population argument - which had been interpreted to mean that the working class could never escape from poverty - provided the basic prop to orthodox classical thinking about the shape of income distribution. He accepted the conclusion that subsistence wages at a meagre level might be sustained if Malthus's gloomiest prognosis was borne out in fact. But this result was by no means the only one possible.
Malthus, of course, had recognized that other outcomes were conceivable, though he placed no confidence in the possibility that the working class would adopt prudential restraint. Mill took quite the opposite position, arguing that the behaviour of the working class was more readily changeable than earlier classicists had allowed and that population growth could indeed be constrained.
Widespread and intensive education might be required, but he had no doubt that it would be effective in raising the tastes and aspirations and altering the behaviour of the working class. This confidence, he insisted, was more than a leap of blind faith: it was supported by observable developments. The masses of the population were emancipating themselves from a traditionally dependent status and 'a spontaneous education was going on in the minds of the multitude'.11 The pace of these changes was quickened by the institutes for lectures and discussion and by the formation of trade unions. This led him to conclude:It appears to me impossible but that the increase of intelligence, of education, and of love of independence among the working classes, must be attended with the corresponding growth of the good sense which manifests itself in provident habits of conduct, and that population, therefore, will bear a gradually diminishing ratio to capital and employment.12
With this elimination of the overtones of inevitability attached to earlier classical interpretations of economic laws, the Malthusian spectre was banished. Brighter prospects for the improvement and perfect ability of mankind could now be seriously entertained. This outlook also implied that a re-definition of one of the basic concepts of classicism was in order. No longer could the net product of society be identified with the profit and rent shares of income; saving to facilitate capital accumulation might also arise from the wage share of income.13
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