ABSTRACT
Introduction Samuelson’s celebrated “Canonical Classical Model” (Samuelson, 1978) formalized the theories of growth and distribution shared by Smith, Ricardo, Malthus and J.S. Mill. To this end, their (more or less obvious) differences have been left aside. In particular, the fact that Mill’s stationary state is a happy, not a miserable, state for workers has received no attention. A few years later, S. Hollander (1984a, 1984b) presented a slightly different formalization, which considered some differences between the Millian and the Ricardian stationary states and rendered some justice to Mill’s originality and autonomy. Yet some further steps are required for a fuller formal account of Mill’s theory of the “probable future of the labouring classes”. Hollander’s insistence on the case in which “workers deliberately constrain the population growth rate to prevent the wage falling below some designed ‘conventional’ level” (Hollander, 1984a, p. 210) did less than full justice to Mill. First, this argument involves an obvious logical error that can hardly be assigned to Mill. In fact, Mill considered very carefully the individual incentives for reduced fertility in a progressive society. In this respect his theory of wages cannot do without a wider vision of the moral, intellectual and institutional evolution of society, in which a higher life standard was the cause, no less than the effect, of higher wages. Second, according to Mill, real wages had a tendency to rise rather than stay constant.2 Since the existing formalizations exert a tremendous power of attraction towards the orbit of Ricardo’s theory, a more explicit “Millian” alternative may be of some interest. This paper presents such an alternative mathematical formulation. Departing from Hollander’s model, we base our argument on a distinction between real
wages and what Mill calls the “habitual standard of comfortable living”. The latter involves a series of moral and intellectual faculties, and not a mere flow of consumption commodities. Moreover, at a given real wage Mill argued a tradeoff between habits of fertility and habits of comfort: the lower the level of fertility, the higher the living standard that can be passed on to the next generation. This, in turn, had a positive effect on wages in later periods; and, insofar as higher wages were not spent on the “coarser pleasures”, a further stimulus to more refined lives was provided. It will be argued that the changes in habits, together with scientific, technological and institutional progress, are the main dynamic force leading to Mill’s stationary state. The paper is organized as follows. First, we present some textual evidence of the contrast between Mill’s description of “the probable future of the labouring classes” in a stationary state and Samuelson’s canon. The remainder of the paper proposes a formalization of Mill’s theory of growth and distribution that is consistent with that description. The trade-off between population growth and the standard of comfort at given wages is presented next, and the Millian version of the classical theory of accumulation, wages and profits is formalized in the following two. We shall then argue that the theory presented by Mill is open to two contrasting long-run social developments, which we will call the “Malthusian” and the “Millian” paths. The specific aspects concerning technical progress are singled out in the penultimate section, followed by some concluding remarks.
