CHAPTER 4: MILL’S IDEA
Mill’s Paragraph
It always seemed obvious to me that growth is free. Survival costs investment in the next generation, but growth costs nothing more. It seemed to me that innovation is the human specialty, that we pay its cost every day as the cost of being human, and that growth happens when genius or circumstance somehow gives it traction. I spent most of my life assuming that all economists, but not politicians, thought the same. I since learned that economists, following Solow, teach something close but
different. So I guessed that J had hit on something new.
] hadn’t. We read economic history to learn that our ideas are seldom original. Thomas Malthus, contradicting his friend and rival David Ricardo, wrote something like my or Mill’s free growth theory in 1820. Chapter 7 of his Principles! says this in
several ways. One example is
“When we have attained...increased and steady profits, we may then begin to accumulate, and our accumulation will then be effectual. But if, instead of saving from increased profits, we save from diminished expenditure; if, at the very time that supply of commodities compared with the demand for them, clearly admonishes us that the proportion of capital to revenue is already too great, we go on saving to add still further of our capital, all general principles concur in showing that we must of necessity be aggravating instead of alleviating our distresses.”
John Rae renewed this theme in 1834. Book 1, Chapter 10 of his New Principles?
includes
“If an improvement, for instance, in the art of baking bread were effected, by which, with half the labor and fuel, equally good bread could be produced, it would not benefit the bakers exclusively, but would be felt equally over the whole society. The bakers would have a small additional profit, the whole society would have bread for the product of somewhat less labor, and all who
1 Principles of Political Economy Considered with a View to their Practical Applications 2 Statement of some New Principles on the Subject of Political Economy
Chapter 4 Mill’s Idea 1/11/16 1
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