Originally published in Flourishing Mar Apr 2013
James Mill was born in Angus, Scotland on April 6, 1773. He is probably best known as the father of John Stuart Mill, one of the founders of Classical Economics and of Enlightenment Liberalism. His own father had been a cobbler.
James Mill credited his mother for his education and later success. She had resolved that her son would receive a first-class education, and sent him first to the Montrose Academy, and then to the University of Edinburgh.
James Mill is little known outside the world of economic historians, but, his contribution to economics was profound. It was James Mill, who first formulated what later came to be known as Say’s Law, after Jean-Baptiste Say (1767-1832).
Say’s Law is really nothing more than common sense, which means that the modern Keynesian economist must misrepresent and deride it. What Say’s Law says is that before consumption, there must be production. But, that has been interpreted as supply creates its own demand, which seems true, but if one takes the phrase literally, it’s easy to poke fun, e.g. If I produce and bring to market a load of rotten tomatoes, I may not find a buyer. My supply failed to create demand. Ha,ha, ha, the joke’s on me!
But, that’s not what either Say or Mill meant. Mill, in particular, was careful to say that production, and only production, can create real purchasing power. The Keynesians claim that’s what they do when the Federal Reserve artificially increases demand by increasing the money supply. But, what they actually do is reduce the real purchasing power of any given quantity of money, a net loss for consumers. You know this is true, because you’ve been going to the gas pump and grocery store.
It’s a shame, I think, that James Mill hasn’t been given more credit for his contributions to economics. In his own time, though, he was acclaimed for his British History of India, published in 1818. He co-founded and contributed to a periodical called The Philanthropist. He was a long-time friend and ally of Jeremy Bentham, who was a strong advocate of individual freedom, equal rights for women, and the abolition of slavery. Through his connection with Bentham, and his own reputation as a scholar, Mill contributed to the Edinburgh Review and other important publications of that time. In addition to his contributions to history and economics, Mill was also well-respected for his Analysis of the Phenomena of the Human Mind, published in 1829.
James Mill died in Kensington, London, England on June 23, 1836. mh