3-6-notes.md

Political Economy #Refining Classic Liberalism: J.S. Mill and Managing Inequality

• current events in Ukraine
• no reading for Tuesday
• plan for today
  • appearance of double-sided capitalism (+productivity, -inequality)
  • regular, fairly cyclical crises causing concern

##Mill

• writes about contexts outside of Political Economy too
• these advances from capitalism have not made life better for the majority of people

##Late 19th Century Europe: A Backlash Against Capitalism

• Intellectuals against Capitalism
  • Marx and Engels most famous
  • Radical Democrats
  • Anarchists
  • French Libertarian Socialists
• Trade Unions and Workers Capitalism
  • first skilled unions, then unskilled trade unions
  • began coordinating locally, then coordinated nationally
  • emergence of factories brings many workers together
    • early 19th century - just 300-400 people at most
    • later, 10,000 - 15,000
  • workers gained collective bargaining rights
    • bargaining power diminished when alone, collective more powerful
  • labor unrest in 1860s and 1870s in Europe and the US
    • peaked in Britain too
    • Paris Commune (1871)
  • birth of political parties (labor party forms)
• Government Social Reform
  • Britain passes factory acts, limiting hours worked for women and children (to 10hrs)
  • 1880 - Germany first nationwide health care scheme
  • unemployment insurance after WW1
  • Britain uses income tax to pay for assistance to unemployed workers and national disability insurance

###International Working Man's Association (1864-1876)

• tried to coordinate a trans-national response to the negatives of capitalism
• disorganized, so didn't last very long

###Company Towns

• no monopoly on services, but on many goods
• common in isolated areas (not urban)
• sense of exploitation from companies

###Paris Commune (1871)

• Germany beats France, new elections
• 2+ months of rule in the Paris Commune
  • government killed 7,000+ people to quell the unrest

##John Stuart Mill (1806-1873)

• heavy education (wrote survey at age 13)
  • Greek, Latin, Hobbs, and more all before 13
• mental breakdown in 20s
• worked for East India Company
• University Professor
• took position in Parliament
• Mill does not believe in laissez faire fully

###Mill: Foundational Concepts

• distinction between Abstract Theory and Practical Application
  • abstract truths vs. application
  • can't apply these principles wholesale to every society
  • always differences between theory and application per each society
• distinction between Production and Distribution
  • political economy deals with both of these questions, but shouldn't be merged
  • one set of goals for production, another for distribution
  • efficiency for production, socially just for distribution
  • most think in terms of one solution, he sees two
  • production has one answer, distribution has many
• distinction between Necessary and Advisory/Optional Government
  • governments are both!
    • authoritative - no murder, rape, theft
    • nudge economics - health advisories, but not laws

###Mill: A Liberal at Heart

• sanctity of the individual
  • space protected for individual should be large
  • no government can force thoughts or actions (unless harm to others)
  • people need to learn on their own, not told what to do by government
• the importance of individual genius and experimentation
  • space to experiment because society advanced by geniuses
  • maximum ability to develop
  • limiting action is starving individual of their ability to develop
• Laissez-Faire as a general principle
  • lost the nuance from Smith's time
  • became overreaching
  • six reasons for why it's important
    • absolute power corrupts absolutely
    • production planning should be led to those who have a stake in them; government isn't inherently bad, but less efficient than an individual

###Mill: Problems with Liberalism

• wage inequality
  • wages don't work like Adam Smith hoped
  • why does the most burdensome work earn the least?
  • why do occupations turn into the caste system?
  • "the really exhausting and repulsive labors" paid the worst because the workers have no choice
  • excess labor supply in many skilled labors
  • only in professions with high barrier to entry
• Caste-like nature of employment
• Consumer doesn't always know best
• Education of the broad masses
  • promoting education of the broad masses because people don't know what they want
  • break down caste-system

###Mill: Precusor to Welfare State?

• inheritance tax
  • preserves incentives and breaks caste system
• state guarantee of minimum level of subsistence
  • poor relief (today: social welfare / unemployment insurance)
  • present in Europe, but was private charity
  • state better positioned than individual charities
  • state cannot judge morality, just flat fee to everyone
• legalization of unions
  • Mill: perfectly fine, should be legalized
  • not a hindrance, but a necessary instrument to enable sellers of labor to care for their own interests
• education of laboring classes