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Jevons's Applications of Utilitarian Theory to Economic Policy*

Published online by Cambridge University Press:  26 January 2009

Sandra J. Peart
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Extract

The precise nature of W. S. Jevons's utilitarianism as a guiding rule for economic policy has yet to be investigated, and that will be the first issue treated in this paper. While J. A. Schumpeter, for instance, asserted that ‘some of the most prominent exponents of marginal utility’ (including Jevons), were ‘convinced utilitarians’, he did not investigate the further implications for Jevons's policy analysis.

Type
Research Article
Information
Utilitas , Volume 2 , Issue 2 , November 1990 , pp. 281 - 306
Copyright
Copyright © Cambridge University Press 1990

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Footnotes

*

I would like to thank Professors S. Hollander of the University of Toronto, and Craig Heinicke at the College of William and Mary, members of the History of Economic Thought Workshop at the University of Toronto, participants in the History of Economics Society 1989 annual meetings, and an anonymous referee for helpful comments at earlier stages of this research, as well as the Social Sciences and Humanities Research Council of Canada for financial support.

References

1 History of Economic Analysis, New York, 1954, p. 1056Google Scholar; cf. p. 408. R. D. C. Black has noted that Jevons's utilitarianism has been neglected. He argues that while the greatest happiness principle—a ‘social principle’—was not important to the Theory of Political Economy (henceforth TPE), the ‘principle of utility’, or theory of pleasure and pain, was integral to that work. Cf. ‘Jevons, Bentham and DeMorgan’, Economica, xxxix (1972), 125–7Google Scholar, and ‘William Stanley Jevons’, The New Palgrave, ed. Eatwell, J., Milgate, M., and Newman, P., 3 vols., London, 1987, ii. 1012–13Google Scholar. J. Spengler argues, without elaboration, that Jevons's examination of the role of the state evinced empiricism and utilitarianism. See ‘The Marginal Revolution and Concern with Economic Growth’, History of Political Economy, iv (1972), 480–1Google Scholar. But in ‘Jevons and his Precursors’, Econometrica, xix (1951), 233–4Google Scholar, R. Robertson suggested that the TPE provides evidence that Jevons ‘subtly rejected’ Benthamite utilitarianism. In T. W. Hutchison's discussion of Jevons on policy, there is no mention of utilitarianism (On Revolutions and Progress in Economic Knowledge (henceforth On Revolutions), Cambridge, 1978, pp. 96–102).Google Scholar

2 On Revolutions, pp. 62, 97, 92–3Google Scholar. M. Blaug has argued that there was continuity between neoclassical and classical economic policy analysis, marginal utility theory being ‘largely irrelevant’ to economic policy. See ‘Was There a Marginal Revolution?’, History of Political Economy, iv (1972), 269, 279CrossRefGoogle Scholar. I agree that there was continuity; but, as far as concerns Jevons and Mill, this must be explained in terms of a common interpretation of the utilitarian principle.

3 Elsewhere Hutchison writes that Jevons was ‘fundamentally and philosophically’ anti-dogmatic, having abandoned his early ‘thoroughgoing free-market view’ (‘The Politics and Philosophy in Jevons's Political Economy’, Manchester School, 1 (1982), 376Google Scholar). Jevons's policy analysis itself is said to have undergone a transition between 1857 and 1882. This matter I take up below. E. Paul also concludes that Jevons abandoned laissez-faire doctrine, but recognizes that he was close to Mill methodologically. See ‘Jevons: Economic Revolutionary, Political Utilitarian’, Journal of the History of Ideas, xl (1979), 278.Google Scholar

4 This position Hutchison subsequently modified by a concession that Mill's methodological shift occurred in the last eight years of his life (rather than the five years posited in his book), and that relativism does not figure very (instead of ‘at all’) strongly (‘On JSM's Defence of Ricardian Economies’, Open Letter to Hollander, S., Birmingham, 1981, p. 3).Google Scholar

5 An Introduction to Political Economy, Toronto, 1959, pp. 302, 303Google Scholar. Black, too, suggests that there was a trend in social and economic policy making ‘from a more individualistic to a more collectivist approach… with public opinion coming to question the established Victorian values of self-help and independence’ (‘Transitions in Political Economy’, Manchester Special Lectures (unpublished typescript), 1982, pp. 7, 13).Google Scholar

6 I agree with Hutchison's evaluation concerning Jevons's method, and policy goals. But I add to his analysis by demonstrating Jevons's utilitarianism and its near identity with that of Mill. Jevons emerges from my examination as more conservative and less willing to call for intervention than J. S. Mill. This supports Hutchison's argument that Jevons was ‘cautious’, but refutes his position that it was Jevons who ended the ‘sweeping’ adherence to laissez-faire.

7 For convenience, references to works published in Methods of Social Reform (MSR), Investigations in Currency and Finance (ICF), as well as The Principles of Economics (PE), are referred to by the volume in which the piece was published (MSR, ICF, or PE), followed by the original date of publication.

8 Elsewhere Jevons argued that fenced machinery might ‘palpably’ prevent industrial accidents; yet the observed outcome was complicated by possible altered behaviour patterns, a moral hazard problem (SRL, p. 27).Google Scholar

9 It is a defect of his argument, that Jevons did not raise the issue of compensation. To my knowledge the only mention of compensation occurs in A Serious Fall (1863)Google Scholar, where he argued that since the government never decreed gold as a ‘real standard of value’, it was not obliged to compensate those who lost following an inflation (ICF, pp. 94–5).Google Scholar

10 Jevons insisted in TPE that interpersonal comparisons of utility were unnecessary for his theory (p. 14). In policy analysis, comparisons were called for, although Jevons now enlarged the notion of ‘utility’ to encompass much more than ‘the lowest rank of feeling’. He never came up with a quantitative means to measure this ‘utility’.

11 See ‘John Stuart Mill's Philosophy Tested, iv. Utilitarianism’, Contemporary Review, iv (1879), 533Google Scholar. It is my position that Jevons's differences from Mill concerning the procedures for ranking pleasures were important from a philosophical standpoint, but did not create any marked difference in policy analysis. In practice, notwithstanding the key differences on the ranking of pleasures, the policy analysis and recommendations of Mill were similar to those of Jevons. This I account for in terms of their shared goal of wide-ranging social reform.

12 As L. Stephen has demonstrated, this is the case also for J. S. Mill, for whom utilitarianism attempts to address the issue of ‘development’, altering the ‘elements of happiness itself’ (The English Utilitarians, 3 vols., London, 1900, iii. 308; cf. pp. 304f and note 35 below).Google Scholar

13 This point is reiterated by Paul, p. 283.

14 Compare L. Robbins, who criticized Jevons for suggesting that there are no general criteria for intervention: ‘the net effect of his discussion, is certainly to leave the impression that all questions of practice are completely open questions, and that there are no rules of any degree of generality which social science, combined with the Utilitarian norms, may enable us to devise’ (The Evolution of Modern Economic Theory, London, 1970, p. 187).Google Scholar

15 For further evidence of Jevons's concern with poverty and the link with overpopulation, as well as his policy recommendations to alleviate these problems, see Peart, S., ‘The Population Mechanism in W. S. Jevons's Applied Economies’, Manchester School, lviii (1990), 46–9Google Scholar. ‘The Rationale of Free Public Libraries’ reveals a continuing interest in the alleviation of poverty (MSR, 1880).Google Scholar

16 Compare Paul, who has argued that Jevons's exhortations concerning laissez-faire amounted to ‘empty and formalistic obeisance’, whose effect was ‘rendered nugatory’ (p. 278; cf. p. 283), and also that Jevons was less individualistic than Mill and stripped Utilitarianism of a ‘presumption in favor of liberty’ (pp. 279–80).

17 In W. Mays' evaluation: ‘Whenever possible, Jevons believes, legislation should observe the order of nature and proceed tentatively’, a type of experimentation which resembles ‘that involved in habit learning’. See ‘Jevons's Conception of Scientific Method’, Manchester School, xxx (1962), 243.Google Scholar

18 These are equality, certainty, convenience, and economy. While Jevons's debt to Smith is here formally acknowledged, he was clearly working within the same frame work as Mill. See Principles of Political Economy, ed. Robson, J. M., 2 vols., Toronto, 1965 (Collected Works of John Stuart Mill, vols, ii and iii), iii. 805.Google Scholar

19 The argument relied upon diminishing marginal utility of income: ‘The general idea… was that 10 [pounds] was of more importance to a man whose income was only 100 a year than 100 would be to a man whose income is 1,000; and of vastly more importance than 1,000 would be to a man whose income was 10,000 a year’.

20 Exemption, however, is really a separate logical issue.

21 See Jevons, 's remarks of 3 11 1866Google Scholar: ‘I hope to see every child educated, and every exception to the equality of classes before the laws of justice removed’ (Papers and Correspondence of William Stanley Jevons, iii. 138Google Scholar). For further evidence, see Peart, , pp. 46f.Google Scholar

22 On this matter see White, M., ‘The Restoration of “Supply and Demand”: The Production of Jevons's Theory of Political Economy’, Paper presented at the 11th Conference of Economists, Flinders University of South Australia (1982), p. 37Google Scholar, and Black, , ‘Jevons’ in The New Palgrave, ii. 1013.Google Scholar

23 Labour supply restrictions in the building trades were ‘particularly injurious’, since ‘The general effect is to make really wholesome houses a luxury for the wealthier classes, while the residuum have to herd together between whatever walls they can find’ (SRL, pp. 104–5).Google Scholar

24 On only two occasions did Jevons look at the general case, and he concluded that general wage increases were unattainable. See MSR (1868), pp. 113–14Google Scholar, and SRL, p. 106.Google Scholar

25 This was a reluctant endorsement. Jevons insisted throughout his career that all labourers (including unions) should recognize that their interests were aligned with producers, and never endorsed union attempts to raise wages.

26 There are problems reconciling the formulation with Jevons's TPE. See Stewart, H., ‘Jevons on Profit-Sharing: Atomistic Theory versus Social Policy’, Paper presented to the HES annual meetings, Charlottesville, 1989.Google Scholar

27 Letter to The Times, 19 01 1867Google Scholar, Papers and Correspondence, iii. 152Google Scholar. This is the justification of ‘all the laws of property, and… their only sufficient warrant’ (p. 152; cf. p. 132).

28 Partnership would lead to ‘peace’, ‘steady, zealous work’, mutual ‘confidence and esteem’, and less ‘drunkenness’, ‘fighting’, ‘swearing’, and ‘gambling’ (p. 130).

29 Jevons also considered the alternatives of conciliation and arbitration here and argued in favour of arbitration for settlement of past disputes, and conciliation for disputes concerning the ‘future rate of wages’ (SRL, pp. 145, 152).Google Scholar

30 All references in the text to Mill's work are from the Collected Works of John Stuart Mill, ed. Robson, J. M., Toronto, vols, i–v, x, xiv, xviii and xixGoogle Scholar; they include CW, the volume number, and page.

31 Jevons criticized Mill's calls for ‘a vast revolution in the land-owning of Ireland’, and favoured a ‘small progressive experiment’ instead—a position which supports my contention that Jevons was prone to be less interventionist than Mill (see note 6 above). In 1882 Jevons favoured the Irish Land Act; see SRL, p. 8.Google Scholar

32 See the remarks from Essays on Economics and Society, ed. Robson, J. M., 2 vols., Toronto, 1967 (CW, vols, iv and v), v. 618Google Scholar: ‘Since trial alone can decide whether any particular experiment is successful, latitude should be given for carrying on the experiment until the trial is complete.’

33 For a full discussion of Mill's vacillations regarding utility, see Hollander, S., The Economics of John Stuart Mill, Oxford, 1985, pp. 602fGoogle Scholar. The author demonstrates that Mill's utilitarian position, according a prominent role to individual liberty, was in fact consistent with Bentham's original position.

34 See Mill, , The Later Letters 1849–1873, ed. Mineka, F. E. and Lindley, D. N., Toronto, 4 vols., Toronto, 1972 (CW, vols, xiv–xvii), xiv. 45Google Scholar, and Essays on Economics, CW, iv. 375.Google Scholar

35 The moralist like Mill who attempts to allow for (and encourage) human improvement, may not accept that pleasures which attract more people are those which should be ranked most highly. Consequently Mill sought an alternative means of ranking pleasures. See Stephen, , iii. 304fGoogle Scholar. This problem also plagued Jevons.

36 Essays on Ethics, Religion and Society, ed. by Robson, J. M., Toronto, 2 vols., 1977 (CW, vols, xviii and xix), xviii. 261Google Scholar. See the discussion in J. M. Robson: ‘… Mill argues that social ends cannot be understood, much less achieved, except by individuals’; the individual ‘must be free to choose his own destiny in the light of his moral views—consideration always being given to the happiness and equal development of others’ (The Improvement of Mankind, Toronto, 1968, p. 127Google Scholar; cf. pp. 124–7).

37 Essays on Ethics, CW, xix. 606–7Google Scholar. Thus for example, State-funded education should be available to all, but not compulsory. See The Later Letters, CW, xiv. 89.Google Scholar

38 ‘A rise of wages, thus confined to particular employments, is not (like a rise of general wages) defrayed from profits, but raises the value and price of the particular article, and falls on the consumer’ (Principles, CW, iii. 930).Google Scholar

39 Mill however, foresaw a time when, population growth having declined, this restriction would no longer be necessary. Once he perceived a lessening of the pressure of population growth, he became more reluctant to endorse the union's restriction of labour supply. See the account in Hollander, , The Economics of Mill, pp. 897fGoogle Scholar. For evidence that Jevons shared these concerns, see below.

40 Mill wanted equal opportunities, and reward according to initiative; he objected to the division of the produce only slightly connected ‘with merit and demerit, or even with exertion and want of exertion in the individual’ (Essays on Economics, CW, v. 444Google Scholar; cf. Principles, CW, iii. 769Google Scholar). But see Schwartz, P., The New Political Economy of J. S. Mill, London, 1972, p. 197.Google Scholar

41 See above, note 6. Mill went beyond Jevons also in recommending compensation for losses incurred due to intervention. For evidence that the utility principle entailed some right to compensation, see Principles, CW, ii. 233.Google Scholar

42 See Principles, CW, ii. 225–6Google Scholar, and Hollander, , The Economics of Mill, pp. 880–1Google Scholar. This is further evidence that Mill went beyond Jevons.

43 Income was to be taxed ‘Only in proportion to the surplus by which they exceed the limit’—allowing some amount of progression (Principles, CW, iii. 831).Google Scholar

44 Jevons did not specify the ‘Opinions’ of Mill he contested.

45 ‘Mill's Philosophy Tested’, pp. 523, 525Google Scholar. Jevons argued in opposition to Mill, that the Library was a better policy than the race track, ‘not because there is a “Free-Library building emotion”, which is essentially, better than a “Race-Course-establishing emotion”’, but because, having analyzed the effects of each policy in terms of the types of pleasure created, the policy maker finds that the Library creates the most pleasure.

46 See Robbins for the argument that all recommendations of policy entail ‘judgments of value’ and ‘conventions’ which facilitate interpersonal comparability (‘Economics and Political Economy’, Papers and Proceedings of the AEA, lxxi (1981), 5, 6).Google Scholar

47 See Black's remarks in ‘William Stanley Jevons 1835–1882’, Pioneers of Modern Economics, ed. O'Brien, D. P. and Presley, J. R., London, 1981, p. 24CrossRefGoogle Scholar, and also Blaug, , p. 269.Google Scholar

48 Indeed, Paul has minimized Jevons's contribution by suggesting that he ‘endorsed Mill's fondness for attempting social experiments on a small scale’ (p. 278).

49 There are, however, some exceptions. See, for instance, Schwartz, as well as Hollander, , The Economics of Mill.Google Scholar

50 See Hutchison's position in On Revolutions, p. 97Google Scholar. R. Backhouse reiterates this, as well as many of Hutchison's arguments concerning the (post 1870) changing attitudes of economists towards state intervention and poverty (A History of Modern Economic Analysis, Oxford, 1985, pp. 75, 241–6Google Scholar). Hutchison concludes that 1870 marks a turning point in ‘The Politics and Philosophy’, p. 376.Google Scholar

51 Since he did not write about taxation after 1875, it is difficult to determine whether Jevons continued to maintain his position on taxation or not.