James Mill on Comparative Advantage and the Gains from Trade:
Excerpts from the Elements
James Mill (1773-1836) was a major figure in classical political economy; for biographical data and internet resources see Gonçalo L. Fonseca and Leanne J. Ussher’s New School website. Mill’s Elements of Political Economy was the first textbook of Ricardian economics. John Stuart Mill recalled in his Autobiography how the book got started: “My father … commenced instructing me in the science by a sort of lectures, which he delivered to me in our walks.” The thirteen-year old wrote up the lectures and from his notes grew the book. In the preface James Mill wrote “ My object has been to compose a school-book of Political Economy … I profess to have made no discovery.”
The Elements has a place in the history of classical international trade theory. The first edition (1821) presented with “model clearness” the principle of comparative advantage from chapter 7 of David Ricardo’s Principles of Political Economy and Taxation. Some years later John Stuart Mill was part of a reading group working through the Elements. He recalled in his Autobiography, “The theory of International Values which I afterwards published, emanated from these conversations.” The theory which appeared as the first of the Essays on Some Unsettled Questions of Political Economy appears to have been a reaction to a mistake in the Elements regarding the evaluation of the gain from trade. In the third and final edition of the Elements James went some way to accommodate his son’s corrections: “I have corrected an error of the former editions.”
Rod Hay’s Documents for the History of Economics website at McMaster makes available the entire 3rd edition of the Elements of Political Economy as well as the other documents mentioned above. However the interest in Mill’s account of comparative advantage justifies reproducing all three (1821, -24 and –26) versions of the comparative advantage section.
Mill treats specialisation and comparative advantage in chapter III on “Interchange” in Section IV on the “Occasions on which it is the Interest of Nations to Exchange Commodities with one another”.
The “Occasions …” section is presented here in two forms
Editions of the Elements
1821. Elements of Political Economy.
: Baldwin, Cradock and Joy. London
1824. Elements of Political Economy second edition
revised and corrected.
1826. Elements of Political Economy, third edition
revised and corrected.
1967. In Winch’s selection of Mill’s writing listed below.
Just a few items from a considerable literature:
Viner, 1937. Studies in the Theory of
Donald Winch, 1966 James Mill: Selected Economic Writings, Edinburgh: Oliver & Boyd. (This valuable survey of Mill’s economic writings reprints the third edition of the Elements noting important changes from earlier editions.)
William O. Thweatt, 1976. “James Mill and the Early Development of Comparative Advantage.” History of Political Economy 8 (Summer): 207-234.
O. Thweatt, 1986. “James and John Mill on Comparative Advantage: Sraffa’s
Account Corrected.” In H. Visser &
Maneschi, 1998. Comparative Advantage in
International Trade: A Historical Perspective.
John Aldrich, 2004. “The Discovery of Comparative Advantage.” Journal of the History of Economic Thought, 26, (3): 379-399. pdf