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First published in 1848, Principles of Political Economy established Mill as a leading economic thinker of his time, and this work endured as the principal economics textbook for the balance of the nineteenth century. As a comprehensive treatment of economic thought, the book touches on the full range of micro- and macroeconomic topics, including taxation, national debt, and theories of money, production, and prices.Volumes 2 and 3 are based on the seventh and final edition of this work published by Mill in 1871. Professor Robson and his editorial team allow the reader to seamlessly track the changes made through all seven editions of Principles of Political Economy, providing insight into the development of Mill’s economic ideas.

CHAPTER XI

Of the Law of the Increase of Capital

§ 1. [Means and motives to saving, on what dependent] The requisites of production being labour, capital, and land, it has been seen from the preceding chapter that the impediments to the increase of production do not arise from the first of these elements. On the side of labour there is no obstacle to an increase of production, indefinite in extent and of unslackening rapidity. Population has the power of increasing in an uniform and rapid geometrical ratio. If the only essential condition of production were labour, the produce might, and naturally would, increase in the same ratio; and there would be no limit, until the numbers of mankind were brought to a stand from actual want of space.

But production has other requisites, and of these, the one which we shall next consider is Capital. There cannot be more people in any country, or in the world, than can be supported from the produce of past labour until that of present labour comes in. There will be no greater number of productive labourers in any country, or in the world, than can be supported from that portion of the produce of past labour, which is spared from the enjoyments of its possessor for purposes of reproduction, and is termed Capital. We have next, therefore, to inquire into the conditions of the increase of capital: the causes by which the rapidity of its increase is determined, and the necessary limitations of that increase.

Since all capital is the product of saving, that is, of abstinence from present consumption for the sake of a future good, the increase of capital must depend upon two things—the amount of the fund from which saving can be made, and the strength of the dispositions which prompt to it.

John Stuart Mill

John Stuart Mill (1806-1873), British philosopher, economist, moral and political theorist, and administrator, was the most influential English-speaking philosopher of the nineteenth century. His views are of continuing significance, and are generally recognized to be among the deepest and certainly the most effective defenses of empiricism and of a liberal political view of society and culture. The overall aim of his philosophy is to develop a positive view of the universe and the place of humans in it, one which contributes to the progress of human knowledge, individual freedom and human well-being. His views are not entirely original, having their roots in the British empiricism of John Locke, George Berkeley and David Hume, and in the utilitarianism of Jeremy Bentham. But he gave them a new depth, and his formulations were sufficiently articulate to gain for them a continuing influence among a broad public.