Abstract
This paper aims to analyze John Stuart Mill’s
theory of joint-stock companies on the basis of
Mill’s theory of an ideal civil society.
Mill recognized that the Industrial Revolution
sparked social and economic problems. Unskilled
labourers lapsed into moral decadence,
which lowered productivity and decreased profit
rates; thus this would then result in a dismal stationary
state without any reform in the distribution
of wealth. However, Mill asserted that social
reforms would realize the ideal condition of
a civil society even in the stationary state. To resolve
these problems, Mill’s theory of joint-stock
companies is significant from two perspectives.
First, from the perspective of productivity,
large-scale production is greatly promoted by
the accumulation of large capital through the
formation of joint-stock companies. Furthermore,
co-operation among various people and
combination of the labour force would lead to
superior productivity.
Second, from the perspective of property,
Mill insisted on fair and just distribution of
wealth and the necessity of managerial reforms.
Reforms aimed at solving the unequal distribution
of wealth could raise the living standards
and the moral and intellectual standards of labourers.
The moral qualities of this new kind of labourers,
which could increase the rate of productivity,
are as important to the overall efficiency
of their labour, as their intellectual qualities. On
the basis of the law of the inverse relationship
between cost of labour and profits, Mill asserted
that superior productivity would reduce the total
cost of labour and increase the real wages of labourers
and profits of capital. It was for this reason
that Mill emphasized the importance of human
development in terms of both labour and
capital and the significance of joint-stock companies
wherein labourers acquire skills and develop
their abilities and individual specialties.
JEL classification numbers: B 31.
