Mill’s Incomplete Political Economy of Socialist Competition

Abstract

The nineteenth-century British cooperative movement identified competition as the central feature of the mode of production dominating the British economy. Most often, cooperators took the competitive system to be the antithesis of their own system of mutual assistance. Yet John Stuart Mill, even while endorsing and predicting the replacement of the capitalists’ economy with a cooperative one, insists that this new mode must not desert competition. Mill holds that without competition a cooperative system will fail to achieve progress. Competition between cooperative associations is necessary to encourage investment and technological change. As an outstanding classical economist, Mill might reasonably have been expected to develop a theory of the dynamic equalization of returns across cooperative industries. But Mill fails to complete his theory of cooperative competition. He leaves numerous questions unaddressed. In particular, he does not explain what will happen to cooperatives that fall behind. Are these a source of unemployment? Will there be a business cycle? How will new products be developed? At root, Mill fails to develop a theory of entrepreneurship under cooperation.