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Development of welfarism.
English jurist, He is best known for his
philosopher, and legal advocacy
and social reformer. of utilitarianism and anim
al rights,[1] and the idea of
Welfarism.
the panopticon.

Associated with the

Bentham strongly foundation of
believed that education the University of London,
should be more widely specifically University
available College London (UCL)
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2 mhe |

is a type of prison building designed by
English philosopher and social theorist Jeremy Bentham in
1785.
2 mhe concept of the design is to allow an observer to observe (D

 ) all prisoners without the incarcerated being able to tell
whether they are being watched, thereby conveying what one
architect has called the "sentiment of an invisible omniscience.
2 Bentham himself described the Panopticon as "a new mode of
obtaining power of mind over mind, in a quantity hitherto
without example.³
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X Born to a family of textile merchants of Huguenot

extraction.

X He had classically liberal views and argued in favor of

competition, free trade, and lifting restraints on business.

X In 1787, J.B Say worked at an insurance company in Paris

which run by Clavière (later to become Minister of
Finance) and was overjoyed by the French Revolution.

X Served as a volunteer in the 1792 military campaign to

repulse the allied armies from France.
X Work with a group of laissez-faire economists, known as the
ideologues, who sought to relaunch the spirit of Enlightenment
liberalism in republican France.

X In 1803, he published his most famous work, mraite d¶Economie

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X Say opposed the labor theory of value by classical and

change it with supply and demand which in turn are
regulated by costs of production and utility.
X But did not include development of schedules showing the
price-quantity relationship.
X Emphasized that labor, land, and capital are all involved in
production.
X mhought that counties are rich and powerful in proportion to
the lowness of prices.
X Equated value with utility.
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X Monopoly not only create 

  but also

use scarce resources to obtain and protect their
 
 
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X Like Cantillon before him and the Austrian School

after him, Say also placed great emphasis on the
µrisk-taking¶




 and even tried to include
him as the ³fourth´ factor of production in his
analysis.
   

 

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X Say¶s Law claims that total demand in an economy
cannot exceed or fall below total supply in that
economy or as James Mill was to restate it ³supply
creates its own demand´.

X ³«it is production which opens a demand for product.´

- Supply creates its own demand
- No one sells without an intent to buy

   

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o Educated at Eton and Magdalen College , Oxford.

o Senior became the first professor of political

economy at Oxford in 1825.

o Believed we should separate the science of political

economy from value judgements, leading to the modern
notion of positive economics .
    
o Senior wished to separate the science of political economy from
all value jugdements.
o According to Senior, economists should concern on analyzing
the production and distribution of wealth, not the promotion of
happiness.
Senior stated:
But [ the economist¶s ] conclusions, whatever be their generality
and their truth, do not authorize him in adding a single syllable
of advice. mhat privilege belongs to writer and statesman who
has considered all the causes which may promote or impede the
general welfare of those whom he addresses, not to the theorist
who has considered only one, though among the most important,
of those causes. mhe business of a Political Economist is neither
to recommend nor to dissuade, but to state general principle.
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1. Principle of income or utility maximization.
People wish to maximize wealth with the lowest sacrifice.
2. Principle of population
mhe population is limited only by moral or physical evil , or by
fear of a deficiency of wealth which needed by each class of
inhabitants.
3. Principle of capital accumulation
mhe power of Labour and of the other instruments which produce
wealth , may be indefinitely increased by using their Products as
means of further production.
4. Principle of diminishing returns
Every increase of the labour bestowed, the aggregate return is
increased, the increase of the return is not in proportion to the
increase of the labour.
 §
o µAbstinence¶ was a new term developed by Senior to the
lexicon of political economy.
o It implied a value judgement about the sacrifices undertaken
by the capitalist in postponing the consumption of wealth.
o Abstinence mheory
= Cost is subjective.
= mhe cost of production are the labor of the workers and the
abstinence of the capitalists.
= mhis makes saving a function of interest.
 

 

o Senior disagreed with Smith, who thought that the
producers of services are all unproductive.
o Producers of services like lawyers , doctors and
teachers are productive because they promote the
increase of wealth.
o mhe proper distinction was not between productive and
unproductive labor but rather between productive and
unproductive consumption .
  "  
Poor Laws
= Senior served on the Poor Law Commission appointed in 1832.
= Favored the Poor Law Amendment of 1834 which sought to discourage
able-bodied workers from applying for welfare.
= mhe act established the principle that living conditions of those receiving
welfare should be worse than those of the poorest-paid workers.
= mhese poor laws were in force for 70 years.
mrade Unions
= Senior opposed to trade union movement because they interfered with the
market process and the mobility of labor.
Factory Acts
= In 1837 , Senior published a pamphlet opposing the English Factory Act,
which at the time limited the working day to 12 hours in factories where
children were employed .
= Senior opposed laws limiting the hours of adults.
—

  

  
X Mill was the last great Classical economist whose
magnificent in 1848 restatement of Ricardo¶s theory
X Made contributions to economics, philosophy, logic,
political science
X Broad concerns:
- Mankind¶s position in the cosmos
- Each person¶s relationship to society
- mhe rules that govern though
- mhe natural laws of human action
- Not as interested in the growth o production or
efficiency as he was interested in the quality of life and
the full development of the individual
- More social philosopher than technical economist
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X Solved a problem left open by Ricardo. Ricardo had used
only production costs. Mill used demand as well.

X mhe stronger is a country¶s demand for its imported good,

the closer the free trade price would be to the country¶s pre-
trade price and, therefore, the smaller would be the
country¶s gains from trade.
X Êtilitarianism
-Generally supported Bentham¶s calculus of pain and
pleasured
-Modifications - Quality of life is also important
- Recognized that pleasured may be
subjective

X mheory of value
- ³there is nothing in the laws of value which remains
for the present or any future writer to clear up; the
theory of the subject is complete.´
X Divides economics into static and dynamics.

X Argued that profits would fall until net capital

accumulation would not be profitable; net increases in
capital would stop. Growth would stop. mhe economy
would reach a stationary state.
X Principles of Political Economy (1848)

- Immediately accepted as authoritative

- Divided into 5 books (vs. Smith¶s 4)
Production, Distribution, Exchange, Dynamics,
Influence of government
- mhe way he distinguishes between production
and distribution opens the door to socialism
- Discusses diminishing returns
- Views laissez-faire in a different way from Smith
X Mill¶s On Liberty is one of the founding texts of classical
liberalism and one of the most important treatises ever written
on concept of liberty.

X mhe book explores the nature and limits of the power that can
be legitimately exercised by society over the individual. One
argument that Mill develops further than any previous
philosopher is the harm principle.

X mhe harm principle holds that each individual has the right to
act as he wants, so long as these actions do not harm others.
X If the action is self-regarding, that is, if it only directly affects
the person undertaking the action, then society has no right to
intervene, even if it feels the actor is harming himself.

X Mill excuses those who are ³incapable of self-government´

from this principle, such as young children or those living in
³backward states of society´. It is important to emphasize that
Mill did not consider giving offence to constitute ³harm´; an
action could not be restricted because it violated the
conventions or morals of a given society
  
X Jeremy Bentham ± Utilitarianism

X Bentham¶s ideas promoted progress, reform, wider democracy and

the amelioration of undesirable social conditions.

X Designed an elaborate plan for a model prison that would reform

criminals rather than punish them.

X Bentham¶s concept of human nature - although not his

utilitarianism - became the foundation for the economic systems of
Ricardo, John Stuart Mill, and the early margin lists, especially
William Stanley Jevons.
X Jean-Baptiste Say ± Say¶s Law of Markets

X Contribute modern theory of 
    
 by pointing

out that monopolists not only create what today we call µ


 
 but also use scarce resources in their competition to obtain
and protect their monopoly positions.

X Emphasizing 



 
as a µfourth factor¶ of production

along with the more traditional ones of    
.
X Nassau William Senior ± Positive Economics

X Separate the science of political economy from all value

judgments, all policy pronouncements, and all efforts to
promote welfare.

X According to Senior, economists should concern themselves

with analyzing the production and distribution of wealth, not
the promotion of happiness.
X John Stuart Mill ± mhe Law of International Value

X Endorsed Ricardo¶s advocacy of free international trade

based on the law of comparative costs.

X Shows that the actual barter terms of trade not only on

domestic costs but also on the pattern of demand. More
specifically, the terms of international exchange depend on the
strength and elasticity of demand for each product in the foreign
country.