Economic Sociology: The Recursive Economic System of J. S. Mill

In a recent paper, R. Ekelund and D. Walker (1996) argue that, “[i]ncentives, utilitarian principles, and the diffusion of property rights are the key to understanding Mill on the statics and dynamics of ‘equity and justice’”(p. 576). Their paper, which deals with John Stuart Mill's views on taxation, reads very much like a modern defense of popular capitalism. From the static point of view, it is imperative not to interfere with the internal relationship between economic variables and thus, distort incentives (proportional income tax). From the dynamic point of view, “inheritance taxes [are] the essential mechanism of an evolutionary change towards an efficiently functioning capitalism” (p. 578, italics added).