Drop the Dead Donkey: A Response to Steven Kates on the Subject of Mill’s Fourth Proposition on Capital1

Roy H. Grieve

History of Economics Review, 2020, vol. 77, issue 1, 20-36

Abstract: Steven Kates has recently attempted to explain and justify J. S. Mill’s paradoxical ‘Fourth Proposition on Capital’, which states that ‘demand for commodities is not demand for labour’, a proposition which notoriously – over generations – has baffled many eminent commentators. Kates intended to resolve the puzzle by offering ‘a proper understanding of Say’s Law as it was understood by Mill and his contemporaries’. Nevertheless, we conclude that Kates fails to justify Mill’s position, depending as it does on the (Say’s Law) proposition that it is the availability of the means of ‘putting labour into motion’, not demand for output, that is critical in determining employment and production. But Mill, on whose wisdom Kates relies, in his famous ‘recantation’ of the wages-fund doctrine himself undermined the fourth proposition on capital by allowing that demand for commodities actually can induce investment in the employment of labour. It is time for a recantation from Kates.

Date: 2020
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DOI: 10.1080/10370196.2020.1784650

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