95
The railways were an example of a
monopoly industry at the time Mill was
writing. New lines were expensive and
impractical on routes that were already
serviced by existing companies.During the Industrial Revolution coal,
railways, and water supply all showed
a tendency toward concentrated
ownership. In mining the ownership
of the land was concentrated in just
a few hands. In the case of railways
and water supply there was no
alternative to a limited number of
firms offering services because the
scale of the infrastructure required
was so great that if there were any
more than a few firms, no one would
be able to cover their costs. Like
Adam Smith (p.61) before him, Mill
believed that these features of
markets did not inevitably lead to
monopoly. The most likely outcome
was collusion between firms,
allowing them to fix high prices.
Such arrangements would lead to
high costs for consumers in the
same way as monopolies.
Monopoly workers
Mill realized that it is not only
within the goods market that a lack
of competition is able to push prices
up. Monopoly effects can emerge in
See also: Cartels and collusion 70–73 ■ The competitive market 126–29 ■
Economies of scale 132 ■ Creative destruction 148–49
INDUSTRIAL AND ECONOMIC REVOLUTIONS
John Stuart Mill
Born in London in 1806,
John Stuart Mill grew up in
a wealthy family that was to
become a great intellectual
dynasty. His father was an
overdemanding parent, who
educated Mill at home on a
difficult and accelerated
program that included Greek
from the age of three. The aim
was for Mill to carry on and
develop his father’s work on
philosophy. The pressure of
his upbringing was at least
partly responsible for the
mental health problems Mill
suffered in his early 20s.
One of the great minds of
the day, he was willing to
speak out in defense of
difficult and unpopular causes
such as the French Revolution
and women’s rights. He was
also an eloquent opponent of
slavery. A 20-year affair with
Harriet Taylor, whom he
credited with inspiring much
of his written work, caused
scandal in his own private life.
He died in 1873, aged 66.Key works1848 Principles of Political
Economy
1861 Utilitarianism
1869 The Subjection of Womenthe labor market too. He pointed
to the case of goldsmiths, who
earned much higher wages than
workers of a similar skill because
they were perceived to be
trustworthy—a characteristic that
is rare and not easily provable. This
created a significant barrier to entry
so that those working with gold
could demand a monopoly price for
their services. Mill realized that the
goldsmiths’ situation was not an
isolated case. He noted that large
sections of the working classes
were barred from entering skilled
professions because they entailed
many years of education and
training. The cost of supporting
someone through this process was
out of reach for most families, so
those who could afford it were able
to enjoy wages far above what ❯❯