William Stanley Jevons (1835-1882)

Much more than an economist

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Jevons is best known as an economist, but he also was a polymath with works in logic, mathematics, geometry, philosophy of science, and general issues of public policy. In economics, he was one of the founders of the marginal revolution who introduced mathematical analysis into economics, and which thus formed the border line between classical and neoclassical economics. But he was otherwise comparable to the classical polymath, John Stuart Mill, in his wide range of books and publications. Jevons’ range of non-mathematical publications on legal and legislative issues brought him an honorary LLD degree from the University of Edinburgh.

His importance for this series of posts is his strong support of an early vision of workplace democracy which he called “industrial partnership.” In this he stood side by side with Mill who Jevons unfailingly quoted on this issue. Jevons’ strong support for the concept of an industrial partnership, indicated in the quotations given below, is however little noted in the economics literature (and unmentioned on his Wikipedia page). What should be one of the central questions in economics, namely the normative question of the nature of the firm, is ignored in favor of the standard assumption of firms based on the employment relation.

There can be no doubt that the soundest possible solution of the labour question will eventually be found in such a modification of the terms of partnership as shall bind the interests of the employer and workman more closely together. Under such a system the weekly wages would be regarded merely as subsistence money, or advances which the employer would make to enable the labourer and his family to await the completion of the interval between manufacture and sale. The balance of the value produced would be paid at the end of the year or half-year in the form of a dividend or bonus, consisting in a share of all surplus profits realised beyond the necessary charges of interest, wages of superintendence, cost of depreciation of capital, reserve to meet bad debts, and all other expenses of production for which the employer can fairly claim compensation. Under the name of Industrial Partnership such an arrangement has been experimentally tried in England, and has been subject to a good deal of adverse discussion. The outlines of the scheme are familiar to all who have read with proper care John Stuart Mill’s Principles of Political Economy. (Jevons, William Stanley. 1882. The State in Relation to Labour. MacMillan and Company. 142-3)

Eventually it· will be seen that industrial divisions should be perpendicular, not horizontal. The workman’s interests should be bound up with those of his employer, and should be pitted in fair competition against those of other workmen and employers. There would then be no arbitrary rates of wages, no organised strikes, no long disputes rendering business uncertain and hazardous. The best workman would seek out the best master, and the best master the best workmen. Zeal to produce the best and the cheapest and most abundant goods would take the place of zeal in obstructive organisation. The faithful workman would not only receive a share of any additional profits which such zeal creates, but he would become a shareholder on a small scale in the firm, and a participator in the insurance and superannuation benefits which the firm could hold out to him with approximate certainty of solvency. (Ibid., 145)

It is a measure of how much the field of economics has degenerated since Mill and Jevons’ time to consider the suggested solution to the perceived problems of labor and unions (antagonism between management and labor, strikes, motivation to do as little as possible in return for as much as possible, and the like). Jevons suggested, rather having labor organizing horizontally in unions and firms also organizing horizontally in cartels, that firms should be organized vertically combining management (“capital”) and labor in industrial partnerships.

That idea is air-brushed out of modern economics textbooks. Instead, there is a condemnation of cartels in favor of competitive markets. When thousands of shareholders combine to make unified decisions in a corporation, i.e., a firm, that is not collusion or a cartel. It is only when firms collude with each other that the textbooks apply the “cartel” label. “Such an agreement among firms over production and price is called collusion, and the group of firms acting in unison is called a cartel. (Mankiw, N. Gregory. 2018. Principles of Economics 8th Ed. Cengage Learning, 339) To show their even-handed treatment, conventional economists apply the same critique of collusion and cartels to labor. “A union is a type of cartel. Like any cartel, a union is a group of sellers acting together in the hope of exerting their joint market power.” (Ibid., 592) Thus their “solution” to the problems of collusion between labor buyers and collusion between labor sellers is the competitive labor market where a non-colluding individual worker meets a non-colluding firm—each firm composed of thousands of capital suppliers—in the competitive marketplace. Jevons’ solution of industrial partnerships is unmentioned.

Jevons also saw clearly that the solution is not in the general notion of “cooperation” since many so-called “cooperatives” operate on the basis of the employment relationship just like conventional firms. (see my Substack post on March 10, 2026: Worker cooperatives and other so-called “cooperatives.”)

The [industrial] partnership scheme is, I believe, by far the truest form of co-operation. We have heard a great deal of co-operation lately, until we may well be tired of the name; but I agree with Mr. Briggs* [reference to 1870 newspaper article] in thinking that many of the institutions said to be co-operative really lack the fundamental principle, that those who work shall share. If a co-operative retail store employ shopmen, buyers, and managers, receiving fixed and usually low salaries, superintended by unpaid directors, I can only say that it embodies all the principles of dissolution; it has all the evils of a joint-stock company without many advantages. (Jevons, William Stanley. 1883. Methods of Social Reform. Macmillan & Co. 141)

For my own part I do think that the principle of unionism, so far as relates to the regulation of wages, is fundamentally and entirely wrong, but I see no reason why I should therefore be supposed to have less sympathy with working-men. I believe that they are striving earnestly and honourably to raise their own condition, but that they take the wrong way to do it. From wrong they must ultimately come to right, and I have no doubt that they will achieve more than they look for. But this right road will not be in struggling vainly against capital, but in making capital their ally, If the masters do not take the initiative and adopt the partnership principle, the present evil state of affairs must be much prolonged; but I do not doubt that the hard, sharp line which now exists between capital and labour will ultimately vanish. Partnerships of industry are, no doubt, an innovation, having hitherto existed only in exceptional trades anc1 rare experiments ; but I assert confidently that they are an innovation of which the utility is evident and the necessity urgent. They arc required, not by the restless desire of change, but as the natural sequel of great revolutions in our social condition. Our great factories and our great army of artizans have sprung up within one hundred years, and it is quite to be expected that so vast an innovation should lead to other innovations. The lives of ourselves and our fathers and our grandfathers have been passed in the midst of peaceful revolutions, such as society has not known before; and it is most legitimate and. proper that the artizan should seek to work yet another revolution-in his own moral and material condition. Already the artizan is less below his wealthy employer than he is above the poor dependent labourer of former days; and I do believe that we only need to throw aside some old but groundless prejudice, in order to heal the discords of capital and labour, and to efface to some degree the line which now divides employer and employed. (Ibid.., 148)

I hope to see the time when workmen will be to a great extent their own capitalists. If trades’ unions, with all the skill in organisation which they possess, and all the funds at their command, would only devote their energy to the erection of co-operative mills and works, they might readily attain all they desire, to the best of my judgment. When they find it necessary to contend with a group of illiberal employers, they should do it by planting mills or works in their midst, owned and managed by workmen and their deputies. This is the way in which wages may be permanently raised and the exclusive interests of capital effectually destroyed. I believe that a movement of workmen towards co-operation in the raising of capital would be anticipated by employers admitting their men to a considerable share of their profits. (Jevons, William Stanley. 1977. Papers and Correspondence of William Stanley Jevons Vol. III Correspondence 1863-1872. Edited by R. D. Collison Black. Macmillan Press LTD, 138)

Of course, there was criticism from those who serve the employing class. Jevons answers one such example in a letter to the Times published on January 19, 1867.

I am sorry to find that Messrs. Creed and Williams, in the last of their important letters, oppose as unsound a scheme which seems to me most promising for the future prosperity of English industry. I mean the scheme of a partnership in results between masters and men. In a former letter, which you did me the favour to publish, I briefly alluded to this scheme, and the result was an almost pathetic protest from an “Employer” against any such unsound notions. But, in spite of all weight of opinion to the contrary, I feel so strongly that theoretical soundness and ultimate practicability are on the side of this scheme that I must beg a little space for explanation. (Ibid.,151)

Many must share the opinion expressed by Mr. Waley in his recent communication to the Statistical Society— that strikes are almost inevitable in the present state of things. And I do earnestly recommend this scheme [industrial partnership] to masters and men as one which, however difficult in practice, is, to the best of my judgment, thoroughly sound in principle, and calculated to effect that union of interests by which alone our trade can prosper. (Ibid., 154)