Having already examined whether people should be allowed to hold and express unpopular beliefs, Mill looks at the question of whether people should be allowed to act on their opinions without facing legal punishment or social stigma. Mill observes that actions should not be as free as opinions, and reasserts that both must be limited when they would cause harm to others and be "a nuisance to other people." However, many of the reasons for respecting different opinions also apply to respecting actions. Since humans are fallible, different "experiments of living" are valuable. The expression of individuality is essential for individual and social progress.

Individuality is essential to the cultivation of the self. A basic problem that Mill sees with society is that individual spontaneity is not respected as having any good in itself, and is not seen as essential to well-being. Rather, the majority thinks that its ways should be good enough for everybody. Mill argues that while people should be trained as children in the accumulated knowledge of human experience, they should also have the freedom as adults to interpret that experience as they see fit. He places great moral emphasis on the process of making choices, and not simply accepting customs without questions: only people who make choices are using all of their human faculties. Mill then links the desires and impulses reflected in individuality with the development of character: "One whose desires and impulses are not his own, has no character, no more than a steam engine has character."

Mill writes that in early stages of society, it is possible that there could be too much individuality. However, the danger now is rather the stifling of desires and impulses. He says that people become more valuable to themselves and also more able to be valuable to others when they develop their individuality. Mill then turns to the second part of his discussion, the ways in which people who exercise their liberty as individuals are valuable to others.

Individuality is valuable because people might learn something from the nonconformists. Dissenters may discover new goods, and keep alive existing goods. While genius is rare, it is also true that "Genius can only breathe free in an atmosphere of freedom." Unoriginal people tend to not see the value of originality, and tend to shun genius for mediocrity. Mill argues against this tendency, saying that all people should value what originality brings to the world. Furthermore, Mill argues that the modern age (the 19th century), in contrast to the Middle Ages, tends to diminish the individual and encourage mediocrity, linking this tendency with the democratization of culture and government. A conscious effort needs to be made to counteract this trend.

There is no one pattern for how to best live life. If a person is sufficiently developed, then his choices for how to live life are best precisely because they are his own. People require different atmospheres in order to develop and reach their potentials, and a healthy society must make it possible for people to follow more than one pattern.

Liberty and individuality are essential to individual and social progress. Seeing people's dissimilarities is key in learning about one's own weaknesses. Diversity also lets us see the potential of combining the positive traits of different people. Forced conformity, in contrast, keeps people from learning from each other. Mill writes that it is "despotism of custom" that prevents the improvement of England, and that it is Europe's relative diversity of lifestyles and paths that makes it more progressive than conformist China. However, Mill worries that Europe is progressing towards the Chinese ideal of "making all people alike," and will thus face stagnation.

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