Download jeremy bentham and gary becker: utilitarianism and economic

Journal of the History of Economic Thought,
Volume 30, Number 3, September 2008
JEREMY BENTHAM AND GARY BECKER:
UTILITARIANISM AND ECONOMIC
IMPERIALISM
BY
JIMENA HURTADO
I. INTRODUCTION
In a recent article Jerry Evensky (2005) shows that, in spite of the claims of its members, the Chicago School1 is far from being a continuation of Adam Smith’s thought.
The starting assumption of the economic approach to behavior,2 with which Evensky
(2005, p. 197) associates the Chicago School, is that ‘‘humans can be represented as
homo economicus’’ whose single motive is ‘‘personal utility maximization.’’ But, he
argues (2005, p. 198), nothing is further from Smith’s ideas. Evensky (2005, p. 203)
concludes that ‘‘Adam Smith was not an economist offering a materialist vision of
humankinds’ progress based on the homo economicus assumption.’’ Instead, Jeremy
Bentham was. Based on the anthropological notion contained in the utility principle,
in its enunciative sense, Bentham constructed a whole system aimed at explaining
social phenomena in order to guide social action.
By presenting the utility principle as an axiom, Bentham is able to account for any
action and/or social phenomenon as the result of individual decisions aimed at maximizing one’s own happiness. Rational calculation accounts for individual decisions:
people maximize pleasures and minimize pains according to their own self-interest.
This is the method the economic approach to behavior uses. It is a method that has
Economics Department—CEDE, University of los Andes. E-mail: [email protected]. I gratefully
acknowledge comments from Michel DeVroey and David Colander on earlier versions at the ninth annual
meeting of the European Society for the History of Economic Thought and the thirty-third annual
meeting of the History of Economics Society. I would also like to thank the organizers of the session at
HES meeting, Steven Medema and Alain Marciano. Remarks from an anonymous referee helped
improving those versions. All remaining errors and omissions are my responsibility.
1
For a brief definition of this school see Reder (1998). The genealogy of this school, in its two main
periods, can be clearly traced back to the first institutionalists and even to Marshall. This can be
established by tracing the thinkers the members of this school name as their mentors or most important
influences. The link to Bentham, however, is harder to establish because none of them mentions the
English author as a source of inspiration—except, of course, Gary Becker as regards law and economics.
2
Becker changes the name from the economic approach to human behavior to the economic approach to
behavior because he believes it can also be applied to the biological world (Becker 1981, p. x).
ISSN 1042-7716 print; ISSN 1474-449X online/07/040001-23 Ó 2008 The History of Economics Society
doi:10.1017/S104277160800032X
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JOURNAL OF THE HISTORY OF ECONOMIC THOUGHT
given economics the instruments to deal with subjects that were not traditionally
considered as part of its field of study. This expansion of economics has been called
economic imperialism: economics colonizing the territory of other social sciences.
Economic imperialism is not a new phenomenon. The Physiocrats considered their
nouvelle science of economics as the ‘‘science of natural law applied, as it should be,
to civilized society,’’3 and they deplored Jean Baptiste Say’s restricting economics
to the science of wealth.4 However, economics was defined according to a particular
field. It dealt with the administration of government or with the study of the production and reproduction of material wealth or, more generally, of the material conditions of human life. This definition of economics limited its scope, and economic
theory centered its attention on explaining the phenomena of production, distribution,
and consumption. Today, this kind of definition can be identified with the study of the
market—that is, of how a decentralized economy works and how markets clear.
This study implies a method. The methodological individualism adopted by most
economists—assuming that social phenomena can be explained as a result of individual
action—led them to concentrate on individual behavior. Economists increasingly
approached their field with certain techniques capable of representing individuals
as always transforming their optimizing plans into optimizing behavior. The method
then consists in assuming a certain axiom about human behavior from which the topic
is analyzed. Economics is no longer defined by a particular field but by a particular
method—a method that, some economists claim, allows them and other social scientists, if they adopt it, to deal with mostly any social phenomenon.
Edward Lazear (2000, p. 103, n. 7) identifies Gary S. Becker as the founder of
modern economic imperialism and names Margaret Reid’s work on household
economics in the mid-1930s and T.W. Shultz’s work on human capital in the early
1960s as its predecessors. We would like to argue here that this kind of economic
imperialism can be traced back to Jeremy Bentham.5 Establishing the genealogy, so
to speak, of this phenomenon allows us to discover its philosophical foundations. It
allows us to recover Bentham’s influence on the shaping of contemporary economics.
Economics has forgotten almost everything about its past as a part of moral
philosophy, or at least it is generally contended it is a past it has been able to leave
behind. However, this past seems more at hand than what would make a true defender
of a value-free science comfortable.
The aim of this paper is not to evaluate the influence of Bentham or Becker on
economic theory in particular or social sciences in general or to present a criticism of
3
Quote in Neill (1949, p. 535-36). Neill, describing the physiocrats, writes, ‘‘They called themselves
philosophes economistes, and they looked upon their new science as a social philosophy including,
economic, political, ethical and social activity’’ (1949, p. 535).
4
Dupont de Nemours (1815, quoted in Neill 1949, p. 536).
5
Fine (2000, 2002) identifies two periods in modern economic imperialism. He identifies the old
imperialism with Gary Becker and the new one with George Akerlof and Joseph Stiglitz. Whereas the
former treats all problems as if they were market problems, the latter focuses on information problems,
market failures, and the possibility and desirability of non-market relations. Fine argues economic
imperialism is rather recent in the history of economic thought because the autonomization of economics
dates from the Marginal Revolution when it started to be identified with the market, centering on the
individual and her optimizing behavior. Here we contend this identification of economics and the method
associated with it can be traced back at least to Bentham.
UTILITARIANISM AND ECONOMIC IMPERIALISM
3
their work. The point we wish to advance lies within the history of economic thought.
Beyond Becker’s own statements,6 we would like to argue a link can be established
between Bentham and Becker as regards their conception of the scope and method of
economic theory.
Following Pierre Force (2003), we will argue that Bentham’s classic utilitarianism
can be considered as an important philosophical influence on the economic
imperialism possible with Becker’s theory. Becker recognizes a link with Bentham
in the area of Law and Economics. We believe this link can be extended to the whole
economic approach to behavior Becker develops in his work, thus providing a better
understanding of the philosophical foundations of economic imperialism. This paper
strives to show how Bentham’s systematic use of the utility principle helps transform
economics into a method—a way of conceiving and studying behavior and choice. It
is in the understanding of the contents and status of the principle of utility that we
might grasp the foundations and consequences of the conception of human behavior
implied by the economic approach. Force (2003, p. 93) considers that ‘‘the reference
to Bentham indicates that Becker’s theory remains indebted to eighteenth-century
neo-Epicureanism’’ and believes that ‘‘Becker shares with philosophers like Bentham
and Helvétius . . . the desire to identify some stable principle of behavior behind the
bewildering variety of human choices and preferences.’’
We take a step further than Force in arguing that the application of the principle of
utility to every aspect of human behavior justifies economic imperialism by transforming economics into a method of general analysis of behavior. Indeed, economics is
no longer defined according to its subject matter but according to its method, which
means an ever-increasing scope explaining Becker’s claim that the economic approach
provides a rigorous framework for the analysis of all social phenomena.
II. THE ECONOMIC APPROACH TO BEHAVIOR
Gary Becker discusses the different definitions of economics in the introduction to his
1976 book The Economic Approach to Human Behavior. Significantly, to begin this
introduction he quotes George Bernard Shaw: ‘‘Economy is the art of making the
most of life.’’ After considering three possible definitions, Becker concludes that
Lionel Robbins’s (1932) definition is the most general of all. Economics, according
to this definition, corresponds to the study of how human beings allocate scarce
resources to competing ends.7 This definition, Becker asserts, means economics is not
limited to the study of market phenomena (Becker 1976, p. 4) or to what we have
called the reproduction of the material conditions of human life. Note also that,
6
Becker presents his work as a continuation of a long series of authors who have used the economic
approach to behavior but who did not have the technical instruments to make a rigorous and ample use
of it. Among these authors, Becker gives particular importance to Adam Smith and Jeremy Bentham.
Actually, according to Becker, Smith is less systematic in his application of the economic approach than
Bentham. Bentham, on the other hand, was, according to Becker, much too worried with social reform
and the normative aspects of his theory to exploit all of the economic approach’s implications.
7
Robbins considers ‘‘the unity of subject of Economic Science [is] the forms assumed by human
behaviour in disposing of scarce means’’ (1932, p. 85). ‘‘Economics is the science which studies human
behaviour as a relationship between ends and scarce means which have alternative uses’’ (in a footnote to
this sentence Robbins refers to Menger, Mises, Fetter, Strigl and Mayer) (1932, p. 85).
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JOURNAL OF THE HISTORY OF ECONOMIC THOUGHT
contrary to the traditional view on this definition, Becker does not emphasize scarcity
as the main topic of economic enquiry. However, this definition, according to Becker,
would not shed much light on what makes the difference between economics and
other social sciences.
Becker continues by saying that this definition, as broad as it might seem, says
nothing about the economic approach, or what we have called the method of
economics. And it is precisely this point that Becker considers to be the characteristic
feature of economics (Becker 1976, p. 5). Economics has a particular method of
analysis (Becker 1993a, p. 385), according to which explaining human behavior on
the basis of certain assumptions leads to understanding social phenomena.
Becker has been praised and criticized because of this presumption within and
outside of economics. He has been praised for opening new research fields in
economics and has been followed by an ever-increasing number of economists (Rosen
1993). This is the case in the field of Law and Economics where William Landes and
Richard Posner have become prominent figures and recognize the importance of
Becker’s initial spark. Victor Fuchs (1994) also sees in Becker an important pioneer in
the field of health economics. Becker has also had major influence in the fields of
sociology, political science, and demography. Criticism centers mostly on his extensive
use of rational choice theory—that is, of the rational economic agent.8 This criticism
goes beyond the appraisal of Becker’s work; it has pervaded most of the recent history
of economics and constitutes a vast corpus of literature nowadays following, for
example, Amartya Sen (1977). (See Bowles and Gintis 1993, 2000; Gintis 2000;
Zafirovski 2003; Steele 2004, among many others). Criticism has also been addressed
to Becker’s economic imperialism, to his intention of applying a single method as if it
were capable of explaining all human behavior (Zafirovski 1999, 2000).
The advantage of the economic approach to human behavior is, according to its
tenents, that it is the most general and powerful approach available in social sciences
(Stigler and Becker 1977, p. 77). In Becker’s words, ‘‘The rational choice model
provides the most promising basis presently available for a unified approach to the
analysis of the social world by scholars from different social sciences’’ (Becker 1993a,
p. 403).9 It is interesting to note that Becker assimilates the economic approach to the
rational choice model, which indicates that all of his construction relies on a specific
conception of human behavior. This is why, according to the author, ‘‘[T]he economic
approach provides a valuable framework for understanding all human behavior
[because] all human behavior can be viewed as involving participants who maximize
8
Becker recognizes economics might have a narrow approach to preferences and behavior:
we do not have to assume that everybody is a perfect calculator. There are limits to our ability
to calculate. Broader preferences and ‘bounded’ rationality are part of a more relevant model of
rational behavior. In my own way I have been trying to broaden preferences to take account of
some of these points. But I am dubious about behavior that won’t survive in an exchange
economy with an extensive division of labor’’ (Clement Interview 2002, p. 22).
9
‘‘In large part, the success of economics derives from its rigor and relevance as well as from its
generality. The economic toolbox can be used to address a large variety of problems drawn from a wide
range of topics’’ (Lazear 2000, p. 99). Note that the author refers to the ‘‘economic toolbox,’’ thereby
emphasizing the method used rather than the object of study.
UTILITARIANISM AND ECONOMIC IMPERIALISM
5
their utility from a stable set of preferences and accumulate an optimal amount of
information and other inputs in a variety of markets’’ (Becker 1976, p. 14).
The economic approach has become very influential not only in economics but
also in other social sciences. Becker was awarded the Nobel Prize in Economics in
1992 for ‘‘having extended the domain of economic theory to aspects of human
behavior which had previously been dealt with—if at all—by other social science
disciplines such as sociology, demography and criminology.’’10 Analyzing this
success as regards crime, Becker asserts: ‘‘One reason why the economic approach
to crime became so influential is that the same analytic apparatus can be used to study
enforcement of all laws, including minimum wage legislation, clean air acts, insider
trader and other violations of security law, and income tax evasions’’ (Becker 1993a,
p. 391). More generally, Becker says:
I have come to the position that the economic approach is a comprehensive one that
is applicable to all human behavior, be it behavior involving money prices or
imputed shadow prices, repeated or infrequent decisions, large or minor decisions,
emotional or mechanical ends, rich or poor persons, men or women, adults or
children, brilliant or stupid persons, patients or therapists, businessmen or politicians,
teachers or students. The applications of the economic approach so conceived are as
extensive as the scope of economics in the definition given earlier [Robbins’s] that
emphasizes scarce means and competing ends. It is an appropriate approach to go
with such a broad and unqualified definition, and with the statement by Shaw that
begins this essay [see p. 4 of this paper], (Becker 1976, p. 8).
Becker believes this approach models ‘‘commonsense’’ ideas, which explains why it is so
appealing and even familiar to anyone who reads his work. Becker uses this approach
to analyze five main topics: discrimination against minorities, crime and punishment,
human capital, family behavior, and social capital. In general terms, all these topics have
to do with the analysis of social interactions, which Becker explicitly analyzes in his
1974 article, A Theory of Social Interactions, and later on in his joint book with Kevin
Murphy (2000), Social Economics: Market Behavior in a Social Environment.
In the 1974 article Becker attempts to incorporate ‘‘a general treatment of interactions
into the modern theory of consumer demand’’ (Becker 1974, p. 1066). He advances this
general treatment has a large applicability and significance (Becker 1974, p. 1066) and
regrets modern economics has given little attention to a key subject in earlier economic
thinkers that has been left to sociology and anthropology (Becker 1974, p. 1091).
Economists, Becker says, ignore social forces when determining utility functions
(Becker and Murphy 2000, p. 8). Social interactions include the influence of people’s
behavior on each other. This behavior, according to Becker, can be analyzed as if it
10
When asked what he thought about being classified as an economic imperialist Becker answered:
That refers to my belief that economic analysis can be applied to many problems in social life,
not just those conventionally called ‘‘economic’’. The theme of my Nobel lecture, based on my
life’s work, is that the horizons of economics need to be expanded. Economists can talk not
only about the demand for cars, but also about matters such as the family, discrimination, and
religion, and about prejudice, guilt, and love. Yet these areas have traditionally received little
attention in economics. In that sense, it’s true: I am an economic imperialist. I believe good
techniques have a wide application (Interview Becker 1993b).
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were market behavior. ‘‘[S]ocial influences or behavior are common and pervasive.
We are especially interested in the mutual interaction between social forces and
market behavior, which we call ‘social markets’. By markets we do not mean only
ordinary market behavior, for we also consider implicit markets, such as marriage
markets’’ (Becker and Murphy 2000, p. 5). Thus, Becker incorporates the analysis of
social interactions into the economic framework, meaning he preserves the characteristics of methodological individualism. Therefore, the social environment is treated as
arguments ‘‘along with goods and services, in a stable extended utility function’’
(Becker and Murphy 2000, p. 8). This approach not only allows dealing with the
effect of the changes in the environment on choices and behavior, it also ‘‘and
perhaps even more important . . . provides a natural way to analyze how the social
environment itself gets determined by the interaction of individuals’’ (Becker and
Murphy 2000, p. 8). Social phenomena, then, are explained through the choices and
actions of individuals. Even if ‘‘each person’s behavior depends on the behavior
of others’’ in this approach there is no such thing as determining social forces
independent from and guiding human actions. This approach allows accounting for
holism (that is, the belief of sociologists and anthropologists, according to Becker and
Murphy (2000, p. 9)): ‘‘we [economists] do not model behavior as being determined
by forces beyond the control of the individual’’ (Lazear 2000, p. 100). There is no
such thing as determining social forces, there are only very strong complementarities:
‘‘When complementarities are strong, they can destabilize the market for goods,
create multiple equilibria, induce large responses in quantities to shifts in prices and
other parameters, and cause other unusual behavior patterns’’ (Becker and Murphy
2000, p. 10). Therefore ‘‘[R]ather than saying that individuals have little control over
outcomes because most are determined by social constraints, Becker and Murphy
prefer to frame the problem in terms of maximization in the face of large spillover
effects’’ (Lazear 2000, p. 113).
This framework assumes individuals are utility-maximizers and preferences are
stable over time and similar among individuals. Individuals are then characterized by
their utility functions and the arguments that constitute them. These arguments may
include tastes for discrimination, altruism among family members, advantages from
crime, etc., making the analysis applicable to most any aspect of human life. The
applicability and power of the approach has been greatly enhanced by what Stigler and
Becker (1977, p. 77) call the new theory of consumer choice. This theory ‘‘transforms
the family from a passive maximizer of the utility from market purchases into an active
maximizer also engaged in extensive production and investment activities’’ (Stigler and
Becker 1977, p. 77). Households then ‘‘maximize a utility function of objects of choice,
called commodities, that they produce with market goods, their own time, their skills,
training and other human capital, and other inputs’’ (Stigler and Becker 1977, p. 77).11
The arguments of the utility function then correspond to the commodities produced and
11
Becker’s Treatise on Family (1981, 1991) expands this treatment dealing with the formation and
functioning of families. Households are treated as a productive unit capable of producing goods not found
on the market, the production of which requires other goods and time. With this framework, Becker
analyzes family structure and interactions between family members. His results have been widely
criticized, especially by feminist scholars, as he presents polygenic marriages, non-mixed marriages, and
traditional division of labor within the family as the most efficient arrangements.
UTILITARIANISM AND ECONOMIC IMPERIALISM
7
the production function varies according to the subject studied (for example, the
characteristics of other persons with whom the individual interacts, music appreciation,
education, medical care, or training).
The flexibility of the approach is thus evident. Individuals can produce any
commodity from which they derive pleasure, and this goes beyond market activity.
Besides, economics, as Becker himself acknowledges, has spent a considerable
amount of time in its recent history on the elaboration and perfecting of mathematical
formalization and techniques. This allows a rigorous technical framework to analyze
optimization problems: ‘‘The power of economics lies in its rigor. Economics is
scientific, it follows the scientific method of stating a formal refutable theory, testing
the theory, and revising the theory based on the evidence. Economics succeeds where
every other social sciencew fail because economists are willing to abstract’’ (Lazear
2000, p. 102).
This rigor and the abstract form the theory takes come from its axiomatic foundations, which can be traced to Bentham’s utility principle. This principle contains
a fundamental assumption regarding human behavior which facilitates not only the
axiomatization of this theory but also, and perhaps, more importantly, the formalization of a social discourse.
What interests us is not so much the details of Becker’s economics but rather its
underpinnings. Lazear (2000, p. 100) claims these foundations are common to all
economics and referred to three fundamental premises: ‘‘First, economists assume
that individuals engage in maximizing rational behavior. Second, economics adheres
strictly to the importance of equilibrium as part of any theory. Third, economists
place a heavy emphasis on a clearly defined concept of efficiency.’’
The first one clearly has to do with the anthropological foundations of this theory
and leads us directly to Jeremy Bentham’s utility principle. This principle has two
senses: an enunciative sense and a censorial sense. The former states that the individual’s aim is happiness: enjoying pleasures and being protected from pains (Bentham
1789, p. 74).12 This, according to Bentham, is a self-evident truth in need of no further
proof or demonstration. The censorial sense of the utility principle states that the only
valid aim of action and the only moral criteria is the greatest happiness.
The implications of this link between Bentham and Becker not only go to the
philosophical underpinnings of the latter’s economic imperialism, but also implies
that, as some commentators have tried to argue,13 Bentham’s utilitarianism can be
seen as generalized economics that encompasses all aspects of human and other
life (Laval 2003, p. 10). Bentham does not separate different aspects of life because
he believes behavior is universal and does not depend upon context or activity.
According to Laval (2003, p. 11), Bentham’s system implies it is the whole of human
action which follows the economic law of maximization of benefits and minimization of pains. This observation of human behavior is the basis of Bentham’s moral
philosophy and project of social reform. It is not an assumption on human nature
but an observation of human behavior, just like the one present in the economic
approach.
12
We will come back to the principle in detail in section IV.
Nathalie Sigot (2001) and Christian Laval (2003), for example.
13
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III. THE APPARENT RUPTURE WITH BENTHAM’S UTILITARIANISM
In his account of the adoption of the marginal utility theory, George Stigler (1972,
p. 114) presents Bentham’s theory as one of its first formulations. Regardless of its
role as a moral guide, Stigler asserts, utility theory is an omni-comprehensive theory
of behavior (1972, p. 114). According to Stigler, even if Bentham did not totally
develop a theory of economic behavior based on utility, he did take the theory to
a considerable length (Stigler 1972, p. 114–15). Stigler considers that this gap in
Bentham’s theory is due to the absence of a theory of relative prices based on
utility.14 Utility theory provided a unified explanation of behavior by presenting all
individuals as utility maximizers and all economic problems as decisions concerning
tastes and constraints (Stigler 1972, p. 122).
Viewing individuals as utility maximizers implies assuming a certain human
behavior but has no implication as to the object of choice. John Davis (2003, p. 32)
says: ‘‘there is nothing that commits rational choice analysis to any particular view
of the nature or content of preferences, and the door is wide open to making any
assumptions about their character that may suit the investigation at hand.’’ According
to Herbert Simon (1986, p. 210), the assumption of rational individuals in economics
is free from any assumption as to the contents of human goals and values; it assumes
human behavior is consistent over time and is rationally objective as regards the
means it mobilizes. Economic rationality has to do with the results of decisions and
not with the process that leads to those decisions (Simon 1986, p. 210). This idea
marks the beginning of the distancing of economics from utilitarianism, for it leaves
aside the formation of preferences—that is, the motive of action—thus breaking from
the hedonistic implications of utilitarianism.
Paul Samuelson’s theory of revealed preferences reinforces this stand by reducing
preferences to a set of behavioral propositions. Economics does not deal with the
formation of these preferences; they are deduced from an individual’s actual choices.
This means individuals choose what they want and no change or gap is assumed
between actual choice and preference orderings. The economic approach to human
behavior builds upon this view and assumes tastes are given and preferences are stable:
‘‘Tastes are the unchallengeable axioms of a man’s behavior . . . tastes neither change
capriciously nor differ importantly between people’’ (Stigler and Becker 1977, p. 76).15
Individuals rationally maximize their utility function or the expected value of this
function. Nothing is said about the actual process of preference formation. Individuals
maximize utility as they conceive it. In this sense, the economic approach, in particular,
and economic theory, in general, has tried to stay away from psychology.16
Shira Lewin (1996) traces this anti-psychological bias to the crisis of hedonism
near the turn of the twentieth century with the debate about the relationship between
economics and other social sciences (Lewin 1996, p. 1294). Hedonism became
14
In what follows, we will show Stigler’s assertion is not accurate.
This hypothesis has been the object of numerous criticisms from economists as well as psychologists
(see Hirschman 1984, Bowles 1998, Rabin 1998, Elster 1998, Davis 2003).
16
This trend is changing in recent years with behavioral economics, which lies beyond the scope of this
paper. This branch of economics is becoming highly influential and aims precisely at incorporating
psychological considerations within economics in order to gain in realism.
15
UTILITARIANISM AND ECONOMIC IMPERIALISM
9
particularly relevant in economics through the incorporation of Benthamite analysis
into Stanley Jevons’s economic theory. Jevons underlines the importance of the utility
principle and of Benthamite theory as a social philosophy. However, he considers that
economics deals with the lowest level feelings and leaves aside all that have no direct
relationship with material wellbeing. Hence, Jevons separates economics from moral
theory even if he asserts the first should be grounded on reasonable moral foundations
(Sigot 2002, p. 266).
This explains why Jevons builds his economic theory on the grounds of Bentham’s
felicific calculus. His theory is built upon pleasures and pains and the possibility of quantifying them in order to construct a mathematical science. Jevons, following Bentham,
gives a central place to individual behavior understood as the individual’s capacity to
calculate in terms of pleasures and pains. Nevertheless, Jevons, because of his concern
with making economics a mathematical science, leaves aside various elements from
Bentham’s theory. According to Nathalie Sigot (2001, p. 149–53), this simplification
implies eliminating the normative sense of Bentham’s utilitarianism—thus its reformist
intentions and its central figure: the legislator. This implication extends to the economic
approach which claims to have no reformist or normative pretensions whatsoever.
Economics in general, and the economic approach in particular, affirms its positive
aspect, its intention of only illustrating the formulation of public policy but not providing
tools for the implementation of a particular social project.
In contrast to Bentham’s theory, economics is no longer a branch of the science of the
legislator and preferences are considered to be exogenous. Indeed, in Bentham’s
utilitarianism, individuals are considered as utility maximizers (that is, calculators who
try to maximize their pleasures and minimize their pains) who act under the direct
influence of the legislator or the deontologist. This means that these two figures are
capable of creating new interests and/or imposing constraints on human behavior in
order to direct individuals towards the maximization of social utility (that is, the greatest
happiness, making duty and interest coincide (Bentham 1789, p. 34)). Preferences are
then endogenous as the deontologist and the legislator are capable of changing not only
exterior constraints (that is, imposing dissuasive punishments (Bentham 1789, p. 157))
but also of making individuals change the arguments of their utility function through
information and the use of the public sanction (Bentham 1983, pp. 175, 251).
In spite of these changes, Jevons, like Bentham, sees utility as a real psychological
substance, and Bentham’s notion of individuals as hedonists is incorporated within
economic theory. Jevons’s achievement then would have been transforming economics into a science using utility theory, hence ‘‘making it possible to derive economic
laws from a single fundamental law of human nature—the law of maximum utility’’
(Lewin 1996, p. 1297).
Towards the end of the nineteenth century and the beginning of the twentieth,
harsh criticism was addressed to this hedonistic view of human beings. Psychologists,
for one, contended there existed motives other than pleasure and pain; behavior could
often be impulsive and not goal oriented and so a study of human behavior should
take into account non-teleological motives (Lewin 1996, p. 1299). Institutionalists, on
the other hand, also claimed the economic view of human behavior was insufficient,
and not only instincts but also ‘‘evolution of institutions and the social embededness
of economic activity’’ should be considered (Lewin 1996, p. 1300). These criticisms,
according to Lewin (1996, p. 1305), were invigorated with the growing influence of
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behaviorism and positivism. Economics should be able to postulate falsifiable propositions in order to have a truly scientific status. The hedonistic assumptions did not
seem to stand to the test.
Mainstream economics was not immune from these criticisms. Hedonistic
language was increasingly left aside and authors such as Pareto asserted that ‘‘ordinal
preferences did not require any psychological interpretation; they merely summarized
empirical regularities of choice behavior’’ (Lewin 1996, p. 1309). Total independence
of economics from hedonistic psychology was supposed to be achieved with the
theory of revealed preferences.
Nevertheless, it is difficult not to see at least some remains of such psychology in
the standard assumptions about human behavior used in economic theory. Utility
might not be directly associated with pleasure or with an ultimate aim of individual
action, but it is difficult not to see the economic agent acting in a teleological fashion,
which allows maximizing an object of choice normally thought of as producing some
kind of satisfaction. Keeping the language of utilitarianism, at least in the enunciative
sense of the utility principle, is not without consequence. The characterization of
behavior found in the economic approach clearly states that individuals are capable
of identifying ends (that is, producing and/or consuming enjoyable goods) and of
determining the best means to attain those ends (that is, optimizing decisions which
imply individuals use their endowments and available information so as to maximize
their objective function). Behavior is then goal-oriented and even if preferences are
exogenous the final aim is still satisfaction as the individual understands it.
Moreover, the decline of behaviorism and the impossibility of empirically founding
the theory of revealed preferences led to a revival of utility theory as justified through
Milton Friedman’s as if methodology. Microeconomic theory broadened its scope and
was used to analyze non-market phenomena. In this context, the economic approach to
behavior found fertile grounds. In a sense, this approach is a revival of utility theory as
conceived by its first tenants thus a return to Bentham’s utilitarianism.
IV. FROM BENTHAM TO BECKER: BEYOND LAW AND ECONOMICS
Becker believes that if the basic assumption regarding individual behavior is correct
then ‘‘the economic approach provides a unified framework for understanding
behavior that has long been sought by and eluded Bentham, Comte, Marx, and
others’’ (Becker 1976, p. 14). In this section we will present the connection between
the economic approach and, at least, the enunciative sense of Bentham’s principle of
utility. In so doing, we strive to show that Becker’s endeavors can be seen as the
direct application of Bentham’s methodology, which goes beyond the latter’s concern
with legal and illegal activities. The underlying hypothesis is that Bentham can be
considered as a major foundation of the economic approach and, therefore, of this
particular form of economic imperialism.
The Obvious Relationship
Becker recognizes that his work on criminal behavior builds upon of the initial
attempts of Cesare Beccaria and Bentham to apply economic calculus to criminology,
thus providing an economic theory of punishment:
UTILITARIANISM AND ECONOMIC IMPERIALISM
11
Lest the reader be repelled by the apparent novelty of an ‘‘economic’’ framework for
illegal behavior, let him recall that two important contributors to criminology during
the eighteenth and nineteenth centuries, Beccaria and Bentham, explicitly applied
economic calculus. Unfortunately, such an approach has lost favor during the last
hundred years, and my efforts can be viewed as a resurrection, modernization, and
thereby I hope improvement on these much earlier pioneering studies (Becker 1968,
p. 209).17
The framework is the same Becker uses to analyze other social phenomena. Selfinterested individuals strive to maximize their utility and minimize their costs, in an
environment characterized by scarcity, uncertainty and conflicting goals (Guidi 2000,
p. 4). Bentham is considered a forerunner because of the welfarist and consequentialist features of his theory (Guidi 2000, p. 5).
Bentham did not intend to limit his theory to the analysis of the law or the system
of legislation. He believed the utility principle could be used as the basis for the
analysis of all social activity because it was built on the fact that the two sovereign
masters of humanity are pain and pleasure (Bentham 1789, p. 11). ‘‘By the principle
of utility is meant that principle which approves or disapproves of every action
whatsoever, according to the tendency which it appears to have to augment or
diminish the happiness of the party whose interest is in question: or, what is the
same thing in other words, to promote or oppose that happiness’’ (Bentham 1789,
p. 12).
The principle of utility is a standard of evaluation. It is consequentialist: an action
producing pleasure is good as long as the pain or the sum of pains it might produce is
less than the total sum of pleasures (Bentham 1983, p. 150). And it is not restricted
to the actions of a single human being but of any ‘‘party,’’ be it one individual or
a whole community. The principle supposes a particular view of human behavior.
Individuals strive at maximizing their pleasure and their motive of action is precisely
this maximization. This implies that calculus naturally finds its way into the analysis
of social phenomena. Bentham explicitly states human beings calculate:
When matters of such importance as pain and pleasure are at stake, and these in the
highest degree (the only matters, in short, that can be of importance) who is there that
does not calculate? Men calculate, some with less exactness, indeed, some with
more: but all men calculate. I would not say, that even a madman does not calculate.
Passion calculates, more or less, in every man: in different men, according to the
warmth or coolness of their disposition; according to the firmness or irritability of
their minds; according to the nature of their motives by which they are acted upon
(Bentham 1789, p. 173–74).
This is true of anyone and in any circumstance. Hence, Bentham’s utilitarianism is
not restricted to law. On the contrary, even in his economic writings the pervasiveness
of the utility principle is evident. Bentham’s economics has received far less attention
17
‘‘I explored instead the theoretical and empirical implications of the assumption that criminal behavior
is rational (see the early pioneering work by Bentham [1931] and Beccaria [(1797) 1986])’’ (Becker
1993a, p. 390). The texts Becker refers to are Beccaria’s On Crimes and Punishments and Bentham’s
Theory of Legislation.
12
JOURNAL OF THE HISTORY OF ECONOMIC THOUGHT
than his legislative and moral theories. However, an increasing body of literature
deals with his economics as an extension of his utilitarian theory.18
The point we would like to underline here is that in his economic writings, which
appear to be punctual analyses of particular problems (usury, money, value) leading
to specific policy recommendations, Bentham introduces something that belongs to
his utilitarianism. The application of the principle of utility implies a particular
concept of human behavior. In so doing, Bentham introduces this conception into
economics and erases all borders between different social activities. The study of
social phenomena relies on the study of human behavior and thus of choices derived
from calculations. Therefore, as Becker also recognizes, his connection with
Bentham goes beyond the field of law and economics. In arguing that the economic
approach is not new, Becker quotes Bentham and his explicit belief ‘‘that the
pleasure-pain calculus is applicable to all human behavior’’ (Becker 1976, p. 8). This
corresponds exactly to what Bentham had already done almost two centuries before.
The Foundations of Bentham’s Project: the Principle of Utility
As we said in the last section, Bentham builds his entire project on the grounds of the
principle of utility. This principle has two senses: ‘‘1. In its censorial sense, it holds up
the greatest happiness of the greatest number as the only universally desirable end. 2. In
its enunciative sense, each man’s own happiness, his only actual end’’ (Bentham 1817,
pp. 59–60). Hence, the principle of utility is normative and descriptive. It establishes
a higher goal for human action and describes the motives of this action: ‘‘Well-being,
composed as hath been seen, of the maximum of pleasure minus the minimum of
pain—the pleasure it will be seen is man’s own pleasure; the pain is man’s own
pain—will upon strict and close enquiry be seen to be actually the intrinsic and the
ultimate object of pursuit to every man at all times’’ (Bentham 1983, p. 147–48).
Human beings act, pursuing their wellbeing or their own interest (Bentham 1789,
p. 74), as they understand it. Indeed, Bentham considers no motive, no pleasure or
pain, can be called good or evil per se and believes there is no such thing as
a summum bonum. Therefore, individuals are seen as having valid reasons to consider
a particular object—in the largest sense of the word—as a source of pleasure or pain.
Thus, just as in the economic approach, after individuals define what these objects
are, they rationally strive to pursue the best action in order to obtain the maximum
utility seen as the net sum of pleasures.19
18
(See Sigot 2001, Guidi 2000.) These two scholars have many more texts on this point and other
commentators have also contributed to the analysis of Bentham’s economics. Here, we restrict our
references to these two because they are the most relevant for our present purposes. We must also note
that contrary to Sigot’s conclusion (2001, p. 188), we do not believe Bentham’s utilitarianism has not
been followed in economic theory. The whole point of this paper is to show Becker’s theory can be
considered as the modern representative of Bentham’s ideas, even if the censorial sense of the utility
principle seems to be overlooked.
19
Discussing the taste for discrimination, for example, Lazear (2000, p. 108) states: ‘‘The taste might
reflect a utility function that most would regard as objectionable, sinister, or evil, but the behavior of the
individual possessing such a taste is rational, that is, consistent with maximizing behaviour. He continues
(2000, p. 109): ‘‘Nevertheless, the emotional aspect of the topic did not prevent economists from thinking
about discrimination in a rigorous way.’’
UTILITARIANISM AND ECONOMIC IMPERIALISM
13
The enunciative sense of the principle of utility posits a certain conception of
human behavior. This conception is quite similar to the one behind Becker’s
economic approach:
we are proposing the hypothesis that widespread and/or persistent human behavior
can be explained by a generalized calculus of utility-maximizing behavior, without
introducing the qualification ‘‘tastes remaining the same.’’ It is a thesis that does not
permit of direct proof because it is an assertion about the world, not a proposition in
logic (Stigler and Becker 1977, p. 76).
This latter point is strikingly similar to the axiomatic character Bentham gives to the
principle of utility. Bentham does not discuss this principle: it does not allow proof
because it is a first principle used to prove everything else (Bentham 1789, p. 13).20
This means that, as in Becker, there is no explanation as to why they conceive human
beings as utility maximizers. Thus, in Halévy’s terms, the axiomatic character given
to the enunciative sense of the utility principle corresponds to saying: ‘‘that every
man unconsciously refers to the principle of utility; it means every man considers his
utility as a quantity, pleasures and pains as vectors to which arithmetical operations
can be applied, and the ends of human action as a possible object of science’’ (Halévy
1901, vol. I, p. 39, our translation). There is a precise conception of human behavior
behind this enunciative sense of the principle of utility. Wesley C. Mitchell (1918,
p. 172–76) synthesizes it in the following features: (1) human beings are hedonistic;
(2) human beings are rational; (3) human beings are passive; (4) human beings’ only
faults are calculation errors; (5) human beings have a preference for their own selves.
Conceiving households as producers of commodities which, in turn, allow
maximizing utility may seem far from Bentham’s enunciative sense of the utility
principle. But the characteristics of human behavior implied by it are certainly very
close to those implied by the economic approach. Households as producers of
commodities correspond to a technically more advanced notion of human beings as
pleasure producing machines that follow a predetermined guide of action. That is,
human beings respond to a mechanics of passions and their interactions correspond to
the positive and negative externalities they generate on each other as a result of the
maximization of their own utility.
Furthermore, as Force (2003, p. 95) points out, ‘‘Becker sees Bentham’s system as
an anticipation of his own because it postulated objects of choice that were abstract
entities, removed from empirical observation.’’ In his listing of pleasures and pains
Bentham includes those of taste, sexual appetite, senses, wealth, power, influence and
authority, curiosity, amity, reputation, sympathy, antipathy, self-regarding, and the
pains of labor, death, and bodily pains (Bentham 1817). Thus, pleasures and pains are
not directly associated with market goods; they can be seen as products of the
individual or the household. From this, Force (2003, p. 95) establishes a direct link
between the notion of utility used by the economic approach and the Benthamite
notion of pleasure. In this sense, Force continues, Becker ‘‘can safely assume that we
20
‘‘Is it susceptible of any direct proof? it should seem not: for that which is used to prove every thing
else, cannot itself be proved: a chain of proofs must have their commencement somewhere. To give such
proof is as impossible as it is needless’’ (Bentham 1789, p. 13).
14
JOURNAL OF THE HISTORY OF ECONOMIC THOUGHT
all want health, prestige, sensual pleasure, benevolence or envy in the same degree
because of the pleasure these goods bring us.’’
The enunciative sense of the principle of utility thus appears to be present in the
economic approach to behavior. It is this sense, we have argued, that allows making
the economic approach a plausible explanation of all human behavior. Therefore, we
submit that Becker is the modern representative of Bentham’s system and accomplishes Bentham’s wish of proposing a comprehensive method of analysis, thus
founding economics’ pretension of becoming a social philosophy.
Economics as a Method
Between 1786 and 1804 Bentham consecrated much of his efforts and time to economics.
Most of his writings on the subject were not published, as Bentham had serious problems
concentrating on a publishing enterprise which required attention he was not willing to
take from other projects.21 Some of the texts were published during Bentham’s lifetime,
the most popular one being Defence of Usury (1787); others appeared in his Works, edited
by John Bowring. This edition has never received much commendation, either at the time
of its publication or thereafter. These might be some of the reasons why Bentham never
really has been considered an economist. John Maynard Keynes, for example, did not
consider Bentham an economist and opposed the possibility and relevance of calculating in a context of radical uncertainty, in which social phenomena take place. Joseph
A. Schumpeter believes that there is little relation between Benthamite utilitarianism and
economic analysis and believes the former is a complete failure due to its erroneous
visions of individual behavior and social institutions. Bentham’s economic texts did not
receive much attention in spite of Werner Stark’s editing them in 1952-54. Stark prepared
this edition using manuscripts as well as published material in order to bring Bentham to
the attention of economists—without much success.
It is that true Bentham’s economic writings deal with specific topical themes (the
question of paper money, the causes of inflation, the regulation of the interest rate, the
price of provisions, etc.) which makes them appear as discussions having lost their
relevance. Nevertheless, Bentham did try to produce a manual of political economy
because, first, he believed that science had no value if it was not a practical guide to
action and, second, he thought The Wealth of Nations was much too complicated for
laymen to understand all of its meaning. The texts corresponding to this manual
(Manual of Political Economy and Institute of Political Economy) were never finished
by their author and had to wait until Stark’s edition to came to light. These texts prove
Bentham had given thought to the subject and had solid opinions and ideas on the
matter. These were the product of his systematic use of the utility principle. This
systematic use means posing any and every social problem in terms of the distribution
of a limited quantity of a given good, thereby transforming all social problems into
economic ones. Even if this is not Bentham’s explicit intention, for he considered
economics to be a part of the science of legislation,22 his approach corresponds to
21
Besides, it is known one of these texts on monetary theory was given to John Stuart Mill and David
Ricardo, who did not consider it apt for publication. One of these manuscripts, as Stark reports, was lost
when Ricardo returned it to Louis Dumont.
22
‘‘The distinction marked by the word economy is applicable rather to a branch of the science of
legislation, than to a division in a code of laws’’ (Bentham 1952, p. 94).
UTILITARIANISM AND ECONOMIC IMPERIALISM
15
analyzing social phenomena, including non-market phenomena, as if it were a market,
much like what Becker does (Fine 2002).
Bentham’s explicit treatment of political economy assumes it is a branch of legislation. Political economy corresponds to the efficient administration of national
wealth following the principle of utility. This means that the aim of political economy, as that of any other branch of legislation, is to determine when the government
must intervene in order to guarantee the greatest happiness. In economics, this means
that given that government is an evil in itself because it constrains human liberty,
government intervention should be reduced to its minimum and be based on a caseby-case analysis. Political economy then has to do with specific problems, the study
of which must lead to specific policy recommendations.
Even if Bentham seems to give a definition of economics in terms of its subject
matter, as we have already argued, it corresponds to a systematic application of the
principle of utility. The enunciative sense of the utility principle informs all study
because ‘‘Directly or indirectly, well-being, in some shape or another, or in several
shapes, or all shapes taken together, is the object of every thought, and object of every
action, on the part of every known being, who is, at the same time, a sensitive and
thinking being’’ (Bentham 1952, p. 82). And as ‘‘The quantity or degree of wellbeing, experienced during any given length of time, is directly as the magnitude (that
is, the intensity multiplied by the duration) of the sum of pleasures, and inversely as
the magnitude of the sum of pains, experienced during that same length of time’’
(Bentham 1952, p. 83), everything can be reduced to a mathematical operation, or
more precisely to the solution of an optimization problem, not only on individual but
also on collective terms. This methodology aims at guaranteeing in the economic
sphere, as in any other sphere of human action, the compatibility between the
enunciative and the censorial sense of the principle of utility. In the economic sphere
this compatibility means solving the problems arising from insufficient information
or externalities.
In fact, there are two visions of economics in Bentham. The first is in his noneconomical writings, where economics is presented as a quality of the actor, the
ability to calculate and maximize. The second is in his economic writings, where
economics is an art dealing with the material problems of his times. In detail, the
object of the science of legislation is to guarantee security, subsistence, abundance,
and equality. ‘‘To political economy apply the axioms and principles relating to
subsistence and abundance’’ (Bentham 1952, p. 93).23 In both cases, the aim is the
same: the greatest happiness. This aim, in economic matters, is reached, in most
cases, by letting individuals act freely. However, this liberty of action, corresponding
to being free to maximize self-interest, requires that individuals count with all the
information necessary in order to avoid calculation errors. For Bentham, in economics as in any other sphere of human action, such an error is contrary to the
greatest happiness, the sole legitimate aim of any act. This is why Bentham’s
economic writings cannot be correctly understood without reference to the rest of his
23
‘‘The matter of wealth is at once the matter of subsistence and the matter of abundance: the sole
difference is the quantity;—it is less in the case of subsistence—greater in the case of abundance’’
(Bentham 1952, p. 111).
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JOURNAL OF THE HISTORY OF ECONOMIC THOUGHT
work and, in particular, to the notion of individual behavior that sustains the utility
principle (see Leloup 2000, Sigot 2001).
Therefore, Bentham can be thought of as extending the object of economics: it is
no longer limited to certain aspects of human life dealing with wealth, reproduction,
and market clearing; it can be thought of as a method, a way of analyzing any human
action. If economics is thought of as a way of apprehending social phenomena on the
basis of individual decisions that result from an optimization problem regarding
pleasure and pain or, in more general terms, self-interest,24 then Bentham is the first
to apply systematically this method to all aspects of human life. In Stark’s terms:
Bentham’s economic writings in the narrower sense of the word are by no means the
only contribution he made to economic thought. In fact, his main influence on later
developments has been exercised through his non-economic works which contain
a considerable number of statements and ideas on which later economists have built,
especially those of the marginal utility school, whether they acknowledge their
indebtedness to utilitarianism or not (Stark 1952–54, vol. III, p. 53).
We must not forget that at the time Bentham was writing on economics the economic
text was Smith’s The Wealth of Nations. Ricardo’s Principles of Political Economy
and Taxation did not appear until 1817. Bentham, using his all-encompassing principle, had formulated ideas that were not to become popular and accepted by the
economics community until the so-called Marginal Revolution in the late nineteenth
century. Bentham, for example, is a tenant of methodological individualism; he believes there is no such thing as a ‘‘body politic’’ and thinks everything starts with
individual decisions (Bentham 1952, pp. 95–96). The interest of the community,
affirms Bentham, corresponds to ‘‘the sum of the interests of the several members
who compose it’’ (Bentham 1952, p. 102). In order to determine the tendency of this
sum and whether it is conducive to happiness or unhappiness, Bentham proposes the
axioms of mental pathology. Such an axiom is a:
proposition expressive of the consequences in respect of pleasure or pain, or both,
found by experience to result from certain sorts of occurrences, and in particular
from such in which human agency bears a part: in other words, expressive of the
connexion between such occurrences as are continually taking place, or liable to take
place, and the pleasures and pains which are respectively the results of them
(Bentham 1952, p. 103).
The knowledge of such axioms is the basis for the arithmetic necessary to lead the life
of the community. The axioms of mental pathology allow establishing, for example,
that ‘‘the value of a thing in the way of exchange arises out of, and depends altogether
upon, and is proportioned to, its value in the way of use:—for no man would give
anything that had value in the way of use in exchange for anything that had no such
24
Interest corresponds to ‘‘an unprejudiced and wide conception which includes everything in which man
may conceivably be ‘interested’—everything to which a man’s ‘interest’ may conceivably be drawn’’
(Stark 1952–54, vol. III, p. 54). ‘‘A man is said to have an interest in any subject, in so far as that subject
is considered as more or less likely to be to him a source of pleasure or exemption [from pain]’’ (Bentham
1954, p. 424). Interest is central in Bentham’s analysis for it is the ‘‘sole efficient cause’’ of action
(Bentham 1954, p. 424).
UTILITARIANISM AND ECONOMIC IMPERIALISM
17
value’’ (Bentham 1952, p. 108). Notice that Bentham excludes the difference between
value in use and value in exchange, that is, the difference between the price and the
value of an object. At least this quote shows Bentham was far from the predominating
labor theory of value.25 This appears as an answer to Stigler’s previously mentioned
assertion, according to which Bentham has no theory of relative prices based on
utility and therefore cannot be considered as an economist.
What brings Bentham even closer to contemporary economics and has been
sufficiently remarked in Benthamite scholarship is his analysis in terms of decreasing
marginal utility:
the quantity of happiness will not go on increasing in anything near the same
proportion as the quantity of wealth . . . The effect of wealth in the production of
happiness goes on diminishing, as the quantity by which the wealth of one man
exceeds that of another goes on increasing; in other words, the quantity of happiness
produced by a particle of wealth (each particle being of the same magnitude) will be
less and less at every particle (Bentham 1952, p. 113).
This analysis sustains Bentham’s claims for redistribution policies tending to relative
equality among individuals. Certainly, as has also been noted in the literature, there is
a permanent tension between security and equality in Bentham’s writings because
redistribution measures can counter the expectation of enjoyment of property. Hence,
Bentham believes the best distribution is that where ‘‘while the fortune of the
richest—of him whose situation as at the top of the scale, is greatest, the degrees
between the fortune of the least rich and that of the most rich are most numerous—in
other words, the gradation most regular and insensible’’ (Bentham 1952, p. 116).
The point is the axioms of mental pathology allow Bentham to affirm that the
analysis of human actions in general, and the field of morals in particular, can be
formalized to gain in clarity and precision (Bentham 1952, p. 118). In fact, calculus
has always been part of the language of passions:
As a rule, these estimates [of the value of pleasures and pains] remain inarticulate:
they do not mature into definite figures. There is no need of figures, because in
practice the calculus of pleasure and pain is essentially a guide to action, and action
can be taken as soon as it is clear which value is greater, without exact comparison of
the magnitude involved (Stark 1952–54, vol. III, p. 57).
It is in order to produce an accurate science of legislation that Bentham tries to
perfect these calculations, inherent to human behavior, and which already have an
expression in prices. This is why the introduction of measures in this field can be
accomplished through the use of money: ‘‘Money is the instrument of measuring the
quantity of pain or pleasure’’ (Bentham 1952, p. 117). Money has the advantage of
keeping pace with the axioms of mental pathology, as it has a decreasing marginal
25
Sigot (2001) considers that Bentham does not really break completely with a labor theory of value and
shows several instances where the English author recognizes the importance of the production sphere in
the determination of value. No doubt, the fact that the text from which this quote is extracted, ‘‘The
Philosophy of Economic Science,’’ is an anthology by Stark emphasizes the modern aspects of Bentham’s
economic thought, just as the editor wanted to. Stark, for example, quotes Bentham on Ricardo asserting
‘‘He confounded cost and value’’ (Stark 1952–54, vol. III, p. 48).
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JOURNAL OF THE HISTORY OF ECONOMIC THOUGHT
utility and is a subjective measure depending on the wealth each individual possesses.
Even though Bentham is well aware of the limits of such an instrument, he believes it
must be used if any progress is to be made in politics and morals.
The possibility of applying economic calculus, pleasure-pain calculus, or, more
generally, benefit-cost calculus, to explain all human behavior and therefore social
phenomena leads to the definition of economics as a method rather than as field of
study. Economics corresponds then to an attitude of the human mind, to a natural
disposition towards calculation (for example, ‘‘all passions calculate’’). Therefore,
economics becomes the social science, it becomes a social philosophy explaining all
social phenomena, political, cultural, sociological, and even moral.
A major implication of this definition of economics is, as Dierdre McCloskey
(1998) calls it, its ethical nihilism. McCloskey (1998, p. 305) traces this ethical
nihilism ‘‘to Bentham, viewed as a hero by recent ethical nihilists such as George
Stigler, Gary Becker or Judge Richard Posner.’’ When every motive of action is
reduced to maximizing pleasure and minimizing pain, then the criteria of right and
wrong, of good or bad, is reduced to a correct calculus of utility. Morals become a
technical problem and moral fault becomes a miscalculation. Thus, through Bentham
and Becker, economics as a method, rather than becoming independent from morals,
absorbs it. All virtues are reduced to the ability to calculate (which McCloskey (1998,
p. 314) identifies with Prudence).
This is possible because of the conception of human action underlying the theories
of Bentham and Becker. Bentham’s anthropological conception can be seen then as
the foundation of the rational economic agent. In this sense, Bentham appears as an
important ancestor of the economic approach. Guidi (1997, p. 3) remarks that
‘‘Bentham’s methodology of analysis—based on the deliberations of ‘calculative’
individuals who maximize their ‘profit’ under constraints—makes of his ‘economic
approach to politics’ more than an anticipation of the modern economic analysis of
(private and public) institutions’’ and, we would add, of all social phenomena.
V. KEEPING THE DISTANCES
In spite of the points that we have shown are common to both authors, important
differences remain. The first and most obvious is the goal each author proposes:
Bentham aims at social reform, whereas Becker seeks to explain social phenomena.
Bentham did all he could to implement his projects (for example, the panopticon
prison or the chresthomatic school) and constantly wrote to politicians even if they
had not asked for his advice. Becker ‘‘has not played any significant role in the policy
arena, either as an advisor to political candidates or in a position in government’’
(Fuchs 1994, p. 191). Bentham’s study was intended to show that in order to reach the
greatest happiness it was necessary to influence human conduct: ‘‘And as the only
means by which any individual can be engaged to operate toward it [the greatest
happiness], the happiness of that same individual: viz. either by indicating or creating
an interest operating upon him as a motive and engaging him to operate towards that
end’’ (Bentham 1817, p. 60). Becker does not explicitly advocate any such end. In his
treatment of crime or discrimination he advances policy recommendations (for
example, augmenting fines rather than imprisonment periods) but he does not see
UTILITARIANISM AND ECONOMIC IMPERIALISM
19
them as a means towards greatest happiness. Becker’s justification reads in terms of
economic efficiency26; crime should be controlled because it produces diseconomies
(Becker 1968, p. 173).
The difference, as noted by Becker himself, is that Bentham was more concerned
with what individuals ought to do rather than with what they actually do: ‘‘he
[Bentham] was first and foremost a reformer—and did not develop a theory of actual
human behavior with many testable implications’’ (Becker 1976, p. 9).27 Guidi
remarks that Bentham’s utilitarian approach ‘‘examines the whole field of legislation
in the light of an ethical standard, whereas [economic analysis] rejects valuational
implications’’ (2000, p. 5). This, as noted earlier in this section, may be contested on
the basis of the consequences of introducing the enunciative sense of the utility
principle within the economic approach.
There is, however, one point on which both analyses agree concerning applied
economics (as a social philosophy): a system of punishments and rewards is the most
effective way of influencing individual behavior. Therefore, understanding human
behavior is the first step towards effective policy-making regardless of the final end.
In this sense and in Benthamite terms, Becker applies the enunciative sense of the
principle of utility and considers its consequences in terms of social phenomena.
Even if, according to Becker, Bentham ‘‘did not maintain the assumption of stable
preferences,’’ he did believe that only through application of the principle of utility
was it possible to understand society.
A second difference seems to be more problematic and deserves further study. As
has been shown, the relationship between utility theory and hedonistic psychology is
not straightforward. Many economists since Alfred Marshall have argued economic
theory has nothing to do with such a psychology or with utilitarianism at large:
To be a utility maximizer is merely to choose the available option one most prefers
(or, in the case of ties, to choose one among the set of maximally preferred options).
Although the utility language was inherited from the utilitarians, some of whom
thought of utility as a sensation with a certain intensity, duration, purity or
propinquity (Jeremy Bentham 1789, chapter 4) there is no such implication in
contemporary theory. To speak of individuals as aiming to maximize utility or as
seeking more utility may suggest misleadingly that utility is an object of choice,
some ultimately good thing that people want in addition to healthy children or better
television. But the theory of rational choice specifies no distinctive aims. This fact is
of considerable importance to moral theory, for utility theory as such is detached
from any hedonistic psychology (Hausman and McPherson 1993, p. 680).
However, we have tried to argue that, at least, in the sense that the economic approach
understands utility it can be closely related to the hedonistic psychology underlying
Bentham’s utilitarianism. This would lead to a further analysis of the theoretical and
epistemological implications of reintroducing a moral philosophy within economic
analysis.
26
‘‘The main contribution of this essay, as I see it, is to demonstrate that optimal policies to combat illegal
behavior are part of an optimal allocation of resources’’ (Becker 1968, p. 209).
27
Stigler (1972, p. 114) believes Bentham’s intellectual tragedy was precisely limiting his analysis of
utility to the role of utility as a moral guide.
20
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VI. CONCLUSIONS
Bentham defines individuals as beings capable of feeling pleasures and pains, whose
behavior is governed by self-interest, egoistic and sympathetic passions. Furthermore,
the individual calculates precisely because he/she is governed by passions. This
calculating individual is the foundation of a pragmatic philosophy that makes every
aspect of human life a technical problem. To the extent that this view can be considered as the foundation of the economic approach to behavior, Becker can be seen
as the modern representative of this pragmatic philosophy.
Bentham thus gives a philosophical justification to the economic approach to
behavior. Through the enunciative sense of the principle of utility, Bentham gives
a new foundation to all human behavior: calculus and utility maximization. We have
argued that this attitude of the mind to calculate gives a particular definition of
economics; this definition then leads to the claim that Bentham’s pragmatic philosophy absorbs all the spheres of human action thus legitimizing the economic approach to behavior not on technical but on philosophical grounds.
Bentham’s application of the principle of utility to all fields of study shows the
power of a method as the unifying principle of all social science. Contemporary
economics shares this feature: it is not so much its subject matter as its adhesion to
a technique and a certain approach that marks its unity as a science (Colander 2000;
Fine 2002, p. 198). This unity of method can be traced to a single way of conceiving
individual behavior.
With the application of the utility principle in the analysis of economic matters
Bentham introduces his own notion of the individual based on what has come to be
known as rational behavior. This means a profound transformation of economics
itself. Bentham analyzes the traditional topics of economics (production, distribution,
and consumption) using a choice theory based on individual calculations. The
individual faces exactly the same problem in any of the spheres of human action, in
his/her market and non-market activities. Passions calculate, says Bentham, and they
always do no matter where the individual finds him/herself; calculating is part of
human nature. Hence, the limits between spheres of action vanish, just as do the
frontiers between social sciences. The study of social phenomena implies the study
of individual behavior in general, and of choice as the result of a calculation in
particular.
The building block is thus a principle of human behavior: self-regarding interest is
predominant and has place everywhere (Bentham 1954, p. 421). This implies,
according to Bentham, that all actions are intended to produce the greatest happiness
to the agent (Bentham 1954, p. 421). Once again we find this (that is, the enunciative
sense of the principle of utility) is an axiom or a common truth (Bentham 1954,
p. 432) for which no proof is needed. Bentham asserts the existence of the species is
proof enough (Bentham 1954, p. 421). Therefore, an economic system, as well as its
study, has to be constructed on the basis of personal interest (Bentham 1954, p. 433).
No doubt Bentham and Becker do not derive the same conclusions from their
analyses. The former, for example, was favorable to measures of public employment
through public works in periods of mass unemployment of poor manufacturers. He
was also much more concerned with the pragmatic aspects of his study and thought
UTILITARIANISM AND ECONOMIC IMPERIALISM
21
science was only useful as a guide to action. As Stark (1952–54, vol. I, p. 16) puts it,
for Bentham, ‘‘‘science’ means ‘power’—power to do good.’’28 Bentham explicitly
acknowledged political economy was part of politics, which was itself a subdivision
of ethics or of ‘‘what is proper to be done.’’ Its study, as any other, should be guided
by the utility principle: ‘‘If all knowledge is, in the last analysis, part and parcel of the
pursuit of happiness, the starting point of any science will have to be the potential
utility of the objects or actions which it sets out to investigate’’ (Stark 1952–54, vol. I,
p. 19). Here, however, the distance with Becker starts to fade; there is an avowed
purpose of uniting all social sciences under a single method because their object is
the same: the pursuit of happiness. The way to do it is to start from what Bentham
considers a self-evident truth: the enunciative sense of the utility principle.
Exploring the proximities between Bentham’s utilitarianism and Becker’s economic approach allows not only a search for the philosophical foundations of the
latter but also for recovering the former as generalized economic theory capable of
explaining all human behavior. Henry Sidgwick (1877, p. 631) considers Bentham’s
most important merit as having excluded all other criteria and all other aims apart
from the utility principle and having used it in a methodical and exhaustive manner in
all practical domains. All practical domains included ethics and, therefore, all social
sciences. This led Bentham to believe that all spheres of human action are amenable
to mathematical treatment because they expressed accurately everyone’s capacity to
calculate. He did not count with the mathematical developments necessary to
accomplish his goal, and therefore his felicific calculus remained in what he himself
recognized to be a rudimentary stage. Economics has long overcome this caveat
precisely because ‘‘The goal of economics is to unify thought and to provide
a language that can be used to understand a variety of social phenomena’’ (Lazear
2000, p. 142).
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