J. M. Keynes's General Theory: The Role of Virtue Ethics Versus the Benthamite Utilitarian Ethics of Classical, Neoclassical and 'Modern' Economics
19 Pages Posted: 19 Sep 2017 Last revised: 22 Sep 2017
Date Written: September 17, 2017
J. M. Keynes based the ethical foundations of the General Theory on a type of Virtue Ethics that he had learned from G. E. Moore. Keynes himself reinforced his understanding of Moore’s version of Virtue ethics with extensive readings of the works of Plato and Aristotle. Keynes was one of the exceedingly few to have read Adam Smith’s The Wealth of Nations. Keynes had known since 1910 that Smith was not a Classical (utilitarian) economist. Keynes returned to the wisdom of Adam Smith in his last published article in June,1946 in the Economic Journal.
What Neoclassical economists really objected to were two major points made by Keynes in the General Theory. First, Utilitarianism, of whatever type, collapses if either the probabilities or the utility of the outcomes (consequences) can’t be estimated precisely using numerical probabilities and point estimates for the utility value. Utilitarianism can only work, then, if the future is risky. Utilitarianism can NEVER work if the future is uncertain. Therefore, since Benthamite Utilitarianism is the foundation for all of the work of, for example, both Milton Friedman and Robert Lucas, no type of uncertainty or vagueness or ambiguity or fuzziness can be allowed in any theoretical aspect of economics.
Adam Smith was the first to clearly recognize this in the Wealth of Nations on pp.106-113. Under risk assessment, the point estimates of the probabilities and the consequences, or the utility of the consequences, can be estimated. Utilitarianism collapses if the probabilities or outcomes or the utilities of the outcomes are interval valued. For Keynes and Smith, the probabilities and the utilities or outcomes are interval valued.
Second, for Neoclassical economists, there is no right or wrong or good or evil in the moral sense of the term that can be applied to any position taken by an individual as it relates to future outcomes. Therefore, moral judgments can and should play no role at all, since only the consequences of actions matter and are good or bad. Good means a good outcome for the individual and bad means a bad outcome for the individual. Keynes, near the end of section II in chapter 19, brings the full force of his brand of virtue ethics into play by explicitly and relentlessly attacking the neoclassical position. It is these two points which will always separate Keynes from any type of neoclassical analysis.
Keywords: Virtue Ethics, Utilitarian Ethics, G E Moore, Aristotle, Adam Smith, J Bentham, Keynes
JEL Classification: B10, B12, B14, B16, B20, B22
Suggested Citation: Suggested Citation