The University of Chicago’s Economics Department Approach Is Based on the Philosophy of Jeremy Bentham’s Rational Utility Maximizer: It Has Nothing to Do with the Virtue Ethics Approach to Self Interest of Adam Smith in the Theory of Moral Sentiments or the Wealth of Nations
42 Pages Posted: 30 Dec 2019 Last revised: 31 Dec 2019
Date Written: December 8, 2019
The following assessment of Adam Smith's approach to economics is completely erroneous, but would be a very exact and accurate description of Jeremy Bentham’s utilitarian approach to economics:
"How do you get your dinner?" That is the basic question of economics. When economist and philosopher Adam Smith proclaimed that all our actions were motivated by self-interest, he used the example of the baker and the butcher as he laid the foundations for "economic man." He argued that the baker and butcher didn't give bread and meat out of the goodness of their hearts. It's an ironic point of view coming from a bachelor who lived with his mother for most of his life ― a woman who cooked his dinner every night.” (Marcal, K., 2017).
The University of Chicago Economics Department approach is based on the philosophy of Jeremy Bentham’s rational utility maximizer, as set out by Bentham in 1787 in his The Principles of Morals and Legislation and in his Defense of Usury. This approach never had anything to do with the Virtue Ethics approach of Adam Smith in either The Theory of Moral Sentiments or The Wealth of Nations. In fact, both books by Bentham are direct, but subtle, attacks on Smith’s The Theory of Moral Sentiments and The Wealth of Nations. Bentham rejected Virtue Ethics completely. Smith rejected utilitarianism completely.
Smith emphasized the second of Jesus Christ’s two necessary and sufficient laws for living a happy life-first, Love your God and second, love your neighbor as yourself. A longer summary of this second law would be to love your neighbor as you love yourself. Loving yourself always comes first. Loving yourself, or self love or self interest, is what is involved in the most important virtue of all, Prudence, because, unless you love yourself first, it is quite impossible to love anyone else. Smith argued that the baker, brewer, and butcher supplied their goods based on the virtue of prudence. It is a very severe error to regard altruism, which states that you only should love your neighbor, as a virtue because altruism directly contradicts Christ’s, as well as all other spiritual teachers and messengers position, about the importance of the self. In general, except in extreme, very unique circumstances, altruism is a vice, because it promotes the neglect of self love.
A severe confusion about the virtues of benevolence and magnanimity, which can only be practiced after, and never before, the virtue of prudence has been successfully accomplished, and altruism, can be seen in all of Gary Becker’s work at the economics department at the University of Chicago. Becker’s work, as well as that of G. Stigler and M. Friedman, follows directly from Jeremy Bentham’s utilitarian claim that only the maximization of utility (Max U) can serve as the foundation for the study of ethics. Bentham’s Max U philosophy is directly opposed to the virtue of prudence. Bentham argued that the only way of measuring utility is to substitute the amount of money gained in any interaction or action involving others. All transactions and interactions are judged from a purely pecuniary or monetary nature alone ,and all involve the love of money for money’s sake:
“But at all times, every man, more or less, loves money…But if a man, by his love of money…For take men throughout if a man loves money to a certain degree to-day it is probable that he will love it, at least in equal degree, tomorrow.” (Bentham, 1787, pp.167-168, ft.2).
Thus, Bentham’s one and only rule, that is consistent with his entire life’s commitment to psychological egoism, is to love yourself only or only consider yourself at all times. Adam Smith totally rejected both Bentham’s position and the Chicago school of economics, which is built completely on a foundation of Bentham's Max U. All of the work of Friedman, Stigler, and Becker is merely a series of footnotes to Bentham’s theory and the Max U model of rational economic man, combined with Bentham's oscillating pendulum model, where only exogenous, outside shocks can create disequilibriums, which will naturally dissipate by themselves overtime so that no government actions are ever required at any time to restore equilibrium. Such actions merely delay the self correcting swing of the pendulum toward equilibrium.
Over the last two and one half centuries, Benthamite Utilitarian economists have labored unceasingly to combine Smith’s virtue ethics approach to self love and self interest, based on Jesus Christ and all other spiritual teachers and messengers, with Bentham’s directly conflicting concept of self interest and self love based on egoism.
This has led to the gross canard that Smith believed in the Invisible Hand of the Market and Laissez Faire economic policies, operationalized through Max U thinking concerning Bentham’s rational economic calculator model, that happiness is only a function of the amount of money accumulated over one’s life. Nothing could be more false.
Alone among economists, only Gavin Kennedy (2005, 2008, 2012) recognized that Smith completely rejected the Invisible Hand of the Market and Laissez Faire.
Keywords: Smith, Bentham, Prudence, Max U, self interest versus self(ish) interest, Utilitarianism, Virtue Ethics
JEL Classification: B10, B12, B14, B16, B20, B22
Suggested Citation: Suggested Citation