Adam Smith (and Keynes, the Ancient Hebrew Israelite Prophets, Christ, Buddha, Socrates, Plato, Aristotle, Mohammed, Aquinas, Augustine, Abbess Ng Mui, Confucius, Ramakrishna, and Gandhi ) Against Jeremy Bentham (and the Modern Economics Profession)

Abstract

Adam Smith (and Keynes, the Ancient Hebrew Israelite Prophets, Christ, Buddha, Socrates, Plato, Aristotle, Mohammed, Aquinas, Augustine, Abbess Ng Mui, Confucius, Ramakrishna, and Gandhi) were all practitioners of some form of Virtue Ethics. Jeremy Bentham (and the economics profession since 1790) and his followers are all practitioners of some form of Utilitarianism. The fundamental conflict turns on the misunderstanding of the concept of self interest. The Virtue ethics view of self interest is that it is one of the major virtues. Self interest is based on the virtue of Prudence for practitioners of Virtue Ethics. Smith liked to use the words “Self-Love”, as well as prudence and self interest, because, if you can’t love (care for) yourself, then you will never be able to love (care for) someone else. Prudence thus requires careful, judicious planning, hard work, circumspect behavior, a stick-to-it, never give up mentality, motivation, frugality, parsimony, saving, dedication, carefulness, and putting safety first. It allows the prudent brewer, baker, butcher, beautician, brick layer, and blacksmith to support themselves, their families and relatives while building up a surplus or nest egg as a safeguard against bad times or economic downturns. The virtue of prudence is a necessary condition that must be applied first. It puts one in a position to be able to practice the other virtues later if they can avoid the problem of corruption. Bentham’s definition of self interest is totally different from Smith’s. Self interest is defined as maximizing only one’s own utility, where money can be considered as proxy for Utility. Thus, for Bentham, it is the accumulation of more and more money (wealth) over time that is the beginning goal of one’s life and the ending goal of one’s life. It is the only viable goal in life if one is rational. Any other goal is irrational. For Smith, profit maximizing behavior is prudent behavior because it allows the hard working brewer, baker, butcher, beautician, brick layer, and blacksmith to build up a surplus or nest egg. This can be used to cover future unexpected costs, such as health problems, as well as to practice benevolence (charity) to help others. However, utility maximizing behavior is rejected by Smith because there are a number of other concerns or goals, such as honesty, justice, equity, fairness, etc. that are as important as economic consequences. For Bentham, these other goals are all besides the point because only economic consequences can count for Bentham, where a good consequence is a positive monetary outcome for an individual and a bad consequence is a negative monetary outcome. The concept of a moral judgment, in terms of Good or Bad and Right or Wrong have no place in Bentham’s system. Only the monetary outcome of any action is evaluated as good or bad. Thus, the Good Samaritan’s helping the robbed and badly beaten traveler, who is a Jew, would be viewed by Bentham as being reckless, irresponsible, hasty, emotional, dangerous, foolhardy, unwise and costly behavior, since the Good Samaritan will have to spend additional silver coins on his return trip home in order to cover the additional cost of the full recovery of the traveler that will serve to drain his bag of silver coins. The virtue of courage displayed here (or practiced by, for instance, Socrates, Christ, and Ng Mui) would be regarded as foolhardy and reckless by Bentham. (See my paper on the Good Samaritan parable at SSRN).