George Stigler on Adam Smith: Mixing up Smith with Bentham Leads to Confusion

Abstract

Utilitarian economists have been mixing up and confusing the work of Adam Smith and Jeremy Bentham for well over two hundred years. Smith was a practitioner of Aristotle’s Virtue Ethics (Prudence, Temperance, Justice, Fortitude) combined with the Christian virtue of Charity (Beneficence or Benevolence). Bentham was an advocate of a hedonistic approach to ethics that he especially designed to serve as the foundation for Classical and Neoclassical economics. He called his approach maximizing your utility. His advocacy of the position that the only goal in life was to always “Maximize your Utility” became known as Benthamite Utilitarianism. Smith completely rejected Bentham’s position. A major confusion among economists is the failure to recognize that the Prudence of The Theory of Moral Sentiments is the Self Interest (self-love) of the Wealth of Nations. Smith would have thought that it was obvious that it would be impossible for an individual to help anyone else in the future until and unless he has first helped himself to become a financial success in the present. Benevolence can only take place if prudence has occurred first. Prudence is thus a necessary, but not a sufficient, condition in order for Benevolence to take place. An individual must first have accumulated the necessary resources to create a surplus before he can give to others. The impediment to a virtuous life is the personal moral corruption that can arise during the period of time that the virtue of prudence is being diligently applied. George Stigler was a follower of Jeremy Bentham just as much as Say, Ricardo, Senior, J. Mills, J.S. Mills. All classical, neoclassical, and new neoclassical economists are followers of Bentham. Stigler’s work on Smith is viewed completely through the glasses of Jeremy Bentham. Since Adam Smith was, in fact, an avowed opponent of utilitarianism and especially of Bentham’s version, Stigler’s commentary on Smith can only end up being highly misleading, confused and confusing. Nowhere in anything written by Stigler on Smith in his lifetime does Stigler realize that Smith has introduced the concept of uncertainty into economic decision making carefully. Stigler is completely oblivious to Smith’s explicit and detailed comparison – contrast in the shoemaker – lawyer-liberal arts employment options problem concerning uncertainty in chapter 10 of Part I of the WN. However, Stigler must avoid Smith’s uncertainty analysis because it directly contradicts his belief that Smith is a utilitarian like Bentham.