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Utilitarianism is a moral and political theory that can be characterized as a combination of a theory of welfare and a concern with welfare as the good. Although there are many forerunners, utilitarianism arose in the Scottish Enlightenment. Thereafter, it was forcefully articulated by Jeremy Bentham (1970), who applied it to the design of legislatures and other institutions and to legislation and law; it was applied to law by John Austin (1954); and it ﬂourished in the writings of John Stuart Mill (1969), Henry Sidgwick (1907), and many nineteenth and twentieth-century economists. The focus on welfare as the good has been virtually constant from the beginning, although the scope of that concern sometimes expands to cover animals other than humans. The theory of welfare, however, has undergone frequent, substantial changes, largely because it is central to the discipline of economics.
Surprisingly often, sophisticated academics suppose that utilitarianism is solely about self-interest, that it is the moral theory of egoism. Among anti-utilitarian moral theorists, it has been characterized as virtually the opposite of egoism: as beneﬁcence run wild. Sidgwick (1907) supposed that egoism and utilitarianism were two great, contrary divisions of moral theory. Utilitarianism had been the chief moral theory in law for more than a century until recent decades, which have seen the rise of competing rights talk (Hart 1983). The movement of law and economics, which arose at about the same time as the move toward rights talk and which has come to dominate many areas of the civil law, has continued the utilitarian tradition and has even displaced rights talk in many contexts.
Utilitarianism is the principal moral stance of contemporary economists, although the more common term may now be welfarism. The focus of much economic thought since before the time of Adam Smith has been on what the economy does for the welfare of people in a market society. From the time of the Scottish Enlightenment through the nineteenth century, economics and utilitarianism developed together in Anglo–Saxon thought, with many authors contributing to both. During the twentieth century, philosophical utilitarianism became disconnected from economic reasoning, and it therefore lost contact with further developments of value theory in economics as—some would say—it also lost contact with morality in the real world.
1. Value Theory
The split from economics was a misfortune for utilitarian thought in philosophy. The sometime theory of welfare of Bentham and many utilitarians, including such economists as F. Y. Edgeworth (1881), tended to conceive welfare or utility as cardinal and additive across individuals. From Vilfredo Pareto through the 1930s, there was a revolution in value theory in economics that jettisoned the interpersonal comparisons required for summing across individuals and then jettisoned cardinal-value theory altogether. Contemporary economics is largely grounded in an ordinal-value theory that merely ranks states of aﬀairs and does not allow interpersonal comparisons.
If we cannot aggregate across individuals, then we are limited to making ordinal Pareto comparisons in which we can say that one state of aﬀairs, X, is better than another, Y, only if at least one person is better oﬀ in X than in Y and no one is worse oﬀ in X than in Y. The beauty of a Benthamite additive utility is that, in principle, it would allow us to give complete rankings of all states of aﬀairs. In Pareto’s world of no interpersonal comparisons or aggregations, we cannot rank two states of aﬀairs if some people are better oﬀ in one of them and others are better oﬀ in the other. Since it is relatively implausible that any signiﬁcant social or economic policy could fail to make some worse oﬀ than in the status quo, we seem to be restricted to living with the status quo.
Contemporary policy analysts solve this restriction to the status quo by using cost–beneﬁt analysis to commend many policies, such as public expenditures on highway programs. In such analyses, the costs and beneﬁts to all are added, and a policy is adopted only if it has a positive sum—especially if that sum is relatively large. On the surface, this sounds like a cheat, as though a century of value theory were being ignored. Even those who accept only the more reﬁned ordinal-value theory without interpersonal comparison, however, might agree ex ante that the status quo is worse for us individually than the expected value of an alternative. It would therefore be mutually advantageous for us to create institutions to make policy choices that would allow us to reach a new state, the expected value of which is greater. From an ordinal stance, we can choose ex ante to have an institution that makes some decisions on the basis of some kind of cardinal assessment, even though we could virtually always be sure of any project that it would cause harm to some.
Often we could recognize directly that a policy would serve mutual advantage ex ante. For example, vaccination against a grim disease might be expected to cause harm to a few but to protect virtually everyone else from the disease. Ex ante, I do not know whether my child will be one of those harmed or one of those beneﬁted, but I might have a good sense of the probable advantages to my child, and those advantages might weigh heavily in favor of adopting the vaccination policy. If the economic cost of vaccination is negligible, as it generally has been, this approximates a simple cost–beneﬁt analysis in which both the costs and beneﬁts are measured in lives. In the case of a disease that has only human carriers, as is true of smallpox, it is even possible to eradicate the disease altogether. This has been done with smallpox and may soon be done with polio.
More generally, we create mutual-advantage institutions, which are utilitarian in an ordinal welfarist sense (Hardin 1988). The policy-making institutions we create could adopt a policy of using cost–beneﬁt analysis for many classes of policy problems. In this two-stage account, the use of cost–beneﬁt analysis serves mutual advantage ex ante and is therefore ordinally welfarist, despite being based on cardinal, interpersonally comparable values. Any application of the method will lead to policies that harm some while beneﬁting others, but the adoption of cost–beneﬁt analysis by the institution will be a mutual advantage move ex ante. We can make similar arguments for the creation of constitutional arrangements, a criminal justice system, and civil law. Ex ante, they can all serve mutual advantage and can therefore be ordinally utilitarian.
Even economists have diﬃculty with ordinal thinking in many contexts, despite the facts that they think ordinally regularly in their microeconomic theorizing and that they sometimes insist that cardinally additive reasoning is philosophically incoherent. Yet they commonly fall back on cardinal thinking when they do policy analysis. Since much of their policy analysis addresses questions of how to allocate money to various programs, they have devices that make their problems approximate merely the addition and comparison of numbers of dollars. Despite massive criticism of these devices by many non-economists and some economists, it is hard to imagine doing policy analysis or justifying policies at all in some realms without such additions. It is typical to criticize standard cost–beneﬁt analysis for disregarding nonmonetary values but to give no alternative scheme for handling the pressing issues such analysis is used to address (Gutmann and Thompson 1996). It is a great advantage of a theory that has real content that it can be criticized in such speciﬁc ways. One wishes the alternative theories were suﬃciently articulate to be susceptible to criticism.
An inherent implication of an ordinal, as opposed to a Benthamite cardinal, utilitarianism is that we must be more modest in our claims about the good we might do in the world, because our theory often yields ambiguous implications—or, essentially, no implications at all—for what policy we should adopt. This is a conclusion that all moral theorists might well take to heart. If moral debate allowed greater play for ambiguity and indeterminacy, it would have a less assertive and dismissive quality. It would then seem more moral. It would also be more relevant. In any case, on our present understanding of personal welfare, there is little prospect of doing cardinal comparisons and aggregations of welfare over populations in many important policy contexts. It is therefore unfortunate that, although we regularly do it in daily life at the personal and small-number level, thinking ordinally is especially diﬃcult when we think of broad social policy. There are easy cases, such as vaccination, but when the values at stake are not so simply uniform across an entire population, we have much greater diﬃculty making the comparisons.
For some policies, we can identify the losers ex ante and therefore cannot say that these policies are ordinally utilitarian. We can meet this objection by compensating anyone who evidently is made worse oﬀ by a policy. There are two substantial problems with such compensation. First, the promise of compensation is likely to provoke exaggerated claims that one is made very much worse oﬀ. Compensations, therefore, tend to be standardized as though all have similar values. Ex ante, this might be acceptable, and we can therefore make serious policy choices. Ex post, such standardization may seem unfair for anyone with unusual preferences or beliefs (Calabresi 1985).
Second, compensation to anyone who is made worse oﬀ by any change at all cannot be a plausible program, because it would entail compensating people for the economic failures that are a natural implication of technological and other economic changes. If the state must compensate every bankrupt, the economy will stagnate. One might suppose that the economy is more nearly a force of nature than a matter of public choice and that therefore we need not be concerned with compensation for the harsh results of the market. If, however, we could compensate for market harms and yet do not, we implicitly permit trade-oﬀs across individuals for the sake of greater market productivity overall. Anyone who thinks that economic progress is good in at least some states of development must countenance losses to some for the perhaps greater gains of others.
The chief contemporary use of utilitarian reasoning is in ex ante speciﬁcation of institutional structures and devices, not in direct application to immediate policy choices. Even cost–beneﬁt analysis, which might seem to be the preeminent use of utilitarian reasoning is, in fact, justiﬁed not directly as though it were directly a utilitarian calculation. Rather, it is justiﬁed only ex ante. For a very simple case such as vaccination, direct calculation works because we can make ordinal judgments. For more complex problems, it does not work, because we cannot make such judgments.
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