The Moral Bankruptcy of Modern Economic Thought

by Oct 2, 2024

The Moral Philosophy Undergirding Economics

If you were to take a principles of economics course today, the implicit undergirding moral philosophy is utilitarianism. The meaning of this term is probably lost on most people. Even most modern economists may have no idea what the term actually means or that it is the underlying moral philosophy upon which much analysis is based. While modern economists are likely to believe they are engaged in a purely scientific pursuit apart from any moral implication, the truth is that using this kind of analysis to justify whether government resources should be used for this or that public policy must appeal to some moral foundation. So, the questions are, what is utilitarianism and is it fundamentally immoral?

200px john stuart mill by london stereoscopic company c1870

Origins of the Term Utilitarianism

Utilitarianism is a term coined by John Stuart Mill who penned a book by that title. Mill was influenced by a strict educational upbringing at the hands of his father, who was a disciple of Jeremy Bentham. In the early part of the nineteenth century, Bentham proposed a radical new approach to moral philosophy that had ramifications for the direction of public policy. Bentham was very much influenced by the Enlightenment and his aim was to overthrow the prevailing moral philosophies of the time. The traditional views appealed to natural or divine law, which asserts that human beings possess fundamental rights. Bentham claimed that no such rights exist. Rather, he argued, all people seek pleasure and avoid pain instinctively and the real moral imperative was to promote the greatest amount of pleasure while minimizing the total amount of pain in society. In essence, Bentham proposed a social mandate known as a “hedonistic calculus.”

While the concepts of utility and hedonism were well-known beforehand, Bentham redirected and combined them to assert this new moral imperative. Indeed, apart from utilitarianism, the idea of utility was, and always will be, fundamental to any consistent study of economics. The idea of utility is simply the perceived usefulness of economic goods. But Bentham applied the concept of utility to human behavior. His assertion was that ethical behavior should promote the greatest happiness for the greatest number. This idea departed radically from traditional ethical philosophies because it allowed for ignoring accepted moral imperatives when doing so contributed to the happiness of the majority. As Frederick Copleston put the matter, “Bentham did not invent the principle of utility: what he did was to expound and apply it explicitly and universally as the basic principle of both morals and legislation.”[i] Thus, Bentham was a social reformer who aimed to change the world. He attacked traditional morality and rejected the concepts of both natural law and natural human rights.

Utilitarianism vs. the Judeo-Christian Ethic

It should be clear that Bentham’s position is at odds with Christianity. Divine law explicitly affirms the right to life, liberty, and property. The Judeo-Christian tradition has always held that man is made in the image of God. Nevertheless, he is a fallen creature given to sin. For this reason, his desires are not godly, and this results in the pursuit of pleasure in the wrong kinds of things. While such behavior might bring immediate pleasure, the long-term consequences of sin are always death and destruction. As such, the Bible teaches that a man ought to learn self-discipline and ought to order his behavior in light of God’s commandments even though doing so may mean enduring some immediate pain.

In the economic realm the prohibitions on theft, lying, and coveting provide the boundaries of human action. Bentham denies these boundaries, but Scripture everywhere points to the reality that they exist and apply to all of life. A person’s life in this world is about making choices either for or against God. For economic purposes, government is needed to simply prevent theft and fraud. Over the course of their lives, people engage in all kinds of activities that involve short-term pain they believe will bring long-term gain. This is why people visit gyms regularly and save money for their futures.

However, there is no way to discern what kinds of tradeoffs might be best on the basis of a hedonistic calculus. We do not all agree on what the “good” is. Some might find climbing Mount Everest a monumental task worth risking their lives to accomplish.  Most of us would prefer not to do so, and might even be inclined to believe that the task is hardly worth undertaking.

John Stuart Mill’s Background

The impact of utilitarianism is seen especially when economists engage in modern day cost-benefit analyses based upon welfare economics derived from equilibrium modeling. The way this happened is somewhat owed to John Stuart Mill.[ii] As noted, Mill’s father was a disciple of Bentham and aimed to raise his children to embrace utilitarian ideas. For this reason, he undertook to personally supervise their education. John Stuart was forced to master the classical languages at an extremely early age, and he completed his formal education when he was only fourteen years of age.

However, the demands of his father took a toll in his life and the young Mill suffered an emotional breakdown at the age of twenty. During this time, he was influenced by the work of a variety of socialist reformers and romantic writers. Nevertheless, he maintained his utilitarian point of view. He even coined the term utilitarianism and wrote an entire book on the subject. Just the same, the social reform movement impacted Mill and that can be seen in some of the policies he supported. For example, he was one of the first to advocate a death tax to redistribute wealth. He couched his argument within the context of utilitarianism by arguing that such redistribution is necessary to level the playing field to promote the greatest community gains.

Justifying Theft

However, this argument is at odds with Scriptural teaching that prohibits theft. Such a prohibition must carry with it the notion of private property and the concept that it ought to be respected and protected. For the government to intrude into such affairs for utilitarian ends is certainly inconsistent with the Scriptural conception of the purpose of government. It is similar to saying that it is moral to violate property rights if we have a majority vote to approve it. In addition, the writer of Proverbs tells us that, “A good man leaves an inheritance to his children’s children. . . .”[iii] Moreover, throughout the Bible we can find mandates for people to look to the future and to provide for their own families. But nowhere will one find mandates that suggest the power of government should be used to undercut the property rights of people for the purpose of redistributing wealth. Despite all of this, Mill was a giant in the profession and his views on the subject became more and more shared by his students.

There is a fundamental problem with assuming a utilitarian ethic when analyzing policy options. Namely, it embraces a kind of collectivism that is also at odds with Scripture. Edmund Opitz has rightly observed that utilitarianism with its “greatest happiness principle completely neglects the spiritual dimension of human life. It asserts that men are bound together in societies solely on the basis of a rational calculation of the private advantage to be gained by social cooperation under the division of labor.”[iv] However, this position is seriously misguided. Theft has always been the first labor saving device, and because of sin, people have always demonstrated their willingness to resort to it to get what they want. Likewise, the utilitarian principle will use the collective power of government to redistribute income as long as someone might argue that it serves to promote the greater good. In the years since Mill, we have seen the rapid expansion of government as people find more and more ways to use it for their own personal benefit. Arguments for redistributive policies have invariably been built on the notion that they will provide for the greater good even though they necessarily imply the violation of the private property rights of some people. “Utilitarianism, in short, has no logical stopping place short of collectivism.”[v] “If morality is ultimately had by making the individual’s happiness subservient to the organic whole of society, which is what Bentham’s utilitarianism asserts, then the human rights of the individual may be violated. That means property rights may be violated if it is assumed to promote the utilitarian end.”[vi]

J. G. Machen 198x284 1

J. Gresham Machen’s Insight

J. Gresham Machen, a Presbyterian theologian of the early twentieth century, saw clearly the damage this kind of thinking can have on people. He understood the importance of liberty in promoting spiritual growth. In his defense of traditional Christianity against the liberalism of his day he wrote:

The whole development of modern society has tended mightily toward the limitation of the realm of freedom for the individual man. . . . It never seems to occur to modern legislatures that although ‘welfare’ is good, forced welfare may be bad. In other words, utilitarianism is being carried out to its logical conclusions; in the interests of physical well-being the great principles of liberty are being thrown ruthlessly to the winds.

The result is an unparalleled impoverishment of human life. Personality can only be developed in the realm of individual choice. And that realm, in the modern state, is being slowly but steadily contracted. . . .

. . . When one considers what the public schools of America in many places already are—their materialism, their discouragement of any sustained intellectual effort, their encouragement of the dangerous pseudo-scientific fads of experimental psychology—one can only be appalled by the thought of a commonwealth in which there is no escape from such a soul-killing system. . . .

The truth is that the materialistic paternalism of the present day, if allowed to go on unchecked, will rapidly make of America one huge ‘Main Street,’ where spiritual adventure will be discouraged and democracy will be regarded as consisting in the reduction of all mankind to the proportions of the narrowest and least gifted of the citizens. . . . [vii]

Machen saw clearly that utilitarianism is a morally bankrupt philosophy. He laid out the inevitable consequences society would face when utilitarianism is the prevailing moral philosophy. It advocates that our laws should be based on a hedonistic calculus where the property of some can be violated if doing so is thought to promote the general welfare by a majority. This is a departure from the view that the purpose of government is to protect the natural human rights of life, liberty, and property. Since the Judeo-Christian tradition affirms these rights as coming from the Creator and as such, they are part of a higher law that is sacrosanct. When utilitarianism justifies violating such higher law because the majority approves, it is at odds with that tradition and is fundamentally immoral.


 

Endnotes

[i] Frederick Copleston, A History of Philosophy, (London: Burns and Oates Limited, 1966, vol. 8), pg. 4.

[ii]  For a brief history of  John Stuart Mill see, Robert Ekelund and Robert Hebert, A History of Economic Theory and Method, (New York: McGraw-Hill, 4th edition, 1997), pp. 170-193.

[iii] Proverbs 13:22.

[iv]. Edmund A. Opitz, Religion and Capitalism: Allies, Not Enemies, (Irvington-on-Hudson, NY: The Foundation for Economic Education, 1992), pg. 131.

[v]. Ibid., pg. 132.

[vi]  Paul A. Cleveland, “The Failure of Utilitarian Ethics in Political Economy”, The Journal of Private Enterprise, Fall 2002, pp. 57-68.

[vii]  J. Gresham Machen, Christianity and Liberalism, (Grand Rapids: Wm. B. Eerdmans Publishing Co., 2009), pp. 9-11.

Paul Cleveland

Boundary Stone was started by Dr. Paul Cleveland. Working as a professor for over 35 years has allowed him to study and think deeply about issues of political economy. He has discovered ways to communicate these sometimes illusive concepts to today's students, often through story telling, which makes understanding these principles more accessible to all of us.

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