I was having a little discussion with someone online the other day about whether neoclassical economic theory represents a real or sincere utilitarian ethical theory, as opposed to just using the language of utilitarianism to express other ethical values entirely, and I had a somewhat interesting thought related to the always fascinating (to me, anyway) issue of whether economic theory implies greed is good, that is, whether it proposes everyone act like a greedy self-obsessed jerk for the good of society as well as oneself. I know. I’ve already written a couple of posts on the issue. How many posts do I intend to do? As many as it takes, of course. But hopefully I’m running out of steam on this line of inquiry. Indeed, I may have mentioned this idea before in passing, but let me do a bit more work on it now. My recent thought was that if we assume for a moment, counterfactually according to the argument I’ve made in my books based on an entirely different line of reasoning, that economic theory is meant to represent a sincere form of ethical utilitarianism, and those paying attention to its assessment of market structures and outcomes are meant to be literally and sincerely interested in maximizing total social utility, the only way to make sense of their behavior in terms of the presumed normative directive to maximize their own utility is to assume such people maximize their own utility by expressing an interest in overall sociality utility, that is, by following the recommendations of economic theory in terms of trying to set up an economic system ostensibly designed to maximize total social utility. If they were expressing a form of ethical utilitarianism based on some other more narrow and restricted conception of what is capable of generating utility that excludes ethical reasoning or a concern for others, that is, if they were themselves operating on the basis of narrow self-interest or the greed is good principle, it seems implausible they would have any sincere interest maximizing total social welfare, per se. They’d be interested in what maximizes their own welfare narrowly conceived to exclude ethical considerations. They’d be interested in economic theory only for hints on how to get in on a monopoly or oligopoly or maybe only as a rhetorical tool to get one over on other people. In other words, a sincere interest in the normative, value-laden, ethical assessment of market mechanisms and outcomes presented in the neoclassical theory of welfare economics seems incompatible with the notion economic theory expresses or implies the ethical proposition one should pay attention only to one’s own narrow self-interest, that is, that greed is good. I wonder if a subliminal appreciation of this issue is why so many people lose track of distributional issues, or profess to lose track of them anyway, and suppose, or profess to suppose, economic theory implies everyone must be personally better off in a perfectly competitive market system than any other economic system, even though it doesn’t really suggest that at all but implies monopolists and oligopolists, not to mention kings, emperors, dictators, criminal kingpins, the local warlords of violent anarchism, and all people of that general sort might and probably would make out rather better for themselves without it. Seems likely the determined denial of interpersonal conflict, the refusal to acknowledge the existence of winners and losers, under any given market system including a perfect competitive market system considered in the abstract, let alone any real instance of such a market complete with a distribution of economic power that should really make the issue obvious to anyone, is generated by the realization it must be so if one is to reconcile an apparent interest in maximizing total social welfare with the ethical proposition greed is good. In the context of sincere or real philosophical ethical utilitarianism, of course, this isn’t really a problem. One clarifies at the outset the objective of one’s utilitarian ethical theory and in particular how it relates to one’s own welfare and the welfare of other people. A real or sincere ethical utilitarian may very well conclude it’s worthwhile to take one for the team so to speak in order to maximize total social welfare, do a Spock in the wonky warp drive, without any apparent confusion between total social utility and his or her own utility or welfare or narrow self interest. Funny what happens when people try to do ethics, science, and math at the same time, isn’t it?
Addendum
I’ve written quite a bit more on this theme of whether neoclassical welfare economics contains a general ethical proposition that greed is good. In later posts, I basically consign the greed is good proposition to the realm of bad economics rather than serious neoclassical welfare economics, although I do acknowledge the role of profit maximizing behavior on behalf of those acting in a certain capacity in our economic system. For example, see Actors and Roles from February 24, 2021. I’ve clarified in various posts that “utility maximization” as a description of behavior applied to the subjects of neoclassical welfare economics in other roles, for example, workers or consumers, is more of a tautology than an ethical prescription as presented here, although it doesn’t really matter for the point being made; if one is cast as maximizing one’s “utility” by following the conclusions based on neoclassical welfare economics based on maximizing social “utility,” then one cannot very well be concerned only with one’s own welfare. I’ve also clarified the distinction between the ethical views of the economist / observer and the subjects of neoclassical welfare economics. For example, see Two Levels of Ethics, June 9, 2021.
