I had a fun conversation with another economist the other day who objected to my contention neoclassical welfare economics represents a fake and insincere form of ethical utilitarianism. It was rather interesting, for me anyway, so I thought I might go over that issue today.
The discussion started with the fellow repackaging my statement in the form that appears in the following question, “Have you written something about how standard welfare economics isn’t ‘sincere’ preference utilitarianism?” I wouldn’t normally use the phrase “preference utilitarianism” myself, but I proceeded to carry on as though he had said, “ethical utilitarianism,” which was the concept that appeared in my version of my argument. Well, as you can imagine, a comedy of errors then ensued involving the temporarily unrecognized distinction between the two. Word to the wise: if someone rephrases what you say but substitutes words or phrases you didn’t use and you’re not familiar with and you’re not exactly sure about, take the time to sort it out before continuing. Because you’re probably on the road to Conflation Town, that funny place where nothing makes sense and people fall over constantly.
Anyway, the fellow went on to describe one of the two common interpretations of utility as the word is used in the context of welfare economics, much as I discussed in my own little book, in this case the interpretation of utility in which it doesn’t exist, per se, but is just a word we can use to discuss preferences. He then argued rather cogently that with respect to that definition of utility, economic theory sincerely does what it claims to do, which is to equate statements about utility to statements about preferences. Thus, he concluded, economic theory does represent sincere preference utilitarianism. Yes, as you may have surmised by now, turns out “preference utility” is the name at least some academic economists have apparently given to the interpretation of utility in which it doesn’t actually exist but is just a word we can use to discuss preferences. Duh. I mean, it does make sense. Funny that didn’t occur to me. Oh well.
It took me a few moments of walking in my garden, showering, and having a nice hot drink before it finally dawned on me what was going on. You know, it all seemed a bit puzzling because everything he had said seemed eminently reasonable and correct to me, yet we had ended up at cross purposes. It was like those movies that employ awkward humor where people are talking to one another with funny expressions because they clearly aren’t talking about the same thing but haven’t yet realized it. The problem, of course, was that I had never actually claimed or meant to claim anyway that neoclassical welfare economics is not a sincere form of “preference utilitarianism,” but rather that “preference utilitarianism” is not a sincere form of ethical utilitarianism.
My unraveling of this bit of confusion was helped a great deal by yet another well-meaning fellow, who may or may not have been an economist, who commented about the same time in a different conversation about utility (yes, I seem to discuss utility quite a lot) that linguistically “utility” means “usefulness” and to use it correctly one really needs to have some end or objective in mind in relation to which one intends to measure usefulness. Something may be quite useful for one thing and not at all for another. Now, in traditional ethical utilitarianism and old fashioned economic theory, the end or objective is conventionally some conception or definition of human happiness or satisfaction. That’s how the idea of assessing or measuring the “utility” of something or some course of action, that is, its usefulness in promoting the implied end or objective of human happiness or satisfaction, became re-cast or re-conceptualized as the amount of happiness or satisfaction thus generated, which is how in utilitarian ethical philosophy “utility” morphed into a rather funny name for the resulting happiness or satisfaction itself. (Let’s just start saying happiness to save time, shall we?)
Of course, depending on how one defines happiness, the measurement of utility / happiness might be easy or difficult. In the version in which happiness is meant to be an internal, subjective perception of happiness, which is the version one finds in old fashioned economic theory, it can be seen as impossible. This is the original context in which economists discussed the “impossibility” of interpersonal utility comparisons. This corresponds to the interpretation of utility in my book where utility is thought to “exist” in some sense, in this case as a subjective perception or feeling or sensation. The point is that the word “utility” refers to something we’re meant to think of as ethically significant or valuable.
In contrast, “preference utility” does not exist even in that sense. It’s just a word we use when discussing relationships between preferences for a given individual. Under this interpretation of utility as used in welfare economics, it’s not that interpersonal utility comparisons are “impossible,” per se, it’s that the word is not defined in such cases. People continue to exist in such cases, of course. And those people may be happy or satisfied or express any attribute or characteristic or sensation one likes. But whatever it is, it isn’t utility. Thus, under this interpretation of utility, the word no longer refers to anything we’re meant to find ethically significant or to value for its own sake. Working backwards from this result, “preference utility” basically equates to “usefulness” defined with respect to nothing, that is, usefulness with respect to no identified or implied end or objective. The linguistic absurdity of using the word “utility” in this way may help one appreciate the fakery and insincerity of using this definition of utility in the context of ethical utilitarianism. Not only does the concept of utility no longer fulfill the same function or role utility plays in a proper utilitarian ethical theory, the word “utility” itself no longer really even obeys the dictates of the English language.
So what are we maximizing when we maximize so-called “preference utility?” Nothing. It’s just a funny way of talking about a situation consistent with certain values about the expression of preferences. The ethical propositions expressed in the theory of neoclassical welfare economics are about preferences, property rights, and market mechanisms. They don’t really involve “utility” except in name. It’s not a true or sincere utilitarian ethical theory. In the version or interpretation of neoclassical welfare economics that uses “preference utilitarianism,” the word “utility” is basically just there to confuse people and throw them off the scent of the real values. Really, one could do that sort of thing with any ethical theory. For example, I could start with a rights based ethical theory and use “utility” as my special word for talking about a situation in which those rights are respected, “rights utility” if you will. I could then try to pass off my rights based theory as a utilitarian ethical theory based on “maximizing (rights) utility.” Pretty tricky, don’t you think?
What about the other common version or interpretation of neoclassical welfare economics that uses plain old school utility, where utility is meant to exist as subjective perceptions of happiness or satisfaction or what have you? You know, old fashioned economic theory. Well, I think that’s a true utilitarian ethical theory. Utility exists and is meant to be intrinsically ethically valuable or attractive. But it’s a totally implausible form of ethical utilitarianism because it uses an ethically unattractive form of utility no one would sincerely want to maximize if he or she could. It’s not hard to demonstrate, as I do in my book. In abbreviated form, say you had a dream where you had super powers and could make interpersonal utility comparisons. Say it turns out one person’s capacity to generate utility is just a lot higher than everyone else’s, and he wants everyone else to be his slave. Would you be interested in maximizing total utility and making everyone that person’s slave? Would that seem the ethically correct thing for you to do? Of course not. There’s nothing really that ethically special about “utility” defined in that way. It’s only attractive if one can’t actually maximize it, and it’s only attractive in that case because it takes utility out of the realm of controversial issues involving the resolution of interpersonal conflicts and, if we’re being honest, facilitates the underhanded insertion of other values that don’t involve utility at all.
The bottom line is simply that economists are not particularly adept at ethical philosophy. They don’t express their propositions honestly or clearly, and when they do, they come up with things that are completely ethically implausible. They don’t seem to understand the issues associated with real ethical philosophy at all. That’s why I recommend when policies require ethical judgments, such as what constitutes a successful or optimal economy, those judgments be made democratically by the people, not by underhanded or perhaps just philosophically clueless economists pushing their own values, no matter how well intentioned they may be or profess to be.
