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Tom Hickey: I have a question on utility. I understand that this may not be something that is in your area but answer if you can. I am reading "A Manual of Political Economy" by Peshine Smith. In the book Smith seems to use two meanings of the word utility. One meaning seems to be the satisfaction something gives whereas the other meaning is the aid which nature renders man. Do you see any way that the two can be reconciled?
I haven't made a study of how the term "utility" has been used in the history of economics but I'll take a stab at it.
Peshine Smith published his manual in 1853 and appears to be summarizing the classical view.
The classical economics took the ordinary language meaning of "utility" as usefulness and gave it technical meaning in economics that was later developed into the concept of marginal utility and preference in rational choice theory. Utility remains a key concept underlying economics and was from the outset, although the meaning has changed, both for greater specificity and to address problems that arose.
Peshine Smith titled his book, A Manual of Political Economy, just as had Jeremy Bentham more than fifty years previously. Bentham was contemporaneous with Adam Smith and David Ricardo.
The classical economists were working at the time of the transition into the modern age characterized by liberalism and naturalism, away from the previous system in which ancient and medieval forms of government prevailed. The project at this time was to shift from supernaturalism of the Great Chain of Being to the naturalism of Newtonian science.
Morality under the old order was based on tradition dominated by religion and theology, which was deontological (rule-based). Bentham was really founding a new secular 'religion" with a new naturalistic morality, which he called "utilitarianism," based on the greatest happiness for the greater number. He connected the ordinary meaning of "utility" as usefulness to human satisfaction of needs/wants, which connected the concept of utility to naturalistic morality based on consequentialism (outcome-based) instead of deontology. and also to political economy. It also connected morality with political economy through satisfaction of wants through production of material "goods."
According to the principle of utility in every branch of the art of legislation, the object or end in view should he the production of the maximum of happiness in a given time in the community in question. In the instance of this branch of the art, the object or end in view should be the production of that maximum of happiness, in so far as this more general end is promoted by the production of the maximum of wealth and the maximum of population. — Jeremy Bentham, A Manual of Political Economy Chapter 1, Introduction
So usefulness in using the production of nature through human ingenuity and incentive results in satisfaction of needs and wants, which yields happiness. The objective is to optimize communal satisfaction (this led to Pareto optimum) as "the greatest happiness for the greatest number. This would be the new naturalistic morality.
So I would say that Peshine Smith fifty some years later is using this Benthamite concept of utility that still underlies conventional economics and contemporary naturalistic morality although it has been elaborated and modified since then.
In my understanding, Peshine Smith defines "utility" as:
Utility — the capacity a thing has to satisfy a man's wants and desires — is something more than Value, which is the sum of the obstacles to its attainment. The difference between them — between the gross amount of service, in the satisfaction of wants, that the possession of a thing will bestow, and (he gross amount of labour which must be undertaken to secure it — is the sum of the effects produced by the gratuitous operation of the forces of Nature. — Peshine Smith, A Manual of Political Economy, p. 70
So U = S - L + N
Where U = utility S = satisfaction (happiness) L = labor (work) N = Nature's contribution (natural resource endowment)
3 comments:
Tom Hickey: I have a question on utility. I understand that this may not be something that is in your area but answer if you can. I am reading "A Manual of Political Economy" by Peshine Smith. In the book Smith seems to use two meanings of the word utility. One meaning seems to be the satisfaction something gives whereas the other meaning is the aid which nature renders man. Do you see any way that the two can be reconciled?
I haven't made a study of how the term "utility" has been used in the history of economics but I'll take a stab at it.
Peshine Smith published his manual in 1853 and appears to be summarizing the classical view.
The classical economics took the ordinary language meaning of "utility" as usefulness and gave it technical meaning in economics that was later developed into the concept of marginal utility and preference in rational choice theory. Utility remains a key concept underlying economics and was from the outset, although the meaning has changed, both for greater specificity and to address problems that arose.
Peshine Smith titled his book, A Manual of Political Economy, just as had Jeremy Bentham more than fifty years previously. Bentham was contemporaneous with Adam Smith and David Ricardo.
The classical economists were working at the time of the transition into the modern age characterized by liberalism and naturalism, away from the previous system in which ancient and medieval forms of government prevailed. The project at this time was to shift from supernaturalism of the Great Chain of Being to the naturalism of Newtonian science.
Morality under the old order was based on tradition dominated by religion and theology, which was deontological (rule-based). Bentham was really founding a new secular 'religion" with a new naturalistic morality, which he called "utilitarianism," based on the greatest happiness for the greater number. He connected the ordinary meaning of "utility" as usefulness to human satisfaction of needs/wants, which connected the concept of utility to naturalistic morality based on consequentialism (outcome-based) instead of deontology. and also to political economy. It also connected morality with political economy through satisfaction of wants through production of material "goods."
According to the principle of utility in every branch of the art of legislation, the object or end in view should he the production of the maximum of happiness in a given time in the community in question. In the instance of this branch of the art, the object or end in view should be the production of that maximum of happiness, in so far as this more general end is promoted by the production of the maximum of wealth and the maximum of population. — Jeremy Bentham, A Manual of Political Economy Chapter 1, Introduction
So usefulness in using the production of nature through human ingenuity and incentive results in satisfaction of needs and wants, which yields happiness. The objective is to optimize communal satisfaction (this led to Pareto optimum) as "the greatest happiness for the greatest number. This would be the new naturalistic morality.
So I would say that Peshine Smith fifty some years later is using this Benthamite concept of utility that still underlies conventional economics and contemporary naturalistic morality although it has been elaborated and modified since then.
In my understanding, Peshine Smith defines "utility" as:
Utility — the capacity a thing has to satisfy a man's wants and desires — is something more than Value, which is the sum of the obstacles to its attainment. The difference between them — between the gross amount of service, in the satisfaction of wants, that the possession of a thing will bestow, and (he gross amount of labour which must be undertaken to secure it — is the sum of the effects produced by the gratuitous operation of the forces of Nature. — Peshine Smith, A Manual of Political Economy, p. 70
So U = S - L + N
Where
U = utility
S = satisfaction (happiness)
L = labor (work)
N = Nature's contribution (natural resource endowment)
and
V = L
V = value
L = labor (work)
Thank you.
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