Economic Ideas of Jeremy Bentham (With Criticism)

In this article we will discuss about the economic ideas of Jeremy Bentham with its criticism.

Jeremy Bentham (1748-1832) was the son of a well-to-do English lawyer and was himself trained for the bar. He did not practice law, however, but devoted his life to study and writing. He traveled considerably, and was influenced much by French thought. His works were mostly translated into French.

According to Haney, “Bentham’s chief contributions to Economics lie in what he added to the philosophical, ethical and psychological basis for the science. He was essentially a social philosopher, and was more interested in government and law than in economics”.

Jeremy Bentham was the leader of utilitarian school. He was the author of the concept of utility. Just as Ricardo’s name is associated with the theory of rent, Bentham’s name is associated with the principle of utility. Bentham was the central figure of a group usually described as Philosophical Radicals.

Bentham’s important publication, so far as political economy is concerned, was “Defence of Usury” (1787). It appeared a decade after Adam Smith’s “Wealth of Nations” and preceded Ricardo. His other work “An Introduction to the Principles of Morals and Legislation” (1789) had a wide influence on thought and legislative practice in England and on the continent.

Most fundamental in Bentham’s thought is his hedonistic psychology. He thought that individual actions are motivated by desire for pleasure and dislike of pain, and governed by a calculated balancing of pleasures and pains. The process of motivation, as he saw it, is somewhat as follows: feelings of pleasure or pain, or both, control the emotions and “will”; the will then refers to the understanding, which calculates a balance and decides; then action follows. This is rational hedonism.

In order to maintain this position, Bentham had to believe that pleasures and pains are measurable, and he so held. But he saw the necessity of allowing for various “dimensions” of pleasure, and he admitted certain limitations or difficulties. Thus he said that pleasures differ in intensity, with degrees ranging from the faintest pleasurable feeling, which is equal to unity. Other differences lie in duration, certainty, propinquity, purity (degree of mixture with pain), fecundity (reacting to increase capacity for enjoyment), and extent (number of individuals participating). In this classification one sees suggestions of some of the phases of utility mentioned by Jevons and others, and of the idea of “time preference”.

Bentham assumed that the feelings of different individuals are comparable, and pleasure can be measured through a “common measure” or denominator in the shape of money. Bentham also discussed the relationship between wealth and happiness. In his “Principles of The Civil Code”, he argued that the happiness of an individual is not in proportion to his wealth. From this, we may say that Bentham seemed to have some vague notions about the diminishing marginal utility of money.

A utilitarian can assume that individuals desire pleasure, and that pleasure is “good” for individuals. Bentham’s utilitarianism is, a hedonistic utilitarianism, which holds that that is “good” for the individual which gives him the greatest happiness. The test of greatest happiness decides what he ought to do, determining the difference between right and wrong. The words used by Bentham to indicate this test are “benefit, advantage, pleasure, good, or happiness”, and they are thus taken to be virtually synonymous.

Bentham derives from it a social ethics and a principle of government.

(1) He believes not only that the principle of utility governs what individuals ought to do, but also what they shall do.

(2) He believes, moreover, that society is just an aggregation of individuals, and that government should therefore be guided by the same principle. Indeed, the community, he states, is a fictitious body, and the common interest can be understood only by understanding what is the interest of the individual. In fact, the interest of community is merely “the sum of the interests of the several members who compose it,” and the only way to ascertain that interest is to add individual A’s pleasure-minus-pain to individual B’s pleasure-minus-pain, and so on. This is the way to the greatest good of the greatest number.

On the basis of the above reasoning, Bentham reaches two conclusions which are of great importance in the development of economic thought. The first one is that “natural rights” do not exist. The other is the doctrine of laissez-faire. Bentham believes natural rights do not exist because rights depend upon laws and laws are made by government. And governments have come into existence by force and they are perpetuated by habit.

The above line of thought provides the basis for Bentham’s individualism, and his advocacy of laissez-faire and free competition. His general rule for increasing the wealth or enjoyment of the nation is that “nothing ought to be done or attempted by government”. His rule of government is, “Be quiet”.

Bentham argued that there was no need for government action in economic matters for the following two reasons:

1. (a) The wealth of society is nothing but the wealth of individuals who compose it; (b) Each individual knows his interest better than anybody else. At another point, Bentham made the observation that “there is no true interest but individual interest”.

2. Government actions is not merely inexpedient, it is injurious. Government action involves restraint upon individuals. And where there is restraint, there is pain. Bentham advocated unlimited freedom for competition.

Though competition would cause distress to some individual competitors, it would be more than offset by the benefits of others and thus promote the greatest happiness of greatest numbers. In this connection, we should note that Bentham criticized Adam Smith’s concession that government should fix maximum rates of interest.

Though Bentham gave “Be quiet” as his rule of government, he allowed certain activities of government. Though he idea legislation as a “necessary evil”, he said that there must be some legislation in order to establish a system of punishments and rewards that would induce individuals to pursue actions leading to the greatest happiness of the greatest number. On the agenda of the government, he allowed the state to grant patents to inventors.

He recommended escheats (a kind of tax) in estates which lack near relatives, taxes on bankers and stockbrokers. Above all, he said that the proper aim of legislation should be promote the happiness at the greatest number. Thus he made place for ‘general interest’. This, of course, reveals an inconsistency in his thought. For at one point he says that there is no true interest but individual interest. Now he talks in terms of ‘general interest’.

While Bentham accepted the economics of Adam Smith, rejecting only Smith’s proposal to regulate the interest rate, Benthamism was very different from Smithianism.

In the first place, it casts out the “nature philosophy”, and substitutes rational tests for metaphysical assumptions.

In the second place, it is more purely hedonistic, and goes further in basing economic action upon rational choices as against instincts and emotions.

In the third place, it mixes ethics and moral philosophy with economics, and tends to turn the latter into a sociology.

Criticism:

Firstly, there is difficulty in calculating the greatest happiness of the greatest numbers. As men are not equal, and the same pleasure may be felt by different men unequally, it would be difficult to calculate the greatest happiness of the greatest number with any assurance of success.

Secondly, Bentham equated happiness with pleasure and reduced happiness largely to terms of quantities of pleasure. ‘A sum of pleasures’ may be an attractive phrase. But when it comes to estimates of human happiness or misery, arithmetic in economics is not much more helpful than economics in arithmetic. For there is no proof that by pursuing the happiness of the greatest number, we shall produce the greatest happiness.

Thirdly, Bentham thought the greater the equality in “masses” of wealth possessed by individuals, the greater the chances of equality in happiness. This line of thought has serious implications. It prepares the way for the sort of mechanical quantitative treatment of social problems.

Not only that, it may put some ideas into the head to a ruler. For example, the ruler may think that he can maximize human happiness by exercising control over distribution of wealth. This may lead to regimentation of life. Of course, that was not the intention of Bentham because he advocated laissez-faire policy for the state.

Fourthly, the ‘principle of utility’ is a subjective concept. It will make economics an inexact science. Not only that as it is an ethical concept, economics will become normative science. But the modern tendency is to make economics a positive science.

Summing Up:

In spite of all the criticisms, the formula of the greatest happiness of the greatest number still remains valuable in economics and politics. It supplies a ‘slogan’ in the popular mind and supplies a standard with which one can judge state action.

Bentham was a social reformer. He believed that education of an individual would improve his calculation of pleasure and pains. He also suggested certain legal reforms. He was a great law reformer. He suggested laws to inflict pain on individuals who acted so as to cause more pain to others, than pleasure to themselves. But this line of thought may lead to more of social action or “socialism”. In a way, such ideas were leading him away from laissez-faire.

Bentham’s ideas had a profound influence on a group liberal thinkers known as “philosophical radicals”. J.S.Mill was one of them.

Bentham finds an important place in the history of economic thought for the following reasons:

First, he dealt a severe blow to the natural philosophy of the Physiocrats and Adam Smith.

Second, he developed rational utilitarianism as the basis for greater freedom in economic life.

Third, he was a great influence on J.S.Mill who was a champion of liberty and individualism.

Lastly, Bentham suggested the ideas of degrees of utility and their measurement to Jevons. So in a way he may be regarded as the fore-runner of marginal utility school.

Bentham will ever hold a memorable place in the history of economic thought as one who dealt a great blow to the nature philosophy, who developed rational utilitarianism as the basis for a more positive freedom in economic life, thus influencing John Stuart Mill, and who suggested the idea of degrees of utility and their measurement to Jevons.