Tag Archives: jeremy bentham

The Immorality of Current Economic Practice

Jeremy Bentham one of the more influential figures in 19th century economics was also one of the founders of the philosophy of utilitarianism. The foundational principle of utilitarian philosophy is that good actions are those that give the greatest pleasure to the greatest number. Those of an older generation of economists such as myself, will remember how utilitarian principles were used in the construction of market theory and in particular the laws of supply and demand. I think that utilitarian principles still influence economic theory and practice, although they have been modified with time. Welfare economics is still an accepted part of economic theory, a theory that tries to explain how the optimum levels of production can be attained in a particular economy. However the practice of economics has led to a very modified form of utilitarian theory, economic practice still aims at maximising the pleasure and happiness of people, but it is not always the maximising of pleasure of the majority, all to often economic practice can be directed at maximising the happiness of a privileged group.

Economic utilitarianism can now rewritten as follows,

happiness can only be maximised for the few through the pain and suffering of the majority’,

A recent example from business demonstrates this principle. Sir Phillip Green was only able to buy his third super yacht at the expense of his staff at BHS. There is  a rough equivalence between the money that he took out of the retail chain BHS and that which he paid for his new yacht. His yacht cost the jobs of 11,000 BHS workers. It can be argued that this one example of bad business practice is not representative of the theory of economics. However the most popular of current economic theories is supply side economics, which has been practised by both government and business over the past thirty years. This teaches that the major obstacle to maximising economic welfare are restrictions that the limit the supply of the factors of production, the principle factor being labour, that is people. Governments have since the 1980’s have successively removed employment protection legislation, so that today there are very few restrictions on how employers can use their workers. Given the removal of these protections Sir Phillip Green had few obligations towards his workers and could pass on his near bankrupt company to another knowing that he could avoid having to make redundancy payments and having to honour the pensions payments promised to BHS staff. This is not a unique example but just the latest in a long line of business owners of refusing to take any responsibility for their staff. If it had not been for the adverse publicity in the media and the hostile reaction of some MPs, his actions could have been put down to yet another failure of a UK business that failed to adapt to the times.

The name Ayn Rand is little known outside political circles, the media and the profession of economics.Yet this novelist cum prophet is the inspiration for much of current government policy.  What she preached was a crude social darwinism. The poor did not deserve to survive in society to which they contributed little. The poor through their low incomes and poverty demonstrate their unfitness to survive ,as they cannot even provide for themselves. In her novel ‘Atlas Unchained’ she sees the death of so many of the worthless people as a necessary means of social cleansing. The heroes of her books are the billionaires and the money men, those who through their own efforts have made millions. Any restriction on their activities such as  taxes on their incomes only makes society the loser, as it limits the creative and wealth making activities of these individuals.

‘Randian’ philosophy is applied to welfare policy. Those who claim benefits are part of the dependency class. These people who have come to depend on the state for their income and who in consequence have lost the incentive or will to provide for themselves. The harshest of sanctions are required to get this class of people into work, any suffering of benefit claimants is justified, as it the stick required to make this class of people work. This why the government can be indifferent to the suffering of those deprived of benefit for a number of weeks for a minor infraction of the rules. They don’t mind if these hungry and desperate claimants have to resort to food banks to survive, as they provide a useful example to others.  Hunger is the best spur for making people work.

Even in the benign 1960’s this malign philosophy was active within economics. At that time unemployment was around 1% of the workforce, it hovered around 100,000. People thought that the full employment of the post war period was a success. I believed that myself and was shocked to discover at university that there were economists advocating an increase in unemployment. They wanted the government to take action to increase unemployment to about 3% of the workforce. This they claimed would reduce the pressure of prices and cut inflation. Yet this was a time when the majority of people remembered the horrors of the Great Depression of the 1930’s. They found little support at first in government, because there was no desire to return to the 1930s and the misery of that period. Then for these economists the utilitarian maxim would have been

the happiness of the majority can only be achieved through the suffering of a minority’, now with ‘Randian’ philosophy dominating government it can be rewritten, as ‘the happiness of the minority can only be achieved through the suffering of the majority’.

This may seem an overly pessimistic assessment of government economic policy, when the majority of people are well fed, well housed and living well. The misery seems to be confined to the precariat, that is those in insecure low paid employment such as cleaners and shop workers. However the impoverishment is slowly seeping upwards. Large numbers of whom would have been the future well off middle classes, university graduates of whom large numbers are looking forward to an insecure future of low pay and insecure work. The government is actively working to reduce the privileges and protections enjoyed by the professional middle classes in their employ. Teachers and doctors are just two groups that are expressing discontent with the negative impact of government policy on there working lives.

There is no reason why economics should be directed by such a malign philosophy. Economic policy in the 1950s had the aim to maximising growth, employment and the welfare of the people. Apart from a small minority economists shared these goals. Only bad economics as practised today aims to immiserate the many and enrich the few.

Gullibility and the economy of fools

Jeremy Bentham is an almost forgotten philosopher today, yet of all the 19th century philosophers he was the most fascinating. He has an extremely logical turn of thought and it caused him to undertake actions that most would find peculiar.  One such action was his insistence on eating his meals back to front, he always had the desert or sweet dish first to be followed by the savoury dish. He argued that it was as logical to have the sweet first, as having it as the second dish, he could see no rational reason for always having the savoury dish first. Economists were influenced by his thinking and they adopted his ideas in their theories of market behaviour. Jeremy Bentham argued that good actions were those that gave the greatest pleasure to the greatest number. Similarly the free market gave the greatest satisfaction to the people as it was in the free market that people could satisfy their wants by determining what was made and sold. However there is one flaw at the heart of Jeremy Bentham’s utilitarianism and free market economics, both assume that the individual is capable of making a rational decision about being what is in their best interests. Our knowledge of human behaviour teaches us that in fact people often make important decisions for the most stupid of reasons. Economists and Jeremy Bentham cannot account for human gullibility and stupidity which undermines the whole accepted free market arguments. 

  

taken from aspirant forum.com

What fascinated me was the medieval obsession with collecting Christian relics. The relics would be held in veneration and became the site of pilgrimage. Pilgrimage was a very profitable business for churches and monasteries, where the relics were displayed, as pilgrims made large donations to these churches and monasteries. The more holy the relic, the more profitable a site of pilgrimage it became. In the spirit of money making pirates employed by the city of Calvi in Italy stole the bones of St. Nicholas from the Turkish town of Myrna, to display in the church in Calvi. This was such a profitable business that monks became involved in forgery to create more and more spectacular relics. One such relic was the Veil of St. Veronica. St. Veronica is supposed to have wiped the face of Christ clear of blood and perspiration on his way to crucifixion at Golgotha. The veil then bore the miraculous imprint of Christ’s face.  This obvious forgery was on display in Rome for hundreds of years. Even today the medieval forgery that is the Turin Shroud is still on display and venerated by pilgrims. This very profitable medieval industry founded largely on fraud and human gullibility stands in contrast to the so called rational consumer of economic theory.

Today human gullibility is the foundation for another large and profitable industry, the trade in the relics and artefacts of celebrity. These items are valued for their proximity to the person of the celebrity, much as were the relics of the medieval saints. Recently a wooden spoon signed by John  Lennon and Yoko Ono was sold for between £600 and £800 at auction. Graceland the last home of Elvis Presley is the object of pilgrimage. Visitors often leave speaking in awe of having experienced something of Elvis Presley’s life, an awestruck experience that would have been similar to that of the medieval pilgrims. 

  

A letter from John Lennon to Phil Spector blaming The Who drummer Keith Moon and singer-songwriter Harry Nilsson for urinating on a console at an LA recording studio is up for auction, with an estimated value of £6,000.
(Read more at http://www.nme.com/photos/the-weirdest-most-expensive-beatles-artifacts-you-can-buy/)

If so many of our acts are a consequence of gullibility or stupidity, the arguments for the primacy of the free market are undermined. If people are capable of spending large sums of money illogically there needs to be a corrective to the free market. Rather than the wisdom of the crowd, it is better to speak of their ‘unwisdom’. Once  their existed that corrective, the government, it was thought that this body had the overview and long term wisdom to make certain decisions better than the individual. Now that belief has disappeared and wherever possible government services are put out to tender in the free market. There is no leading politician that believes that energy supply because of its importance is best supplied by the government. One consequence is that while the former nationalised energy industry was one of the leaders in nuclear energy engineering, the now privatised industry has lost that expertise. The new nuclear power stations will be built by a combination of expertise from French and Chinese engineering firms.

Perhaps it is in public health that the consequences of human gullibility are the most obvious.  The smoking of tobacco was popular when I was a teenager was seen as cool, as exemplified by the advertising phrase the ‘cool taste of menthol tipped cigarettes’.There was complete ignorance of the health risk of smoking, it was only after many years of government action to inform people of the dangers of smoking, that that cigarette consumption dropped. The reverse has happened with alcohol consumption, a market in which all restrictions on its sale and consumption have been dropped. Consumption as a consequence has risen, along with the incidence of cirrhosis of the liver and throat cancers. What is perhaps most distressing is the fact that gullibility has prevented what would have been the elimination of that disease of childhood measles. Many such as myself thought measles as being a minor rate of passage of childhood, not realising that this was an illness that could cause blindness, brain damage and disability. One maverick researcher claimed that he had evidence that the vaccine that prevented measles could  cause autism in children. This research having been published in ‘The Lancet’ caused a moral panic, chiefly through the writings of journalists in nationally read newspapers. Inevitably vaccination rates dropped and measles became yet again a scourge of childhood. Fortunately this panic is largely restricted to the Anglo Saxon world. There have been outbreaks of measles in several British cities bringing disability to an unfortunate minority of children. The same has happened in California, where measles is a threat to the children of the best educated classes, proving gullibility is not the prerogative  of the poor and ill informed. Despite the original research being discredited, the fear of the MMR vaccine remains and children are again threatened by this dangerous illness.

Nietzsche would have enjoyed exposing the naivety of economists and politicians who trust the wisdom of markets. Neither understand the nature of humanity and why their policies for the economy and society are flawed. While this essay may appear misanthropic, that’s not really my aim. What I want is a return to the old belief that there is such a thing as human wisdom and that it should be a guide to public policy making. Instead we have a democracy of fools, one in which only those policies that can be understood by the simplest and most unreasoning of men are adopted. 

Possibly it’s unfair to suggest our politicians are gullible fools, it’s more correct to say that they act as if they are such. The popular press provides an example of this, if you read a tabloid newspaper the impression it gives is that it’s been written by people who left school at the earliest opportunity and with a minimal education. In fact the vast majority of journalists writing in such papers are graduates, often from the elite universities it just that they write as if they were uneducated, as they believe what their readers want are simple uniformed opinions. A training at a tabloid newspaper is highly valued as trainee journalists believe that it teaches them the skills needed to be a good journalist. What is teaches them is how to write a column that appears to have been written by an uneducated person, as that type of column is believed to appeal to the widest readership. Similarly our politics is peopled by graduates from the elite universities who believe that the same patronising approach is required in politics. As one famous film making said money is never lost through underestimating the public taste.