Economics & Happiness: An Historical Perspective PDF

Economics & Happiness: an historical perspective Paolo Santori Tilburg University, [email protected] Premise Economics and economy needs legitimization Philosophy (Ethics) can furnish moral legitimization Why should we live in market societies? Why should we study Political Economy or E...

Economics & Happiness: an historical perspective Paolo Santori Tilburg University, [email protected] Premise Economics and economy needs legitimization Philosophy (Ethics) can furnish moral legitimization Why should we live in market societies? Why should we study Political Economy or Economics? Summary 1) Wealth as a mean to Happiness : Adam Smith and the ‘Cambridge tradition’ – not mainstream 2) Happiness as pleasure – mainstream 3) Happiness as Eudaimonia: beyond mainstream and not mainstream Classical Political Economy Wealth-Happiness in Smith Both in TMS and WN wealth is just a means for being happy Invisible hand and deception: the “poor man’s son” (Smith 1759: 181). Malthus: Essay on Population (1798) “The professed object of Dr Adam Smith’s inquiry is the nature and causes of the wealth of nations. There is another inquiry however perhaps even more interesting, which he occasionally includes in his studies and that is the inquiry into the causes which affect the happiness of nations [...]. I am sufficiency aware of the near connection of these two subjects and that the causes which tend to increase the wealth of a state tend also, generally speaking, to increase happiness [...]. But perhaps Dr Adam Smith has considered these two inquiries as still more nearly connected than they really are. (Malthus 1798: 303 – 4)” J.M. Keynes, ALFRED MARSHALL, 1842-1924, The Economic Journal, Vol. 34, No. 135 (Sep., 1924), pp. 311-372. “The study of economics does not seem to require any specialised gifts of an unusually high order. Is it not, intellectually regarded, a very easy subject compared with the higher branches of philosophy and pure science? Yet good, or even competent, economists are the rarest of birds. An easy subject, at which very few excel! The paradox finds its explanation, perhaps, in that the master-economist must possess a rare combination of gifts. He must reach a high standard in several different directions and must combine talents not often found together. He must be mathematician, historian, statesman, philosopher-in some degree. He must understand symbols and speak in words. He must contemplate the particular in terms of the general, and touch abstract and concrete in the same flight of thought. He must study the present in the light of the past for the purposes of the future. No part of man's nature or his institutions must lie entirely outside his regard. He must be purposeful and disinterested in a simultaneous mood; as aloof and incorruptible as an artist, yet sometimes as near the earth as a politician. Much, but not all, of this ideal many-sidedness Marshall possessed. But chiefly his mixed training and divided nature furnished him with the most essential and fundamental of the economist's necessary gifts-he was conspicuously historian and mathematician, a dealer in the particular and the general, the temporal and the eternal, at the same time”. Marshall on happiness/well-being “man in flesh and blood” (Marshall 1890: 27 ff.) Economic goods are those that “can be measurable by a money price” (ibid.: 33). “Political economy or economics is a study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with the attainment and with the use of the material requisites of wellbeing. Thus it is on the one side a study of wealth; and on the other, and more important side, a part of the study of man”. (Marshall 1890: 1) Principles of Economics “It is true that in religion, in the family affections and in friendship, even the poor may find scope for many of those faculties which are the source of the highest happiness. But the conditions which surround extreme poverty, especially in densely crowded places, tend to deaden the higher faculties. Those who have been called the Residuum of our large towns have little opportunity for friendship; they know nothing of the decencies and the quiet, and very little even of the unity of family life; and religion often fails to reach them" (Marshall 1890: 2) Followed, among others, by Pigou and Sen Summary 1) Wealth as a mean to Happiness : Adam Smith and the ‘Cambridge tradition’ – not mainstream 2) Happiness as pleasure – mainstream 3) Happiness as Eudaimonia: beyond mainstream and not mainstream Utilitarianism Smith, Malthus, Marshall, Keynes, Amartya Sen…. This is not the mainstream of Economics. Regarding their position of economics and happiness they would rather be defined… Heterodox economists! What is the orthodoxy? What’s the mainstream? Utilitarianism Utilitarianism Jeremy Bentham, An Introduction to the Principles of Morals and Legislation (1789) “Nature has placed mankind under the governance of two sovereign masters, pain and pleasure” (1789: 11). “It is for them alone to point out what we ought to do” (11) Utility alias Pleasure alias Happiness “By utility is meant that property in any object, whereby it tends to produce benefit, advantage, pleasure, good, or happiness, (all this in the present case comes to the same thing) or (what comes again to the same thing) to prevent the happening of mischief, pain, evil, or unhappiness to the party whose interest is considered”. (Bentham 1789: 12) means became the end “By happiness is intended pleasure’ (Mill 1861: 210). “To give a clear view of the moral standard set up by the theory, much more requires to be said; in particular, what things it includes in the ideas of pain and pleasure; and to what extent this is left an open question.” “Neither pains nor pleasures are homogenous”. There are differences “in kind, apart from the question of intensity” William Stanley Jevons “The theory which follows is entirely based on a calculus of pleasure and pain and the object of economics is to maximize happiness by purchasing pleasure as it were, at the lowest cost of pain” (Jevons 1871: 91) Also Edgeworth! The main path in Economics The domain of economics is no more wealth or economic welfare (the material prerequisites) but to directly bring about happiness, which can be translated into concepts such as pleasure (old marginalists), ordinal utility or preferences (Hicks), or choices (Samuelson); The tools utilized for studying the ‘means’ (maximization, quantitative calculus, instrumental rationality) are now used for specifically studying ‘happiness’. Summary 1) Wealth as a mean to Happiness : Adam Smith and the ‘Cambridge tradition’ – not mainstream 2) Happiness as pleasure – mainstream 3) Happiness as Eudaimonia: beyond mainstream and not mainstream Another path… “The mass of the [English] nation seems to forget, as do philosophers, that the increase in riches is not the end of political economy, but the means by which to provide the happiness for all” (Sismondi 1819: 52) “All our [Italian] economists, from whatever regional background, are dealing not so much, like Adam Smith, with the wealth of nations, but with public happiness” (Loria 1893: 85). Eudaimonia: back to the Greeks Aristotle’s Eudaimonia a) happiness is the final, or ultimate, end of life: it is the “highest good” for the human being; b) happiness is self-sufficient, because nothing would increase its value; c) there is an inseparable bond between happiness and the practice of virtues (as excellence); d) happiness can be reached only as by-product if it is sought in non instrumental ways, seeking to be virtuous: need of sincerity! Eudaimonia “is always desirable in itself and never for the sake of something else...for this we choose always for self and never for the sake of something else” (Arist., NE I, 7, 1097a). Happiness then “is the best, noblest, and most pleasant thing in the world” (ibid., I, 8, 1099a). It is the “highest of all goods achievable by action” (ibid., I, 4, 1095a). Eudaimonia and gratuity The basic link between genuine sociality and eudaimonia embodies a fundamental tension regarding the whole Aristotelian theory of happiness-eudaimonia: the virtuous life is a way to happiness, but virtues bear their fruit (i.e. happiness) only if sought not instrumentally, only if internalised as being intrinsically good. In fact, as soon as virtue is used as a means is ceases to be a virtue. A long path to Civil Economy Roman Felicitas Thomas Aquinas Beatitudo Civic Humanism Vita Civile Civil Economy Pubblica Felicità Civil Economy Naples, 1754: Antonio Genovesi held the first chair in Economics in Europe. 1765-1767: Genovesi published the Lezioni di Economia Civile (Lessons of Civil Economy). Civil Economy is the science of Public Happiness (Pubblica Felicità). “Man is a naturally sociable animal: goes the common saying. But not every man will believe there is no other sociable animal on earth.... How is man more sociable than other animals?... [it is] in his reciprocal right to be assisted and consequently in his reciprocal obligation to help us in our needs" (Genovesi, Lezioni, I, chapter 1, §17) The more one works for his own interests, so much more, if one be not mad, must one be virtuous. It is a law of the universe that one cannot make oneself happy without making others happy” (Genovesi, Autobiografia e lettere, 449). Double issue posed by Eudaimonia to Economics Happiness has to do not only with phycological hedonism, but also with more objective dimensions. Are we still talking about Happiness? Relationships matter for happiness!