1. Sec: 2-3:
Modern Ethical Theory:
Utilitarian Ethics

2. • Utilitarianism: especially influential in shaping politics, economics, and
public policy.
• Roots of utilitarian thinking: Thomas Hobbes (1588-1679), David Hume
(1711-1776) and Adam Smith ((1723-1790), but classic formulations are
found in Jeremy Bentham (1748-1832) and John Stuart Mill (1806-1873)
• Utilitarianism: we can determine the ethical significance of any action by
looking the consequences of the act.
• Utilitarianism: policy of maximizing the overall good or producing the
greatest good for the greatest number.
• Utilitarianism: strong support for democratic institutions and policies.
(Government and social institutions exist for the well-being of all, not to
further the interest of the monarch, the nobility, or some small minorities.
The economy exists to provide the highest standard of living for the
greatest number of people, not to create wealth for a privileged few.

3. • Utilitarianism: consequential ethics
– Good and bad acts are determined by their consequences
– Utilitarians tend to be pragmatic: no act is ever right or
wrong in all cases in every situation, depend on the
consequences.
• Example: lying is neither right or wrong, depends on the situation
in which lying will produce greater overall good than telling the
truth ( in such situation lying is ethical)
• Example Case Study: Should US government pass a law that limits
the amount of money corporate CEO’s can be paid (that can
credited as tax-deductible)? Utilitarian approach will consider
both alternatives. Limiting the amount of executive salary that can
be deducted from taxes should provide a disincentive to
corporations to pay such large salaries. As a result this world
increase the average pay for other workers. On the other hand,
low salaries would make it difficult to attract highly qualifies
executives to US firms and could result in less competitive US
companies. (both decisions are a function of what happens after
the fact)

4. • Utilitarian thinkers hold that we should
maximize the overall good, but among
utilitarians there are different interpretations
of what this “good” involves.
• Utilitarian position: happiness is the ultimate
good
– only thing that is and can be valued is happiness
– Is the goal of ethics, both individually and as a
matter of public policy, should be to maximize the
overall happiness?
– What is happiness?

5. • Jeremy Bentham: p.30
– only pleasure and the absence of pain is happiness
– Unhappiness is pain or deprivation of pleasure
– “ Nature has place mankind under the governance of
two sovereign master, ……..in all we think.”
• Maximizing pleasure (the utilitarian principle) is
the fundamental, objective and indisputable
ethical principle.
– Maximizing pleasure is not egoistic according to the
utilitarian principle.
• Egoism focuses on the happiness of individual
• Utilitarian acts are judged by the consequences for the
general and overall good. The general good includes the
well-being of each individual affected by the action.

6. • John Stuart Mill:
– Humans are capable of enjoying a variety of experiences
that produce happiness
– Human happiness is not mere hedonism
– Beside the pleasures of sensation that Bentham mentions,
humans also experience social and intellectual pleasure
that are different and superior to feelings.
– Which pleasures and what type of happiness is better?
Experienced and competent judges are the best test for
determining the highest happiness.
• “Of two pleasures, if there be one to which all or almost all who
have experience of both give a decided preference, … that is the
more desirable pleasure.”
• “From the veredict of the only competent judeges, I apprehend
there can be no appeal. The judgment of those who are qualified
by t knowledge of both, of if they differ, that of the majority
among them, must be admitted as final.”

7. • Mill’s Utilitarianism:
– Does not support an uncritical majority rule in which
every opinion what is good is treated as equally valid.
– People need to be educated and experienced in a
variety of pleasure before they age competent to
judge. Once they are experienced, then majority-rule
democracy is the best way to made decisions.
– Ethical principle arranging society in such a way that
we maximize the happiness for the greatest number
of people.
• This is attained through an educated citizenry making
decisions through a majority rule democracy.
• Educated citizenry is attained by allowing individuals the
freedom of choice to pursue their own ends. Even when
those choices are unwise, individuals are gaining the
experience needed to distinguish between good and band,
higher and lower, pleasures.

8. • Utilitarianism greatest contribution to social and
political thought : its influence in economics
• The ethics of 20th century neoclassical
economics-essentially what we think of as free
market capitalism- is utilitarianism.
• Under free market economies: economic
activities aims to satisfy consumer demand
– The law of supply and demand: healthy economies
produce (supply) goods and services that consumers
want (demand)
– Goal of free markets: allowing individual to decide for
themselves what they want most and then bargain for
these goods in a free and competitive marketplace.
This process over time and under the right conditions
guarantee the optimal satisfaction of wants.

9. • Free market economics fit utilitarian framework
– End goal of economic activity (utility or welfare): maximum
satisfaction of consumer demand
– We do the most good for the greatest number when we get as many
as possible as much of what they want as possible.
– The good is defined in satisfying one’s wants.
– The most efficient mean to attain this goal: structure economy
according to the principles of free market capitalism.
• Allow individuals the freedom to bargain for themselves in an open, free, and
competitive marketplace.
• Self-interested will always be seeking ways to improve their own position.
• Agreements (contracts) will occur only in those situations where both parties
believe that a transaction will improve their own position.
• Competition among rational and self-interested individuals will continuously
work to promote the greatest overall good.
• Whenever this occurs in which one or more individuals can attain an
improvement in their own happiness without a net loss in others’ happiness,
market forces will guarantee that his occurs.
• the market: most efficient means to the utilitarian end of maximizing
happiness.