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Human Well-Being and Economic Goals

PART II
Utility and Welfare I: The History of Economic Thought
Overview Essay -- Page 1

Frank Ackerman

Those who succeed in penetrating the mathematical armor cannot fail to notice the narrowness at the heart of modern economics. Contemporary theory takes for granted a one-dimensional understanding of human goals, restricted to the maximization of the sa tisfaction of existing, unchanging desires for ever more private consumption. Where does this conceptual narrowness come from? Why is a broader understanding of human motivation excluded from economics? In pursuit of an answer, this section and the next explore the historical origins of the modern economic treatment of welfare, values, and wellbeing.

The discipline was not always so single-minded. One of the great nineteenth-century economists, John Stuart Mill, could write:

Except on matters of mere details, there are perhaps no practical questions... which admit of being decided on economical premises alone.[1]

Mill, of course, was not speaking of the need for advanced mathematical knowledge, but rather of the need for historical, social, and above all ethical perspectives on economic problems. Leading economists from Adam Smith to Mill to Alfred Marshall (the period covered in this section) were also philosophers; Smith and Marshall both received their first teaching positions in moral philosophy. Yet it is their more technical work, those aspects of their writings that could be formalized in models, that have become part of the ongoing development of the discipline of economics. On the moral and philosophical side, there have been periodic changes in intellectual fashion, but no evidence of cumulative advances.

Amartya Sen has suggested that economics has two different origins, one in ethics and the other in concerns more closely related to engineering.[1] He traces the ethical questions about economics back to Aristotle, and the engineering concerns to another author of the same era: Kautilya, an advisor to the Indian emperor in the fourth century BC. There is, however, nothing approaching a continuous debate on either of these perspectives over the ensuing 2500 year span. For the purposes of this essay it will be sufficient to start with the background to Adam Smith and the genesis of modern economics.

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