Several very important thinkers in addition to Smith, Malthus, and and Ricardo made

important contributions to classical economic analysis. We will discuss two of them.

Jeremy Bentham
The life span of Jeremy Bentham (1748-1832) overlapped the publication of David
Humes economic essays, Adam Smiths Wealth of
Nations, the works of David Ricardo and Thomas
Malthus and the early writings of John Stuart Mill.
Bentham was an early adherent of the Classical
school and also made some original contributions to
philosophy and economics. When Bentham died his
wishes were carried out, his body was dissected for
the benefit of science. He left his entire estate to
University College, London, with the stipulation that
his remains be present at all meetings of its board.
His skeleton, padded and dressed, is on public
display in a glass case. His skeleton is seated on a
chair, with cane in gloved hand. The head is made of
wax, but Benthams head, preserved in the manner of
a South American headhunter, rests on a plate
between his feet.

Utilitarianism
The central theme of Benthams thought is called Utilitarianism, or the principle of the
greatest happiness. Its underlying philosophy hedonism dates back to the Greeks of
antiquity. This notion is that people pursue things that provide pleasure and avoid things
that produce pain. Benthams philosophy of Utilitarianism, unlike the Greek philosophy
of Hedonism, superimposed on hedonism the notion of an ethical doctrine promoted the
greatest happiness for the greatest number of people. Bentham recognized the positive
role that government (society) could play in tempering the extremely individualist out of
hedonism. If an individual pursues only personal pleasure, will this action promote the
general happiness of the society? He thought not necessarily, however he had is own
methods of compelling individuals to promote the general happiness. The rule of law
establishes sanctions to punish individuals who in their own pursuit of pleasure harm
others excessively. Moral and social sanctions also exit in any society, of which social
ostracism is an example. Theological sanctions such as fear of punishment in the
hereafter would also help reconcile the individualistic self-interest of hedonism with the
utilitarian principle of the greatest happiness for the greatest number of people. Let us let

Bentham speak for himself. In his first chapter of Introduction to the Principle of Morals
and Legislation, printed in 1780, this is what he has to say:
I. Nature has placed mankind under the governance of two sovereign
masters, pain and pleasure. It is for them alone to point out what we ought
to do, as well as to determine what we shall do. On the one hand the
standard of right and wrong, on the other the chain of causes and effects,
are fastened to their throne. They govern us in all we do, in all we say, in
all we think: every effort we can make to throw off our subjection, will
serve but to demonstrate and confirm it. In words a man may pretend to
abjure their empire: but in reality he will remain subject to it all the while.
The principle of utility recognizes this subjection, and assumes it for the
foundation of that system, the object of which is to rear the fabric of
felicity by the hands of reason and of law. Systems which attempt to
question it, deal in sounds instead of sense, in caprice instead of reason, in
darkness instead of light.
But enough of metaphor and declamation: it is not by such means that
moral science is to be improved.
II. The principle of utility is the foundation of the present work: it will be
proper therefore at the outset to give an explicit and determinate account
of what is meant by it. By the principle of utility is meant that principle
which approves or disapproves of every action whatsoever. according to
the tendency it appears to have to augment or diminish the happiness of
the party whose interest is in question: or, what is the same thing in other
words to promote or to oppose that happiness. I say of every action
whatsoever, and therefore not only of every action of a private individual,
but of every measure of government.
III. 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: if that party be the community in
general, then the happiness of the community: if a particular individual,
then the happiness of that individual.
IV. The interest of the community is one of the most general expressions
that can occur in the phraseology of morals: no wonder that the meaning
of it is often lost. When it has a meaning, it is this. The community is a
fictitious body, composed of the individual persons who are considered as
constituting as it were its members. The interest of the community then is,
what is it? the sum of the interests of the several members who compose
it.

V. It is in vain to talk of the interest of the community, without

understanding what is the interest of the individual. A thing is said to
promote the interest, or to be for the interest, of an individual, when it
tends to add to the sum total of his pleasures: or, what comes to the same
thing, to diminish the sum total of his pains.
Diminishing Marginal Utility
Bentham, in The Philosophy of Economic Science, argued that wealth is a measure of
happiness but that wealth has a diminishing marginal utility as it increases:
Of two persons having unequal fortunes, he who has most wealth must
by a legislator be regarded as having most happiness. But the quality of
happiness will not go increasing in anything near the same proportion as
the quantity of wealth ten thousand times the quantity of wealth will not
bring with it ten thousand times the quantity of happiness. It will even be
matter of doubt, whether ten thousand times the wealth will in general
bring with it twice the happiness. The effect of wealth in the production of
happiness goes on diminishing, as the quantity by which the wealth of one
man exceeds that of another goes on increasing: in other words, the
quantity of happiness produced by a particle of wealth (each particle being
of the same magnitude) will be less at every particle; the second will
produce less than the first, the third less than the second and so on.
It is at this point in the history of economic thought that the idea of the marginal theory of
money is introduced. Ricardo, as you remember, introduced the idea of marginal
productivity in his theory of rent.
Utilitarian philosophers hoped to make morals an exact science. In their view, if only
pleasure and pain could be measured quantitatively and compared among different
individuals, every law and act could be judged by balancing the total pleasure against the
total pain. Bentham concluded that money is the instrument that measures the quantity of
pleasure and pain. Bentham said in his economic writings the following: Those who
are not satisfied with accuracy of this instrument must find out some other that shall be
more accurate, or bid adieu to politics and morals. Can you see some of the implications
of Benthams ideas on the redistribution of income?
It was this devotion to the greatest good for the greatest number that led Bentham to
support universal male suffrage and the secret ballot and to oppose the House of Lords
and the Monarchy, arguing that only in a democracy do the interests of the governors and
the governed become identical. He urged a system of national education, even for pauper

children. He believed that public work projects would provide jobs for unemployed
workers during slack economic times (in modern terms, what we are going through now
since 12/2007 when the current recession officially began). Bentham and his circle of
intellectuals (James Mill, John Stuart Mill, and Ricardo) became known as philosophical
radicals.
Criticisms
Benthams philosophy and economics have been widely criticized on both philosophical
and economic grounds. Assessments of pleasure and pain are subjective; they vary from
person to person. His theory of the greatest happiness for the greatest number of people
required making interpersonal comparisons. To make such comparisons would
necessitate the precise measurement of utility in a cardinal form. That is, utility must be
measured in units that can be added, subtracted, multiplied, and divided, just as cardinal
numbers 1 through 10.
Many philosophers argue that Utilitarianism is deficient as a philosophy abjuring all
value judgments on the quality of pleasure. According to some philosophers the goal of a
good is more than seeking out pleasure. As John Stuart Mill said It is better to be a
human being dissatisfied than a pig satisfied; better to be Socrates dissatisfied than a fool
satisfied. George Bernard Shaw said Happiness is not the object of life: life has no
object: it is an end in itself: and courage consists in the readiness to sacrifice happiness
for an intenser quality of life. Behavior psychologists talk of conditioned reflexes as a
way to explain our human behavior. Freudian psychology claims that the fundamental
driving force governing human behavior is the conflict between opposing forces deep
within the personality. Students of Cultural Anthropology point out that, in one way or
another, society imposes on the individual its system of ideas and its overriding ideology
patterns of behavior and ways of living. These ideas challenge the pleasure/pain
principle as the guiding force of human behavior.
Finally, many people deny the idea that every society and every government should
promote the greatest happiness for the greatest number of people. Plato taught in his
Academy that pleasure is subordinate in value to knowledge and that it should be a byproduct of successful achievement. Thomas Hobbes (1588-1679) held that humans have
a fundamentally depraved nature that drives them towards war, strife, and the self
appropriation of all that they can lay their hands on; therefore a strong and absolute
government is necessary to keep them in check. John Locke did not believe that every
good is a moral good, and found in people a social bent and sense of obligation that
would bind them together where no restraint of law existed.
What, then, is Benthams legacy to economic thought today?

Benthams concept of human nature although not his brand of utilitarianism became
the foundation for the economic systems of Ricardo, John Stuart Mill and the early
marginalists, especially William Jevons. The concept of utility maximization, which
assumed that each person would compare the intensity of satisfactions received from a
great variety of goods, and diminishing marginal utility are at the heart of the marginalist
theory of demand.
As we proceed though the history of economic thought, we will discover that
contemporary economic theory takes other motives into account and does not depend
upon Benthams narrow felicific calculus (pain/pleasure calculus). Today, economic
theory rejects interpersonal utility comparisons. Today, economists use indifference
curve analysis (known as ordinal utility) rather than cardinal utility. Yet few observers
would deny that a great deal of contemporary economic thought, with its emphasis on
rational choice made by comparing costs and benefits has its roots firmly planted in a
theory of human behavior developed by Bentham. For better or worse, most academic
economists today view human behavior as a purposeful activity.
In the last few years a few economists have incorporated the advances in neuroscience
and biology with the discipline of economics to investigate the way our brain makes
decisions. The new field is known Behavioral Economics and one of the latest works in
the field is by Thaler and Sunstein, entitled Nudge: Improving Decisions about Health,
Wealth, and Happiness.

Jean-Baptiste Say
Jean-Baptiste Say had his career temporarily blocked by
Napoleon who was displeased by his extreme laissez-faire
views, however awhile after Napoleons defeat at
Waterloo he became a professor of political economy.
Say popularized Adam Smiths ideas on the continent
during his lifetime. He was opposed to a labor theory of
value of the classical school and replaced it with supply
and demand, which in turn are regulated by the costs of
production and utility. In some respects his analysis was
more advanced than his friend Ricardo. Says discussion
of supply and demand, however, did not include
development of schedules showing price-quantity
relationships as did those of Marshall. Marshalls famous text book, published in 1890,
was the first text to explain the Law of Supply and Demand as it is now routinely done in
introductory economics texts today. Say contributed to the modern theory of costs of
monopoly by pointing out what we call today efficiency losses or dead weight losses.
One of his major contributions to the history of economic thought was emphasizing the

role of entrepreneurship as the fourth factor of production (along with the more
traditional ones of land, labor, and capital).
Says chief claim to everlasting fame rests on his theory that general overproduction is
impossible. This has come to be known as Says Law of Markets. Let us list to Say:
Should a tradesman say, I do not want other products for my woolens, I want money ...
he may be told ... You say you only want money; say you want other commodities, and
not money. For what, in point of fact, do you want money? Is it not for the purchase of
other of raw materials or stock for your trade, or of victuals for your support?
Wherefore it is products that you want, and not money. It is worthwhile to remark, that
a product is no sooner created, that it, from that instance, affords a market for other
products to the full extent of its own value. This means that in the creation of a product
(supply) you create the value (income of the factors of production) to buy what was
produced. Therefore the classical economists Smith, James Mill and Say assumed the
economy always tends toward full employment. We know that their thinking delayed the
study of business cycles because they assumed that the economy would always tend
towards full employment. In the long run, there may be some validity to this doctrine,
but John Maynard Keynes pointed out the weakness of Says law in 1936 and one of his
famous aphorisms is that we live in the short run since In the long run we are dead.