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Chapter 8: Bentham, Say, Senior & Mill :explode: (Utilitiarianism…
Chapter 8: Bentham, Say, Senior & Mill :explode:
Utilitiarianism
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The ethical doctrine that the moral worth of an action is determined solely by its contribution to overalll utility
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Bentham argued that virtually all humans seek to maximize their "happiness", defined as the surplus of pleasures over pains
He also posited that all human actions arise from the hedonic calculus. Hedonistic thought is that all actions can be measured on the basis of how much pleasure and how little pain they produce.
By the principle of utility is meant that principle which approves or disapproves of every action whatsoever,according to tendency which it appears to have augmented or diminish the happiness of party whose interest.
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Utility Maximization
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Bentham provided the first statement cocncluded that money is the instrument that measure the quantity of pleasure and pain.
Criticisms
Bentham chose money as his cardinal measure,but people have different subjective valuations of things,which cannot be compared
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Philosophical and ethical crticisms - Bentham abjuring all value judgement on the quality of pleasure. He described the difference between prose and poetry
Jean Baptiste Say
Value Theory
Say opposed the labor theory of value by classical and replace with supply and demand which in turn are regulated by cost of production and utility
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Emphasized that labor, land and capital are all involved in production
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Cost of Monopoly
Monopoly not only create efficiency loss but also use scarce resources to obtain and protect their monopoly positions
Entrepreneurship
Like Cantillon before him and the Austrian School after him, Say also placed great emphasis on the risk-taking entrepreneur and even tried to include him as the fourth factor of production in his analysis.
Law of Markets
Say's Law claims that total demand in an economy cannot exceed or fall below total supply in that economy or as James Mill was to restate it; "supply creates its own demand"
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Nassau William Senior
Positive Economics
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Economist should concern on analyzing the production and distribution of wealth, not the promotion of happiness
Positive economics is the branch of economics that concern the description and explanation of economic phenomena
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For example, a positive economic theory might describe how money supply growth affects inflation, but it does not provide any instruction on what policy ought to be followed
Four Propositions
Principle of income or utility maximization ( people wish to maximize wealth at the lowest sacrifice)
Principle of capital accumulation (Labor productivity is not limited, but increase as capital is brought to bear
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Principle of population ( The population is limited only by moral or physical evil, or by the fear of a deficiency of wealth that each class of inhabitants think they need.
Abstinence
It implied a value judgement about the sacrifices taken by capitalist in postponing consumptions of wealth
Abstinence Theory
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The cost of production are the labor of worker and the abstinence of capitalist . (People have to be paid to abstain from consumption to give up their buying power to purchase capital
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Policy
A proponent of laissez-faire, senior was a active participant in Whig politics, being one of the commisioners responsible for the Poor Law Amendment Act of 1834
Trade Unions
Thought that the living conditions of those receiving welfare ought to be worse than those of the lowest paid workers
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Factory Acts
Favored child labor laws, but did not favor laws restricting the hours of adults.
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