Sunday, November 2, 2014

Utilitarianism, Capitalism and Utility Monsters

A common criticism of utilitarianism is the idea of a utility monster. Suppose you had some extra ice cream, and you decided to give it away, so as to maximize utility. You only have enough to give to one person, and there are only two people available for you to give it to: Alice and Bob. If Alice likes ice cream, and Bob does not, then obviously you should give your ice cream to Alice. Giving it to Bob wouldn't increase his utility. What if Bob did like ice cream, but Alice like it more? Then, you should still give your ice cream to Alice, because that maximizes utility. What if Alice likes everything more than Bob does? Then you should take Bob's stuff and give it to Alice, because that will maximize total utility.

On a separate note, utilitarianism and capitalism go really well together.

Utilitarianism says you should try to maximize utility. When you buy something, you do so because it will make you happier, or help you achieve your goals, in other words, increase your utility. And you're trying to get best deal, you don't want to pay any more money than you have to. So money works as a not too bad proxy for utility. Which is good, because it's hard enough to get people to agree what utility is, let alone measure it in any meaningful way.

Before, I talked about the spherical cows of economics, that is, the conditions under which the free market is maximally efficient. One of those spherical cows in economic equality. A rich person can outbid a poor person, not because they value what they're buying more, but simply because they have more money to spend.

But if money is a proxy for utility, then maybe the rich person really does value it more. Maybe the rich person, in fact, has a greater capacity to value things at all. In other words, maybe rich people are utility monsters.

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