Utilitarian Approach to an Economy

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Utilitarianism is a major position in normative ethics stemming from the late 18th and 19th century philosophers Jeremy Bentham and John Stuart Mill. Contrary to the deontological approach to ethics that perceives morality as a duty or a moral rule that has to be followed, utilitarianism is a form of teleological ethics focussing on the consequences of actions meaning that the moral value of an action is solely determined by its outcome. Thus an action is considered right if it tends to produce happiness and wrong if it leads to the reverse effects of happiness, not only to the executer of the action but also to everyone else that is – either directly or indirectly – affected by the action. The influence of utilitarianism on other areas besides philosophy, such as law, politics and economy, over the last centuries has become clearly notable, whereas this paper focuses - besides a detailed description of the classical utilitarianism itself - explicitly on its influence on decision making with respect to the economy. Based on the common characterization of utilitarianism that ethically right acts are those that produce “the greatest good (or greatest happiness) for the greatest number” this paper aims at examining this formulation in detail with respect to applying it to the decision making process in business which has a considerable influence on economy. Chapter 2 aims to set a frame for the later theoretical discussion by presenting the basic concepts of utilitarianism. Chapter 3 further deals with the fundamental idea of the utilitarian theory formulated by Jeremy Bentham and several problems associated with its application. Chapter 4 covers John S. Mill’s enhancement of Bentham’s theory. Based on this background information, chapter 5 illustrates the how utilitarianism can be applied to decision making in business and thus impacting the economy by presenting three distribution formulations that can be derived from the classical utilitarian perspective. Chapter 6 summarizes the paper and critically reflects on the findings of the theoretical evaluation. 2Basic Concepts of Utilitarianism

Utilitarianism is an attempt to provide an answer to the question what a man ought to do in order to produce the best consequences possible for all persons affected from the action he undertakes. Regarding the consequences of the action, the utilitarian takes all the happiness (good) and suffering or pain (bad) produced by the act into consideration independent of the fact whether arising after the act has been performed or during its performance. The overall happiness can thus be regarded as the result of the aggregated happiness of each person involved. When evaluating the consequences of actions, utilitarianism relies on some theory of intrinsic value, meaning that when something is held to be good, all other values are assumed to deduce their worth from their relation to this intrinsic good as a means to an end. Furthermore, utilitarianism is based on the assumption that it is possible to evaluate the consequences of two different actions by comparing their intrinsic values. Summing up, utilitarianism tries to create a complex but fair system of ethics by establishing several generalizing principles. Moreover, these principles have to be fairly easy to apply so that they can be used as a leading idea in the process of judging human actions in general so that utilitarianism maintains to be applicable to the entire mankind. 3Fundamental Ideas of the Utilitarian Theory

Even though the roots of utilitarianism can be retraced to the Greek philosopher Epicurus, Jeremy Bentham is generally referred to as the “Father of Utilitarianism” . He was the first European that held a view of the utilitarian theory in terms of an elaborated system. His “Principle of Utility” claims that every human action that assures the public weal is demanded. Based on the empirical assumption that every human aims at satisfying his own...
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