By Jonathan Andreas, Updated 2014/05/19
Mmutilitarianism is an abbreviation for “money-metric utilitarianism.” It is a mutation of utilitarianism, but self-described utilitarians completely reject mmutilitarianism as an ethical system because it is based on a false axiom: constant marginal utility of money. The antipathy is mutual because adherents of mmutilitarianism completely reject utilitarianism too because mmutilitarians reject the use of diminishing marginal utility of money (dimmeu) for ethical decisions. The main difference between the two groups is their view of dimmeu, but we cannot call both groups utilitarians despite the obvious doctrinal similarities because they mutually reject each other.
Adherents of mmutilitarianism don’t use that term partly because they don’t realize that they using any ethical system at all. During the ordinal revolution, the economics profession rejected ethics for being unscientific. Since then most economists have thought that they are focused upon positive science without ethical bias. But ethics is unavoidable, so economists ended up developing accidental ethical structures in their thinking.
Mmutilitarianism is the byproduct of this torturous intellectual history. It began when neoclassical economics was dominated by utilitarianism after the marginal revolution of the late 1800s. Utilitarianism is the idea associated with Jeremy Bentham who argued that we should try to achieve “the greatest happiness of the greatest number” of people. The basic aim of utilitarianism is to try to add up the utility, or wellbeing, of every individual and maximize the sum of total utility. Utilitarian ideas were part of the foundation of neoclassical economic theory until the 1930s when logical positivists created the intellectual framework that succeeded to eliminate utilitarianism from economics.
The logical positivist intellectual fad of the 1920s rejected normative (ethical) concerns as metaphysical and unscientific. They wanted to eliminate ethics from economics and opposed utilitarianism on this philosophical basis. Ironically, the positivists’ own argument against normative reasoning was itself based on normative reasoning. They said that ethics is bad for science which is itself an ethical (normative) judgement. ‘Bad’ is inherently a normative judgement.
This illustrates that it is impossible to completely eliminate ethics from human endeavors. Instead of eliminating ethics from economics, the positivists unwittingly turned economists into disciples of mmutilitarianism, which filled the ethical vacuum. All organizations and communities need some kind of ethical basis to be able to organize around common agreements, and mmutilitarianism filled this niche. It has been encroaching on business schools, legal judgments, and public sentiment ever since.
Another argument against utilitarianism came from opposition to the idea of diminishing marginal utility (dimmeu) of wealth. Dimmeu is the idea that Bill Gates gets less utility from finding a $20 bill on the sidewalk than a homeless guy would get. That is because Bill Gates has so many billions of dollars that he hardly notices any benefit from yet another $20, and it probably would not even be worth his time to chase it down in the wind. But a homeless guy could get tremendous happiness from being able to use $20 to be able to eat for several days.
Utilitarians realized that they could not in practice measure the utility of other people, but they invariably accepted the idea that there is dimmeu of wealth. They would often suggest that Bill Gates should give $20 to the homeless guy because Bill Gates would hardly lose any utility by losing $20 (and it might even raise his utility because he likes to give away money to needy people) and the homeless guy would gain a lot of utility. The sum of global utility would thereby increase if Bill Gates lost a $20-bill in the wind and the homeless guy found it. This is why dimmeu is a politically controversial idea. Some rich people consider the concept to be tantamount to class warfare because it gives a clear justification for progressive taxation and social programs to help the less fortunate. Dimmeu remains so controversial that utilitarians still seem shy about discussing its political implications.
Many utilitarians worried about whether taking $20 from Bill Gates would reduce his incentive to work and produce new goods for the world and they worried about how to redistribute money fairly so that it didn’t create corruption and inefficient dependency, but it was a powerful reason to think about the rich, middle class, and the poor and how to redistribute resources to where they would get the most bang for the buck. The opposition of the upper classes to dimmeu created a political force that reinforced the positivist philosophical opposition to utilitarianism.
The positivists disliked ethics, and they also disliked subjectivity. For example, they attacked psychology at the same time for studying thinking and perception because it is inherently subjective and therefore only measurable from a 1st-person perspective. The positivists argued that subjective experience is unscientific because it is unverifiable to 3rd parties. The entire concept of utility is also a psychological phenomena of cognition and perception that is unverifiable to 3rd parties and this was a third avenue of attack on utility theory.
The fact that each individual’s utility is impossible to measure with any precision has always been a huge practical difficulty with implementing utilitarianism beyond the vague recommendations that directly follow from the concept of dimmeu like progressive taxation. People who disliked dimmeu, like the economist Lionel Robbins, were adamant that the measurement problem made utilitarianism useless. Robbins published an influential attack in 1932, saying that dimmeu does not “justify the inference that transferences from rich to poor would increase total satisfaction”.
At the time, economists relied on dimmeu to explain several positive economic concepts including a foundation of demand theory: dimmeu explained why demand curves slope downward. Because dimmeu was fundamental to economic theory, the utilitarian basis for economics resisted all attacks until 1934 when Hicks and Allen, citing Robbins’ inspiration, showed that it is mathematically possible for a demand curve to slope downward even if there were constant marginal utility of money. Constant marginal utility is the idea that every dollar gives the same amount of utility regardless of how wealthy a person is. If we lived in a constant marginal utility world, Bill Gates would get just as excited about seeing a $20 bill as a homeless guy.
Hicks and Allen had political motives for trying to eliminate dimmeu from economics. They said they hoped it would help them reform “the economic theory of the state, where the shackles of utilitarianism have always galled”. And indeed Hicks soon proceeded to reform the theory of the state. He got economists to abandon dimmeu utilitarianism, but they still wanted to be able to give policy advice how to improve “the economy.” Without some kind of ethical theory, economists would lose relevance and importance because they needed an ethical theory to be able to give advice about anything. The replacement for utilitarianism that Hicks proposed (along with Nicholas Kaldor and others) was what they called the “new welfare economics” which assumed constant marginal utility instead of dimmeu. This was the philosophical foundation of mmutilitarianism and it greatly simplified economic prescriptions. If there is constant marginal utility of money, then all we have to do to achieve “the greatest happiness of the greatest number” of people is to count up the total amount of money that people earn every year. This is what gross domestic product (GDP) is and mmutilitarianism is the moral philosophy which gives GDP so much heft. GDP is by far the most common and important measure of economic welfare in the world. Somehow mmutilitarianism was also more satisfactory for the positivists because, unlike utility, everyone agrees that it is possible to fairly objectively measure money. Somehow they were able to overlook the obvious normative problems of the “new welfare economics”.
Hicks and his followers have usually called his replacement for utilitarianism, “efficiency” and when you hear economists talking about efficiency, they are usually talking about maximizing money-metric utility (or mmutility). I call it mmutilitarianism to honor its roots in utilitarianism, and because that is exactly what utilitarians would believe if they thought that money is the best measure of utility and that there is constant marginal utility of money. That is really the principle difference between the two schools of ethics. Utilitarians believe that utility is difficult to accurately measure in large part because of dimmeu. Mutilitarians believe that utility is fairly easy to accurately measure because there is constant marginal utility of money and so we can simply add up dollars to seek the greatest sum of mmutility. Someone’s worth is literally measured using their ability to pay in dollars. And because a homeless guy’s dollars have the same mmutility as Bill Gates’ dollars, that means that the billion poorest guys on the planet are literally worth less than Bill Gates when deciding what is good for the economy.
In mmutilitarianism, the value of any government action is determined by estimating the willingness to pay of all people involved and subtracting off the dollar costs. This is called cost-benefit analysis. The wellbeing of any group of people is measured by adding up all the dollars that they get for the final goods and services that they produce and dividing by the number of people in the group. This is mean GDP, the holiest measurement of mmutilitarianism.
Ethical egoism (a philosophical justification for selfishness) is one of the consequences of mmutilitarian thought. If every dollar is worth the same to everyone, then selfishness is justified because it doesn’t matter who gets the money and the only thing that matters is increasing the total money value of the economy (max GDP). Mmutilitarians typically think that selfishness is an excellent motivation for maximizing the production of GDP which is one reason why they promote selfish ends. Mmutilitarians even conflate selfishness with rationality and often imply that altruism is irrational or even bad. Mmutilitarianism was exported to other social sciences and business schools by economics imperialism too. For example, in political science, realism is akin to mmutilitarianism and business schools teach that maximizing profits (a form of mmutility, remember) is the moral responsibility of business.
Medianists recognize that economies work best when people work together for mutual benefit, so pure selfishness is counterproductive. Medianism also seeks to improve economic policies by replacing mmutilitarian measures with measures based on medians. For example, the medianist replacement for cost benefit analysis is median benefit analysis, and the medianist replacement for GDP is Median Expected Lifetime Income (MELI).
All economists realize that GDP is a flawed measure of economic wellbeing and numerous economists have tried to replace it with a better measure of wellbeing. All have failed because GDP is simpler and more useful than all past proposals. MELI could finally dethrone GDP if we can develop a primary protocol for measuring it that economists can agree upon. Dethroning GDP could have broad implications for economic policy which will touch everyone’s lives.
Nobody defends mmutilitarianism as an ethical ideal either from religious or secular ethical principles because it is based upon false axioms that systematically lead to ethical errors. But it fills a practical purpose for guiding decisions about what is good for “the economy” because it is a convenient, simple ethical system that helps avoid wasteful errors that societies would (and did) make without it. Society needs some kind ethical system to guide economic policy, and mmutilitarianism has filled this important niche. Medianism seeks to make a tiny improvement to economic thought by replacing mmutilitarianist measures with measures based on medians. There is nothing inherently ‘median’ about all of the positions that medianism.org advocates, but it is a useful focal point for thinking about “the economy” and the economic wellbeing of people. Medianism is really about reforming mutilitarianism. Instead of calling this reform movement ‘anti-mmutilitarianism,’ I am naming the ideas after a salient, simple, and powerful method for reforming ethical economics. Economic policy should focus more on measuring the median individual rather than the mean dollars.
Problems of mmutilitarianism include:
- Egoism in its various forms: Mmutilitarians are philosophical egoists in three different ways:
- Ethical egoism: moral agents ought to do what is in their own self-interest without altruism.
- Rational egoism: Mmutilitarians think that selfishness is rational. This is also a normative stance because rationality is normative. Rational egoism is closely related to ethical egoism. After all, it is hardly ethical for people to systematically behave irrationally! Ethical egoists, like Ayn Rand, believe in rational egoism too.
- Psychological egoism: Mmutilitarians think that people are psychologically motivated by self-interest and even apparently altruistic behavior is really motivated by the desire for selfish benefits according to this theory. Although this is usually described as a positive form of egoism rather than a normative form, psychological egoism tends to lead to ethical egoism because they see selfishness as a natural human tendency. It is only natural for people to accept things that they perceive to be natural as being benign. This is sometimes called the naturalistic fallacy, and it is hard to avoid making appeals to nature when making normative statements. Students who are taught that selfishness is natural and common really do become more selfish!
- Medianist alternative: Embrace a happy median between egoism and altruism. Real people have both selfish and altruistic motivations. Even the worst monsters of history sometimes did something altruistic for somebody (or perhaps an animal) at some time in their lives. Hitler could never have become a powerful leader with devoted followers if he were completely nihilistic towards everyone. Society would immediately collapse if people were never altruistic. Furthermore, it is important to embrace and encourage altruistic behavior to strengthen society. It is perverse that many philosophers have noted that altruism could get excessive in theory, because it is hard to find actual examples of altruism run amok and it is easy to find examples of excessive selfishness. Even if you agree with the psychological egoists that altruistic behavior is motivated by some kind of personal benefit, true altruism is not motivated by hedonistic benefits. The soldier who sacrifices his life to save his comrades is not doing it for the hedonistic stream of experienced pleasures he expects to get out of it. True altruism is more complicated than hedonism can describe, and it should be encouraged.
- Positivist fallacy: Mmutilitarians believe in the fallacy that economists can avoid ethics and do a completely neutral, “positive” science. This is nihilism. Avoiding ethics is impossible for any community of people who work together on shared ideas, but ethics is particularly important for a social science like economics whose ideas have, in Robert Heilbroner‘s words, “shattered empires and exploded continents; they buttressed and undermined political regimes; they set class against class and even nation against nation.” ¡¿Yep, nothing ethical about that. Move along now!
- Medianist alternative: We need to recognize that there are ethical underpinnings of every community of people including economics. Self-awareness of our ethical judgements can help us consciously create better judgements. If we persist in the fiction that economics can be nonethical (positive), then we will end up with an accidental ethics like mutilitarianism. Medianism is a push towards a more ethical economics.
- The efficiency-equity tradeoff: Mmutilitarians worship at the altar of mmutilitarian efficiency. This would not be so bad except that they emphasize a tradeoff between efficiency and equity that doesn’t always exist. As a result, an unstated goal of mmutilitarianism is to increase inequality!
- Medianist alternative: There are many policies that increase both efficiency AND equity. These are also medianist policies because they will benefit the median person.
In sum, mmutilitarianism is money-metric utilitarianism. It is a mutation of questionable morality and it should be replaced by medianism. This is a clear improvement, and it is cheap and simple to do. Although it is only a modest improvement, when multiplied across multiple policies that affect billions of people over decades, it is well worth the tiny investment it would require.
Note that I started out writing the word with a single initial m, but I have added a second m to the beginning of the word to make it easier to distinguish between mmutilitarianism and utilitarianism. When speaking the word mmutilitarianism, one must emphasize a long mm or else you will probably be misunderstood. You must almost sound like you are stuttering. If you see the word with only one m, it is a holdover from the years when I wrote it that way.
 Hicks and Allen also showed that there there could be increasing marginal utility of money too, but that idea is so ridiculous that few people have ever tried to argue that it could be the norm. Some wealthy elites have made the argument, but not many. Note that it requires some fairly strong psychological assumptions to make it possible for a demand curve to slope downward in the presence of constant or increasing marginal utility of money, but most neoclassical economists were happy to reject utilitarianism and they did not do much to explore the realism of their new theory.
 When cost-benefit analysis began it used willingness and ability to pay as the measure of the good, but then in the 1970s, health economists also began using the statistical value of a life which is a much more egalitarian and defensible methodology for measuring benefits. Oddly, the value-of-a life methodology seems to have generated a lot more popular controversy than the pure mmutilitarian willingness-and-ability-to-pay methodology.