Disentangling utility: the marginalist contribution

Abstract

Utility is a central concept in modern economic science. However, when looking for a clear definition, we find an array of different and sometimes contradictory notions. Is utility simply a measure of individual pleasures and pains, associated to consumption and labour? Is utility a value of a function that gives a complete ordering of choice alternatives without any motivational content? Does rationality, viewed as utility maximization, imply self-interested motivations? This essay is part of a research effort aimed at clarifying the meaning of the core concepts of economics pertaining to individual behaviour and action, through the study of the historical evolution of notions and ideas. The topic addressed is utility as conceived by the marginalist thinkers of the nineteenth century, namely Jevons, Walras, Edgeworth, Marshall and Pareto and its consistency (or inconsistency) with the modern notion of rational choice. The discussion of utility by the marginalist authors is revealing of their three major concerns: (a) to identify a field for Economics separate from Ethics, or Morals; (b) to develop a specific concept of economic action; (c) to adopt notions amenable to mathematical formulation and analysis. For marginalist authors there was no ambiguity between moral and “economic” motivations, and this is exactly where the economics of the marginalists diverges from modern neoclassical economics. The discussion in the following pages aims to show that for these economists, moral values are separate and incommensurable with other selfcentred related dimensions of evaluation; in contrast to the widespread modern notions, they believed that moral values could not be included and dissolved into a single-valued utility function. The analysed authors clearly separate two different domains: the first concerns the relationship between the agent and things, and the second the relationship between the agent and others. This differentiation of domains guided the interpretation and organizes the text that follows. Section one and two will be devoted to the first domain of analysis – the agent and things. In section one, it is argued that the concept of utility, as a measure of individual satisfaction and choice criterion, necessarily involves a clear delimitation of the decision domain. Section two suggests that the separation of the domain of action provided the marginalists with a criterion splitting Economics from the other Moral Sciences. Section three, dealing with the relationship between the agent and others, concludes that the social outcomes included in the economic domain are those that can be interpreted in terms of equilibrium. The adopted criteria of evaluation of social states are axiological neutral. The domain of Economics has its borders where the real social interaction begins with its moral dilemmas for the individuals.