Utilitarianism is the idea that the moral worth of an action is determined solely by its usefulness in maximizing utility and minimizing negative utility as summed among all sentient beings. It is thus a form of consequentialism, meaning that the moral worth of an action is determined by its outcome. The most influential contributors to this theory are considered to be Jeremy Bentham and John Stuart Mill.

John Stuart Mill uses utilitarianism to define morality in terms of the maximization of net expectable utility for all parties affected by a decision or action. As most clearly stated by Mill, the basic principle of utilitarianism is:

Actions are right to the degree that they tend to promote the greatest good for the greatest number.

Socialism and Capitalism from a Utilitarian Point of View

People often seem to confuse utilitarianism with socialism – though there seems to be a lot of differences existing between both utilitarianism and socialism, and utilitarianism and capitalism.

Socialism

Although socialism tends to prmote equal distribution of wealth – thus leading to perceived happiness for a lot of people (who thinks they are treated farily), there will be a lot others who would think that they are not being treated right and deserves more for their efforts.

And still, this is not the major problem. Socialism leads to inefficiency – which contradicts with the most important moto of utilitarianism – upward mobility of the society as a whole.

Capitalism

Capitalism, in opinions of a lot of scholars, is a justification for free-market economics. Private property and unregulated free markets produce the greatest net social benefits of any socioeconomic system: laissez-faire.

A free market economy only takes into account the benefits and costs borne by the buyer and seller, but does not take externalities into account. A free market economy would only comply with utilitarianism when the governement design a regulation that corrects the externality in a way that maximizes net social benefits.

Utilitarianism and Economics

Economics emerged as a distinct, self-conscious science or discipline in the nineteenth century, and hence this development coincided with the dominance of utilitarianism in philosophy. The social philosophy of economists has almost invariably been grounded in utilitarian social philosophy. Even today political economy abounds with discussion of the weighing of “social costs” and “social benefits” in deciding upon public policy.

But this doctrine is hardly scientific and by no means value free. For one thing, why the “greatest number”? Why is it ethically better to follow the wishes of the greater as against the lesser number? What is the justification for each person counting for one? Why not some system of weighting?

Modern welfare economics is particularly adept at arriving at estimates (even allegedly precise quantitative ones) of “social cost” and “social utility.” But economics does correctly inform us, not that moral principles are subjective, but that utilities and costs are indeed subjective: individual utilities are purely subjective and ordinal, and therefore it is totally illegitimate to add or weight them to arrive at any estimate for “social” utility or cost.

As far as the public rights and happiness are concerned two economic theories dictates and they are:

• Free market capitalist economy.
• Economy under central control.

But both these theories have been failed to create a complete utilitarian society where the public policies are ensuring the greater good for the greater number of people.