Smith's Virtue of Prudence Has Nothing to Do with Bentham's Dictum About Maximizing One's Utility (Money)

Abstract

Smith’s advocacy of the primacy of the practice of prudence is based on the basic concern, stemming either from an understanding of the fact that, since a creator made us, we are responsible for maintaining that creation in as best condition as possible, or from the realization that, since we only exist once, it is incumbent on us to maintain ourselves in the best possible condition. Both of these outlooks lead to a recognition of self love. We must care for ourselves first or we will never be in a position to care for (love) others later since we can’t give that which we do not have or know how to give.

Smith’s understanding of the value of prudence confirms the emphasis placed on this virtue by Aristotle. Prudence requires that we must be interested in maintaining out health and financial resources. Otherwise, it becomes impossible to help others when the need for action arises since we will be unprepared. The practice of the virtue of Prudence prepares us for the future. Thus, a healthy interest in maintaining ourselves is a necessary condition before we can consider the interests of others. True self interest is just a synonym for practicing prudence.

Unfortunately, the economics profession has misinterpreted Smith’s reaffirmation of Aristotle’s realization that the application of the virtue of prudence (self love or self interest) is a necessary condition that must be successfully practiced first before any other virtue can be practiced with the misbelief that Prudence is maximizing one’s own utility. In fact, Bentham’s Max U thinking, where money is held to be a proxy for utility, means nothing less than Maximizing the amount of money one has over one’s lifetime. Thus, accumulating money is the only goal that maximizing utility entails. Smith, like Aristotle, condemned the goal of accumulating money solely for the sake of obtaining more money. Self interest for Bentham means making more money for one’s self only. Self Interest for Smith is practicing the Virtue of Prudence.

Anyone reading Kennedy’s online Adam Smith’s Lost Legacy is faced with the disheartening realization about how greatly entrenched the Invisible Hand Myth is in the economics profession. Every issue of his Adam Smith’s Lost Legacy deals with numerous misinterpretations of Adam Smith and the Invisible Hand. It is daunting to realize that the number of misinterpretations of Smith reported at Adam Smith’s Lost Legacy is increasing, if not multiplying.

Smith viewed the WN as an application of TTMS.The virtue of Prudence is still there and it is in the economic domain that prudence is manifest. There is no conflict between Prudence (self interest) and Benevolence. However, Smith, as he always had, and as Plato (Socrates), and Aquinas did before him, emphasized the primacy of prudence. Prudence must come first. Smith advocated maximizing Prudence (Minimizing losses). He never advocated maximizing utility. Maximizing Utility is J. Bentham’s position. It involves maximizing the amount of money that one, and only one, can accumulate for him or herself. It is a more technically advanced form of egoism or hedonism.

Smith and Bentham do not mix. The attempt to make Smith a utilitarian was doomed from the beginning. The Invisible Hand myth leads to great confusion because Bentham’s contrary definition of self interest is incorporated in this myth while authorship of the myth is foisted onto Smith. Kennedy has shown how this myth has grown exponentially among economists since it appeared in Samuelson’s Economics textbook for the first time in 1948.

Keywords: Smith, Virtue ethics, Aristotle, Aquinas, Plato Invisible Hand, Benthamite Utilitarianism

JEL Classification: B10, B12, B14, B16, B20, B22