Explain how the branch of utilitarianism claims free and competitive markets can help maximize the overall good?
1. Explain how the branch of utilitarianism claims free and competitive markets can help maximize the overall good?
While utility maximization and justice are distinct concepts, in practice, achieving one also achieve the other; justice and utility converge. On the face of it, this does not seem to be a very plausible position. It is easy to think of scenarios where doing the just thing might not maximize net utility, and vice versa. Nonetheless, Utilitarian attempts to reconcile these two notions have a long and interesting history, and it is important to understand something about them. To the extent that economists are concerned about the justice of capitalism (and admittedly, justice is not typically their main concern), they tend to think about it as Utilitarians. (1)
In the economic sense, Utilitarians argue that the free and competitive markets market?would enable both the producers and consumers to maximize their own utility and therefore help to maximize the overall good. And, the basic Utilitarian approach to justice is to maintain that when we act to maximize net utility, we are also acting justly (and vice versa).
So, one "of the most important Utilitarian defenses of the free market is also one of the oldest: Adam Smith's. Smith argued that, in a nutshell, free market capitalism is both utility maximizing and just. In a free market, I am able to freely pursue my own self-interest, but in order to further my economic self-interest, I must make a product or a service that people want and I must do so in a way that is at least competitive with what my rivals have to offer. If I really want to make a lot of money, I must do whatever I do better than my competition. By striving to make more for myself, everyone ends up better off overall. My competitors might be hurt, but this is offset by the fact that I have made my consumers better off by providing them with a better product or a better price. Thus, through the process that Smith referred to as the "invisible hand," my pursuit of my own self-interest results in an outcome that was, as he says, "no part of my original intention" - everyone (overall) is made better off, and the result ...
This solution explains how the branch of utilitarianism claims free and competitive markets can help maximize the overall good. The criticisms of this approach are also examined.