Sophistry and Illusion: Can Economic Man Resurrect Ethics?

Bewitched by Language

Near the end of his Enquiry Concerning the Principles of Morals, the 18th century Scottish philosopher David Hume writes that “this enumeration puts the matter in so strong a light, that I cannot, at present, be more assured of any truth, which I learn from reasoning and argument.” [1] But being a thorough skeptic, Hume continues his statement with the following qualification:

“But when I reflect that, though the bulk and figure of the earth have been measured and delineated, though the motions of the tides have been accounted for, the order and economy of the heavenly bodies subjected to their proper laws, and Infinite itself reduced to calculation; yet men still dispute concerning the foundation of their moral duties. ” [2]

Hume not only wonders if men will ever be able to elucidate the foundation of morals, he also indicates that the “science” of morals may be outside the realm of natural science and mathematics. Even if we know everything there is to know about the universe, will this bring us one step closer to objective answers about how men should behave?

In his 1929 Lecture on Ethics, the Austrian philosopher Ludwig Wittgenstein restates Hume’s skepticism about answering questions of morality:

“Suppose one of you were an omniscient person and therefore knew all the movements of all the bodies in the world dead or alive and that he also knew all the states of mind of all human beings that ever lived, and suppose this man wrote all he knew in a big book, then this book would contain the whole description of the world; and what I want to say is, that this book would contain nothing that we would call an ethical judgment or anything that would logically imply such a judgment.” [3]

Wittgenstein distinguishes judgments of relative value from judgments of absolute value. When we use the word “good” in a relative sense we mean that something is right in the context of a predetermined standard. For example, we can ask ourselves if we are driving the right way to Scottsdale, Arizona. But this is not the way the word right is generally used in ethics. Wittgenstein contends that when a value judgment cannot be restated in the form of a statement of facts, we are expressing a nonsensical proposition.

So when Wittgenstein writes that the “the tendency of all men who ever tried to write or talk Ethics or Religion was to run against the boundaries of language,” [4] he doesn’t mean to ridicule ethics or religion, but to demonstrate the different nature of ethical and religious propositions. Considering the fact that, despite the impressive advances in the natural sciences since Hume and Wittgenstein, “men still dispute concerning the foundation of their moral duties,” the prospects for an objective foundation of morals seems to be a chimera.

Can we improve on moral skepticism without running against the boundaries of language? In his book Ethics as Social Science [5] Leland Yeager suggests that the majority of debates about morality may not involve fundamental disagreements about values but disagreements about social and economic reality. If Yeager is correct, we should expect that progress in the social sciences will “discipline” moral philosophy.

Yeager’s perspective has a lot to commend it, but we may question his assumption, not uncommon in utilitarianism, concerning the degree of consensus about fundamental values between people. A methodological objection also suggests itself. Do the social sciences not suffer from similar epistemological problems as ethics? It is too tempting not to quote Hume once more:

“When we run over libraries, persuaded of these principles, what havoc must we make? If we take in our hand any volume of divinity or school metaphysics, for instance, let us ask, Does it contain any abstract reasoning concerning quantity or number? No. Does it contain any experimental reasoning concerning matter of fact and existence? No. Commit it then to the flames, for it can contain nothing but sophistry and illusion.” [6]

Can we avoid the “sophistry and illusion” of traditional moral philosophy, and also avoid the semblance of consensus and methodological problems inherent in utilitarianism? It appears that we need an approach that is minimal, limits rationality to means-end reasoning, and produces rational and stable compliance.

Morals by Agreement

Enter homo economicus. Can economic man offer an alternative? It is not obvious why economic man needs extra-rational considerations to pursue his individual preferences. To economic man traditional morality is not considered and rejected, but simply ignored because maximizing individual utility is sufficient. Therefore, we may want to look for better foundations of morality from within the framework of practical rationality.

When we talk about maximizing individual rationality, it is important to make clear what we do not mean. What we do not mean is to define self-interest in a specific fashion. The assumption of maximization of individual utility assumes that individuals have values, and that these values are subjective and relative [7]. Assuming otherwise, we soon would find ourselves back where we started by starting from specific values ( virtue, impartiality, egalitarianism etc.). Another reason for this assumption is that it will enable us to focus on the structure of interaction between individuals, regardless what their specific preferences might be. It is also important to note that if we talk about economic man that we do not mean an individual exclusively motivated by financial gain. When we talk about economic man, we propose to use the minimalist assumptions of economics as a basis for morality.

Following David Gauthier’s seminal work Morals by Agreement [8], we identify morality as rational constraint on the pursuit of self-interest. If the pursuit of self-interest invariably would generate mutual benefit without negative external effects, morality would be redundant. But as game theory has taught us, there can be situations where an individual can do better if he accepts constraints on maximization of self-interest, provided others are similarly inclined. If rational constraints on maximizing individual utility are accepted, rationality and morality are reconciled within a framework that seems to avoid the pitfalls that Hume and Wittgenstein identified in traditional morality.

We expect an individual to accept constraints on maximization of self-interest because this will enable him to participate in beneficial transactions that are not available to what Gauthier calls straightforward maximizers. A classical example is of course Thomas Hobbes’ state of nature where a “war of all against all” makes life “solitary, poor, nasty, brutish, and short.” To end this state of affairs, all parties agree to renounce their right of self-determination to create a Sovereign. We do not need to follow Hobbes in his preference for an absolute state, or any central enforcer, to see how everyone’s situation can be improved by mutually agreeing on constraints on the use of force.

Can we not improve on this by deciding on a case by case basis what course of action to pursue; reap the benefits of straightforward maximization, and the benefits of mutual constraint? One objection is that individuals who only accept constraints on their interactions if it is to their direct benefit may be excluded from opportunities with individuals that are willing to commit to and comply with decisions that are not directly maxiziming.

But what about appearing to be a contrained maximizer, without being disposed to be one? One might ask if such a disposition is rational. Such a person might be perceived as someone who “cannot be trusted.” A more plausible objection would be to ask if we can choose our dispositions. That is an objection we will leave to the side for now, but that affects the core of Gauthier’s project of reconciling reason and morality.

In a society that accepts morality as rational choice we would expect to find mutual advantage, commitment, and compliance. However, mutual advantage can also exist against the background of prior coercion (past injustice). Here Gauthier offers an ingenious argument why an agreement that does not reflect a baseline (or history) of non-coercion does not invite stable compliance by linking compliance to stability. When an individual realizes the greater benefits that he could expect from “pure rational agreement,” compliance with agreements that reflect unfavorable terms become problematic. “Aware of the benefits to be gained from constraining practices, rational persons will seek those that will invite stable compliance.” [9]

Evolution, Technology, and Reason

One may object that the acceptance of a morality that reflects a non-coercive hypothetical bargain between rational individuals will be mainly confined to armchair philosophers with too much time to read, and not enough time to observe reality.

The lack of rational decision making has been well documented in fields like behavioral finance and experimental economics. An evolutionary account of morality that makes more modest assumptions about rationality and common knowledge seems preferable. This approach would not only have the benefit of realism, but also offers a better framework for how conventions and norms evolve, persist, and decline.

But can an evolutionary account of morality provide us with reasons how to act? It appears that as soon as we try to use the evolution of norms to guide individual behavior, we run into the same “sophistry and illusion” that generally characterizes attempts to derive an ought from an is. A more subtle complication is that as soon we come to recognize the biases that affect our reasoning, some modifications in behavior can be expected. Evolution derived morality is at odds with what the philosopher Jean-Jacques Rousseau calls the tendency of “perfectibility” in man.

Admittedly, there can be no more “perfection” than nature allows, but in a future where biology, biotechnology, and artificial intelligence will converge, human nature will become more design and less fate. This transformation will eliminate biases in reasoning, dispositions can be changed along the lines outlined in Gauthier’s writings, and limitations on information will be reduced in decision making. In such a world, economics textbook assumptions about rationality may become quite realistic.


1. David Hume – Enquiry Concerning the Principles of Morals, 1751, paragraph 227

2. David Hume – Enquiry Concerning the Principles of Morals, 1751, paragraph 227

3. Ludwig Wittgenstein – Lecture on Ethics, 1922

4. Ludwig Wittgenstein – Lecture on Ethics, 1922

5. Leland B. Yeager – Ethics as Social Science: The Moral Philosophy of Social Cooperation, Edward Elgar, 2001

6. David Hume ‑ An Inquiry Concerning Human Understanding,1748, Section XII, Part I

7. Note the difference between this concept of rationality and that in Ayn Rand’s “Objectivism”. For a critique of Ayn Rand as a moral and political philosopher see Jan Narveson – Ayn Rand as a Moral and Political Philosopher, Reason Papers, 23, Fall 1998, p. 96-100

8. David Gauthier – Morals by Agreement, Oxford: Clarendon Press, 1986

9. David Gauthier – Why Contractarianism? in: Contractarianism and Rational Choice: Essays on David Gauthier’s Morals by Agreement, ed. Peter Vallentyne: Cambridge University Press, 1991, p. 29