Handbook of Economics and Ethics
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Handbook of Economics and Ethics

Edited by Jan Peil and Irene van Staveren

The Handbook of Economics and Ethics portrays an understanding of economic methodology in which facts and values, though distinct, are closely interconnected in a variety of ways. From theory building to data collection, and from modelling to policy evaluation, this encyclopaedic Handbook is at the intersection of economics and ethics.
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Chapter 45: Needs and Agency

Lawrence Hamilton


Lawrence Hamilton The concept of ‘human needs’ is conspicuous by its absence in modern economics. This is especially true of neoclassical economics, ever since Marshall criticized Smith’s and Ricardo’s distinction between ‘necessaries’ and ‘luxuries’ (Marshall [1920] 1964, pp. 56–7). However, most forms of mainstream economic analysis in fact are neglectful of the concept, as exemplified by the omission of an entry for ‘needs’ in the four-volume New Palgrave Dictionary of Economics (Eatwell et al. 1998). This is odd but not difficult to explain. It is odd because, at least in part, economics is about understanding human agency and motivation, and human needs constitute one very important component of human motivation to act. Moreover, as exemplified in the work of, amongst others, Aristotle (1980, 1988), Smith ([1776] 1975, [1790] 1976), Marx ([1932] 1992, [1847] 1976, [1939–41] 1973, [1867] 1976–78, [1890–91] 1996) and Sen (1985a, 1985b, [1997] 1987a, 1987b, 1993a, 1993b; Hamilton 1999), economic and political discourses and institutions have always been characterized by constant recourse to the idea of ‘need’ (Wiggins 1998, p. 4n; Hamilton 2003, p. 9). Thus, mainstream economics excludes a central component of human motivation in general and of economic and political discourse in particular. It does so as a consequence of the triumph of utilitarianism within economics and the concomitant reduction of human agency to utility maximization. The focus of this chapter is on how this omission impairs our understanding of the social, economic and political practices and goods that determine how we...

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