Sturn, Richard (2004), The Sceptic As An Economist's Philosopher? Humean Utility As A Positive Principle.

Euro. J.
History of Economic Thought 11:3 345–375 Autumn 2004
The sceptic as an economist’s philosopher?

Humean utility as a positive principle*
Richard Sturn
1. Introductory remarks and overview

The relations between Hume’s utilitarianism and economic reasoning are
deep and multifaceted. The main argument of this paper can be
summarized as follows. The most profound of these relations are connected
to the way in which Hume introduced utility as an explanatory principle,
allowing him to disambiguate three distinct elements in social theory: the
logic of social situations; the logic of socio-economic mechanisms and
processes; and the tendencies and regularities of individual behaviour. The
foundational character of these relations helps to understand why Hume’s
influence is often rather dialectical than straightforward, and it helps to
understand why there is still considerable disagreement concerning the
degree and scope of Hume’s ‘anti-rationalism’, conservatism and scepti-
cism.
Not all of the aspects under which Hume’s profound and complex
influence poses challenges can be analysed in this paper. Here are three of
these challenges: first, there is the history of ideas and its vicissitudes.
Hume’s thought had considerable influence on thinkers who represent
styles of reasoning that are quite foreign to his own theory. A spectacular
example in case is the anti-enlightenment thinker and early German
translator of some of Hume’s writings, Johann Georg Hamann (1730 – 88).
This Lutheran anti-intellectualist used Hume’s theory of knowledge in his
attempt to lend credibility to a pronouncedly reactionary turn of
empiricism. Hamann was one of the first in a heterogeneous collection
of modern anti-modernists who used some kind of empiricism as a weapon
in the combat against general principles as advocated by enlightenment
thought. Concerning Hume’s influence on thinkers closer to the main-
Address for correspondence

Department of Public Economics, University of Graz, Universitätsstrasse 15/E4,
8010 Graz, Austria. e-mail: richard.sturn@uni-graz.at
The European Journal of the History of Economic Thought
ISSN 0967-2567 print/ISSN 1469-5936 online # 2004 Taylor & Francis Ltd
http://www.tandf.co.uk/journals
DOI: 10.1080/0967256042000246467
Richard Sturn
stream of modern thinking, John Stuart Mill as well as Hume’s quasi-

contemporaries, Adam Smith and Immanuel Kant, developed views
pertinent to the epistemological and methodological foundations of
socio-economic theorizing, which sharply differ from the empiricism that
is to be found in Hume’s epistemological writings. But they did so under
the influence of the critical challenge put forward by Hume, who awakened
Kant from dogmatic slumber, as the latter confessed in his Prolegomena
(Kant 1783).
Second, great thinkers change, once and forever, the way in which
certain fundamental theoretical problems are conceived: they clarify
difficulties in defending or rejecting certain types of solutions to these
problems. Hence the challenge posed by great figures such as Hume is that
the character of their intellectual contribution as a whole can only be
assessed if their oeuvre is considered both ‘backward-looking and forward-
looking’: from the problem horizons and perspectives they were confronted
with in their time as well as from the questions and problems they left for
their readers, which are more important for their meaning and impact with
regard to posterity than their own doctrine in a narrow sense.
Third, Hume is perhaps most famous for the distinctions and definitions
that were suggested by him and that are widely quoted and used, such as
the Is – Ought distinction, the distinction between acts that bring about
benefits if and only if they are part of a general practice versus acts that
bring about immediate and unconditional benefits,1 the distinction of
natural and artificial virtues, or the distinction between matters of fact and
relations of ideas, or the definition of pure instrumental rationality. Like
Kant, Hume tended to formulate such distinctions and definitions in such a
crisp and sharp fashion that they are often read as programmatic
commitments. It should be clear, however, that these distinctions and
definitions are neither research programmes nor research methodologies
in a nutshell, even though they may have implications for both by enabling
the theorist to ask different questions or the same questions in a more
precise way. Moreover, suggesting certain distinctions does not imply a
commitment to their uncritical use. One may suggest an analytical
distinction and yet be perfectly aware that it makes sense and is useful
only for certain purposes under certain conditions, whereas it tends to be
misleading for other tasks.
Being aware of the three challenges just outlined is necessary for avoiding
distorted views of Hume’s role in the development of utilitarian thought, of
economic analysis and of social theory in general. Given the specific focus
of this paper, which aims at exploring the significance of his use of the
concept of utility for economic theorizing, this problem is particularly
acute. It unavoidably emphasizes particular aspects and parts of his oeuvre.
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Humean utility as a positive principle
The remainder of the paper is organized as follows. In section 2 I outline

several strands of influence, which give some justification to calling Hume
an ‘economist’s philosopher’. Section 3 analyses Hume’s ‘utilitarianism’,
which is considered as a pivotal ingredient to his socio-economic theory and
as a methodological and analytical principle, rather than an ethical
doctrine in the traditional sense. Section 4 discusses the role of
instrumental reason in the context of Hume’s account of human agency
and his socio-economic theory. This is a key aspect for understanding the
specific character of Hume’s utilitarianism. The discussion in sections 2 – 4
prepares the ground for a summary of what can be considered the core of
Hume’s project in social theory in terms of substance as well as in terms of
method (section 5). Section 6 takes up one of the explanatory benefits
made available by a utilitarian framework as outlined in section 3 in more
detail. As it allows for factorizing the totality of socio-economic inter-
dependences into distinct levels of analysis, it eventually provides the basis
for simplified, cartoon-like concepts of human agency, which are useful
with regard to the task of explaining certain social mechanisms and
processes. Such cartoon-like concepts remain a contested and not always
well-understood issue in economics. It is contended that the strategy of
factorization and simplification is crucial in the context of Hume’s project
of a non-metaphysical explanation of human agency and its normative and
institutional infrastructure as part of nature in general as well as for the
development of economics as a science in particular. Section 7 provides
concluding remarks concerning the practical perspectives of Hume’s
theory.
2. An economist’s philosopher?
It is well known that Hume emphasized the distinction between ‘matters of
fact’ and ‘relations of ideas’, dividing knowledge into two domains: the
domain of logical statements, which are either necessarily true or
necessarily untrue (i.e. contradictory); and the empirical domain based
on perception and induction, which produces generalizations that are only
contingently true and are relied on as true only by custom. Hume’s
distinction between matters of fact and relations between ideas is a useful
starting point for clarifying the status of knowledge that he thinks is made
available by social theory. This knowledge belongs to the sphere of matters
of fact and is hence seen as contingent upon the characteristics of the
environment in which a socio-economic system is bound to operate. But in
Hume’s writings on social theory, this distinction does not inspire a rigid
empiricism for which ‘the edifice of knowledge [. . .] depends on
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regularities in nature obtruding themselves on the mind’, as the late Martin

Hollis (1994: 73) aptly put it. Hollis’s remarks refer to Popper’s critique of
Humean empiricism, which does not capture Hume’s own awareness that
such a kind of empiricism is difficult to sustain, given the problems of
inductive reasoning.
As shown by his writings on economic and political themes, ‘Hume’s
fork’, as this distinction is sometimes called, did not keep Hume as a social
theorist caught in the web of epistemological problems of radical
empiricism. These problems imply a tendency towards a strongly sceptical
position, not an ideal starting point for somebody who wishes to establish
moral philosophy on a new, scientific basis (cf. Hume’s Introduction to the
Treatise of Human Nature2). Indeed, it is hardly conceivable how Hume could
have developed all his insights in what nowadays is called ‘constitutional
political economy’ and economics while uncompromisingly sticking to a
completely passive role of the mind in the epistemological processes
generating knowledge about social reality.3 Elie Halévy (1928: 9 – 11) hence
distinguishes two opposing tendencies in Hume’s thought, which he
accordingly calls ‘dualistic’: a tendency towards naturalism on the one hand
and a tendency towards rationalism on the other. This distinction is a rough
one, and it is questionable whether ‘rationalism’ is the right term, but
talking of ‘dualism’ captures the concern that Hume pursued: to combine a
general emphasis on the limits of reason with a specific endorsement of
‘general principles’ and the use of theoretical systems of socio-economic
interdependencies based on assumptions that can be defended as mean-
ingful, such as moderate scarcity and limited generosity (e.g. Hume 1739 –
40: III.ii.2). Perhaps E.C. Mossner’s (1954 [1980]: 126) claim that ‘Hume
set himself apart as a systematic anti-rationalist’ (my italics) points to the
same direction. Certainly Hume’s moderate ‘rationalism’ has to be kept
apart from kinds of Cartesian rationalism building theories entirely on
hidden forces driving the springs and wheels of society or that attempt to
construct social theory on the basis of a few axioms or that invoke
providential design to fill explanatory gaps. But the way in which Hume
emphasizes the working of what he calls general principles relevant for
empirically meaningful classes of circumstances and conditions suggests
that his empiricism and scepticism summarize a critical stance towards
knowledge in general and not a nihilistic position concerning the possibility
of standards of scientific reasoning. Reasoning from models, thought
experiments and counterfactuals plays an important role for Hume in
examining candidates for such general principles. Important aspects of the
way of his ‘experimental moral philosophy’, including his theorizing in
socio-economic matters, can be understood as an attempt of coping with
the problems cropping up in the context of inductive reasoning. For
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instance, he often made use of thought experiments or models based on

counterfactual assumptions for critical purposes, viz. for showing that
certain alternatives can be ruled out. Perhaps it is just the dualistic mix of
rationalism and naturalism (as it is put by Halévy in a simplified way) that
makes Hume’s style of reasoning attractive for economists who look for
middle ground between aprioristic pure economics and mere collecting of
data.
The concept of utility as used by Hume plays a pivotal role in this story, or
so I will argue in this paper. Moreover, I will argue that this salient role of
utility is related to the fact that Hume is an ‘economist’s philosopher’ in
more than one sense. In philosophy, David Hume was long regarded as a
negative thinker or as an extreme sceptic to be attacked rather than read.
An exception is his influence in the development of utilitarian thought. But
even when summarizing the early history of utilitarian philosophy, John
Stuart Mill called Hume ‘the profoundest negative thinker on record’
(Ryan 1987: 135) while praising his analytical and critical qualities. Jeremy
Bentham recognized Hume’s outstanding role as a social theorist and
remarked that ‘When I came out with the principle of utility [. . .] I took it
from Hume’s Essays. Hume was in all of his glory, the phrase was
consequently familiar to everybody. The difference between Hume and me
is this: the use he made of it was to account for that which is, I to show what
ought to be.’4 Bentham was not the only one to argue that Hume was a
‘merely explanatory’ social theorist (whereas his own achievement consists
in giving social theory based on the same hedonistic psychology a normative
turn for the sake of human improvement). Of course, Bentham overlooks
here the foundational difficulties of his own position, which are related to
the problem of deriving normative motivation supporting utilitarianism
from psychological hedonism. Taking this foundational problem into
account, the quotation from Bentham more properly captures the main
philosophical difference between Hume and later nineteenth and early
twentieth century utilitarian philosophers (e.g., Sidgwick and G.E. Moore)
who made the utilitarian shift to ethical cognitivism and intuitionism
explicit. For Moore (1903: 17 – 20), Bentham is a useful reference to
illustrate the naturalistic fallacy, whereas Hume is not mentioned once in
Principia Ethica: as a ‘merely explanatory’ theorist5 he is obviously
considered irrelevant and not interesting for an inquiry rigorously confined
to normative theory.
For economists from Adam Smith onward, Hume was not only a source
for seminal ideas concerning monetary theory, foreign trade, public goods
and public finance. Economists who got acquainted with Hume’s
philosophical writings often found, and still find, his conceptual distinc-
tions and definitions pertinent to the type of problems that are typically
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dealt with in economics. In other words, they tend to hold him in esteem as
a positive thinker (and not without reason, as I will argue). This applies to
the time of Adam Smith as well as to our own. Here are a few examples that
show the extent to which Hume was and is read and endorsed by
economists. The first group of statements refer to a general and
methodological level whereas a second group contains more specific
claims concerning the importance of Hume for particular explanatory
approaches in socio-economic theory.
‘The Political Discourses of Mr. Hume were evidently of greater use to
Mr. Smith than any other book that had appeared prior to his lecture’,
wrote Dugald Stewart (who certainly was no Humean) in his Life of Adam
Smith, LL.D. (Smith 1980: IV.24). Switching to the twentieth century,
Hume’s outstanding role in clarifying the nature of problems comes to the
fore in the following statement by Leonard Savage (1954 [1972]: 276),
according to whom Hume provided ‘an early and famous presentation of
the philosophical problem of inductive inference, around which almost all
later discussion pivots.’ Even though it differs from the two quotations
provided so far by its negative tone, a passage by McCloskey (1983: 486) fits
into this picture. McCloskey sees Hume as one of the main contributors to
the ‘methodological declarations of the modernist family from Descartes
through Hume and Comte to Russell and Hempel and Popper’, which he
regards as philosophically obsolete, metaphysical, impossible and, hence,
despite its status as official methodology of economics, not followed in praxi.
(Hume’s main contribution to this allegedly misguided methodology is, of
course, the foundational approach to human knowledge described above as
‘Hume’s Fork’.)
In the context of the enlargement of the scope of economics beyond the
market sphere and the growing interest in overcoming limitations imposed
by homo oeconomicus-methodology, prominent modern economists and game
theorists confess to be directly inspired by Hume: he is not only credited
with seminal ideas in particular fields mentioned above, such as monetary
theory, trade theory and public finance,6 but is regarded as the forerunner
of broader research programmes, such as experimental economics, game
theory, institutional economics and evolutionary economics. The following
quotations provide an illustration of the extraordinary intellectual scope
and diversity of the ways in which theorists of different strands try to make
sense of Hume. Russell Hardin (1988: 18), a philosopher who is in the
business of importing game theoretical insights into utilitarian reasoning,
characterizes Hume’s contribution as follows: ‘Hume specified the range of
problems in a coherent system that fits the strategic structure of the
problems. The problems include benevolence, justice, and the choice of
particular governmental arrangements.’ Ken Binmore (1998: 506) declares
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Hume the ‘true hero’ of his Game Theory and Social Contract II and credits
him with the following theoretical innovations: ‘[. . .] Hume effortlessly
formulates the idea of an equilibrium in such a transparent fashion that the
depth of his insight passes almost unnoticed. Hume is the original inventor
of reciprocal altruism, the first person to recognize that the equilibrium
ideas now studied in game theory are vital to an understanding of how
human societies work. He understood that one must look to evolution for a
solution of the equilibrium selection problem. He even anticipated modern
game theorists in seeing constitutional reform as a problem in mechanism
design.’ This goes beyond and is much more specific than a general
endorsement of Hume’s naturalist account of normative phenomena. As it
is based on the idea that moral norms ultimately depend on our feelings or
on what we like, this naturalism seems attractive for social theorists who
stick to the key role of individual preferences in the explanation of social
phenomena of all kinds.
Moreover, Binmore (1998: 19, 176) states that the basis of modern
decision theory ‘is the Humean principle that reason is the slave of the
passions’ and sees Hume’s sympathy mechanism as an inspiration for his
own approach to interpersonal comparisons of utility. Indeed, Hume’s
definition of instrumental rationality in the Treatise of Human Nature is
widely regarded as an informal anticipation of the axiomatic summary of
the requirement for formal coherence of preferences as provided by
Ramsey (1931: 156 – 98). Alan Gibbard (1992: 10) calls this conception of
instrumental reason the ‘Hume-Ramsey view’.
To move to a different theoretical camp, Friedrich Hayek (1960: 420)
chose Hume as ‘constant companion and sage guide’ for his influential
magnum opus The Constitution of Liberty, which focuses the role of
spontaneous social order in human societies. Interestingly, Hayek (1960:
455) acknowledges that Sir Arnold Plant, the intellectual mentor of Ronald
Coase, drew his attention to Hume’s work on justice and property.7 This is
remarkable because it illustrates the seminal character of Hume’s work for
the economic analysis of legal and institutional matters. Moreover, Hayek is
not the first thinker in the Austrian tradition influenced by Hume. In the
last third of the nineteenth century, Hume played a considerable role in
Austrian intellectual traditions relatively close to the Austrian school of
economics, for instance, within the so-called Second Austrian school of
value theory represented by theorists such as Alexius von Meinong and
Christian von Ehrenfels, who is the author of a naturalist ethics explicitly
combining Mengerian marginalist conceptions with evolutionary motives
(see Sturn 2000: 135 – 79).
For Vernon Smith (2003: 470), Hume is ‘an eighteenth-century
precursor of Herbert Simon’ and of the ‘concept of a rational order, as
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an undesigned ecological system that emerges out of cultural and biological

evolutionary processes: home-grown principles of action, norms, traditions,
and morality’, which is to be contrasted with Cartesian constructivist
rationality and which is advocated by Smith as an important basis for
experimental economics. Christian Bay (1958: 33) called him a ‘precursor
of Darwin in the sphere of ethics’, and Hayek considers passages in
Dialogues Concerning Natural Religion (Hume 1976) as an anticipation of
Darwinian evolution. Indeed, in the Dialogues we find prescient remarks
with regard to properties of evolutionary explanations, which can be seen as
a starting point for filling some gaps in the explanatory sketches concerning
basic institutions that Hume developed in A Treatise of Human Nature. It is
not without reason that Hume was a hero of Darwinians such as Thomas
Huxley.
Does Hume deserve all this praise as a prescient hero of various strands
of modern economics in terms of method as well as in terms of substance?
Or does it merely show that some economists managed to make sense of
Hume in their own way and for their own theoretical purposes? I will argue
in this paper that the answer to both questions is a qualified ‘yes’. The
claims collected above highlight certain aspects of Hume’s reasoning in a
way that should be taken seriously. But their very heterogeneity suggests
that they are in need of qualification. Before analysing some of the issues at
stake in more detail, five general caveats are briefly sketched in order to
prevent simple misunderstandings that may crop up when discussing
Hume’s influence on economic reasoning in general and the influence of
Hume’s utilitarianism in particular:
Caveat 1: Referring to the first generation of the marginal revolution,
Hume is not a forerunner of neoclassical economics in the narrower sense
of Walrasian or Jevonian analysis; for instance, the idea that demand
behaviour could be, in general, somehow derived from marginal utility
schedules is not foreshadowed in his reflections on consumption. The main
systematic reason for this is not the lack of marginal analysis. For Hume,
demand behaviour is part of a social learning process and hence
endogenous.
Caveat 2: I also take it as obvious that Hume was not a forerunner of a
methodology based on the neo-classical homo oeconomicus in the sense that is
well captured by a passage by Oscar Lange, according to whom the
postulate of rational utility maximization ‘provides us with a most powerful
tool for simplification of theoretical analysis. For, if a unit of decision acts
rationally, its decision in any given situation can be predicted by the rules of
logics (and of mathematics). In absence of rational action such prediction
could be made only after painstaking empirical study of the uniformities in
the decision patterns of the unit.’ (Lange 1945: 30). As will be shown below,
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the analysis of the ‘logic of the situation’ (invoked by Lange in the above
quotation) has considerable importance for Hume. But in a Humean
framework this works only for specific types of situations (not in ‘any given
situation’), and predictions can never be based on pure instrumental
rationality. The latter cannot be taken as a general explanatory substitute
for empirical patterns of motivation. Predictions must rely on empirically
based estimates on the motivational force of different kinds of passions and
their relevance in certain types of situations and circumstances.
Caveat 3: As argued above, Hume’s influence on economic thought is
complicated by intricate foundational problems of modern social and
economic theory, such as the problem of induction, the role of theoretical
models and the status of methodological individualism in positive economic
theory. Concerning these issues, things are made even more difficult by the
differences that exist between (a) what McCloskey (1983: 486) calls ‘the
official methodology of economics’; (b) its more or less reflected actual
practices; (c) Hume’s empiricism as summarized by authors such as Popper
(which is regarded as being more or less close to the previously mentioned
official methodology); and (d) Hume as a social theorist and political
economist who endorsed some kind of mix between ‘rationalism’ and
‘naturalism’ (to use Halévy’s terms). Of course, these different levels of
argument should be kept apart.
Caveat 4: A zone with pitfalls for economists who are in the business of
importing Hume’s thought into economics is created by Hume’s specific
conceptualization of the relationship between socio-economic theory and
ethics. The way in which normativity is dealt with and differentiated in
various versions of normative economics, most notably in modern welfare
economics and social choice theory, does not fit well into the Humean
picture of a non-cognitivist meta-ethics, which, in a sense, is nothing but
explanatory social theory. Whereas in the Humean approach there is no
place for axiomatic derivation of normative criteria used to evaluate
alternative social states, the idea that normative criteria are a subject matter
of explanatory social theory cannot be easily accommodated within the
framework of welfare economics. This applies to welfare economics in the
Pigovian (more closely utilitarian) tradition as well as to the New Welfare
Economics, which rejects interpersonal comparisons of cardinal utility and
includes Social Choice Theory. ‘Humean’ economists like Hayek may
rhetorically reject all of those orthodox strands, but this does not solve the
foundational problems of the policy recommendations they wish to
support.
Caveat 5: Last but not least, some parts of Hume’s reasoning are simply
not understandable without referring to questions and problems that were
pivotal in the intellectual traditions that inspired Hume. Important parts of
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Hume’s thought in general and many of Hume’s distinctions in particular

are better understood by locating them in theoretical contexts that are
beyond the scope of utilitarian debates. This is illustrated by two different,
but equally important perspectives on Humean thought beyond the
utilitarian context, referring in the first case to philosophical traditions
distinguishing perfect and imperfect duties and conjectural history in the
second.
(i) Jerome B. Schneewind (1990: 354 – 77) locates Hume’s

thought primarily by coordinates provided by the problems
of Grotian natural law theory and the scholastic distinction
between intellectualism and voluntarism. The Grotian
perspective is useful for understanding Hume’s distinction
between natural and artificial virtues. In utilitarian contexts,
this is often regarded as an anticipation of the distinction
between rule-utilitarianism and act-utilitarianism, Hume
endorsing the former. As J. B. Schneewind (1990: 52) points
out, ‘from a historical perspective it is more accurate to
describe it as Hume’s attempt to show how perfect as well as
imperfect rights and duties can be explained by a non-
teleological virtue-centred theory.’
(ii) The general theoretical framework of Hume’s historical
thinking should not be reduced to prescient remarks
foreshadowing thinking in terms of evolutionary mechan-
isms. Mary Poovey (1998), amongst others, has shown that
some of Hume’s positions must be understood in the context
of the development of British conjectural history. Moreover,
Hume’s ‘natural history’ can also be located with regard to
the coordinates set by French histoire raisonnée (Rotwein 1987:
vol. 2, 692 – 5).
3. Hume’s methodological utilitarianism: Utility as a positive principle

The interpretive approaches suggested by Schneewind, Poovey and others
provide indispensable insights necessary in order to understand the
problems, the scope and the horizons of Hume’s theorizing. That all
notwithstanding, it is contended here that Hume’s ‘utilitarianism’ occupies
an important place in the analytic framework of his social theory. I start
with some commonplace observations on Hume’s ‘utilitarianism’. The
concept of utility is an indispensable part of the vocabulary of Hume’s
theory. Even a superficial reading of his texts provides ample evidence for
this. Hume played an important role for the utilitarian tradition. Of course,
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his utilitarianism is no act-utilitarianism. Act-utilitarianism has much less

potential than rule-utilitarianism: (i) to take on board economical and
sociological insight about the role of socio-economic arrangements: and
(ii) to make sense in a framework characterized by an emphasis on the
limits of reason and epistemological problems. More specifically, Hume still
is the classical reference for those utilitarians who wish to defend a non-
cognitivist meta-ethics (see Smart 1978). Bentham held Hume in high
esteem, and so did John Stuart Mill, who characterizes the difference
between the contributions of Hume and Bentham as follows: Bentham, who
‘was far inferior to Hume in Hume’s qualities’ instead carried ‘the warfare
into things practical’ (Ryan 1987: 136). The intensity and scope of
Benthamite warfare is at odds with Hume’s scepticism concerning the
practical role of reason. In part it may be considered as an echo to Hume’s
combats against superstition, most notably against the false beliefs leading
to the useless monkish virtues. Bentham widens the institutional scope of
such combats and extends them to all kinds of supposedly inefficient
institutions, customs, habits and norms. For Hayek, who liked Hume but
ranked Bentham under the main protagonists of false constructivism and
rationalism, this extended warfare was the result of an excessively
rationalistic, shallow and misleading theory of social institutions and
norms. It is commonly understood that Hume’s utilitarianism is less
rationalistic, less reform-oriented and more conservative as compared to
Bentham’s and Mill’s approaches.
All those common observations are not false, but they are not sufficiently
specific to characterize the distinct role of Hume’s utilitarianism within the
context of his theory. They are based more on the mere vocabulary and fail
to do justice to the overall architecture of Hume’s theoretical edifice. First
of all, Hume’s utilitarianism needs to be understood at two levels: (i) in its
relation to his non-cognitivist meta-ethics; and (ii) as an ingredient of his
naturalistic theory of social and economic life and its normative
infrastructure. Concerning (i), utilitarianism à la Hume does not imply
that the point of morality is the maximization of social utility. Utility is
introduced as the common standard and final test for all kinds of human
institutions, because the utilitarian psychology allows for accommodating
the basic idea that morality is ‘more properly felt than judg’d of’ (Hume
1739 – 40: III.i.2), not in order to emphasize the advantages of a rational
measuring rod applicable to alternative socio-economic arrangements.
Moreover, the rules of morality and justice, or put more generally, the
sphere of normativity as a peculiar social phenomenon, are characterized
and differentiated by specific properties and supported by patterns of
feelings that Hume adapted from non-utilitarian theories of normative
phenomena. As was pointed out by Schneewind, his famous distinction
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between natural and artificial virtues can hardly be understood without

considering the horizon of problems set by modern natural law theorists
such as Hugo Grotius. All this reinforces the position that utility cannot be a
calculus for determining the socially desirable pattern of legal rules and
sanctions, incentives, moral imperatives, practical motifs or population size
along the lines of later ‘government house’-utilitarians.
With regard to (ii), utility primarily is a methodological device in the
explanation of socio-economic phenomena in general, and the explanation
of normative phenomena such as virtues, moral sentiments and rules of
justice in particular, which he considered to be in need of de-mystification,
given their super-natural status in traditional ethics. The concept of utility
played a basic role for Hume in his attempt to explain the most complex
human phenomena in a way that neither invoked a complex ontology nor
providentialism (which played a role in the social theory of some of his
British contemporaries, as Poovey 1998, shows).
Humean utility is an explanatory principle in two different meanings:
as a heuristic principle; and as an analytical principle. As a heuristic
principle it implies that attempts to explain normative phenomena
cannot dispense with understanding their indispensable role in stabiliz-
ing complex patterns of exchange, which mediate interdependencies in
complex socio-economic systems. This does not imply that a fully-fledged
explanation is available along the lines of this heuristic principle, nor
does it preclude other explanations for observed social phenomena in
general, some of which may be not useful at all, as Hume was acutely
aware of. (Monkish norms and virtues are Hume’s paradigmatic
examples.) More specifically, the mechanisms and processes which
support norms and virtues in their indispensable role and particularly
the individual motifs driving these mechanisms are related to a texture
of cognitive processes and passions that cannot be reduced to or
exclusively explained in terms of utility. But this dimension of utility is
crucial for Hume’s project of understanding moral norms and
institutions as something developed within the limits of human nature.
These phenomena must be explained in terms of their utility under the
conditions, tendencies, constraints and distortions of human knowledge
and human action, instead of invoking divine wisdom or providence to
account for the fit between moral norms and the human good. The way
in which Hume treats utility as a heuristic principle (without getting into
metaphysical considerations about its nature) resembles the way in which
Newton invoked gravity as a ‘real cause’ for the mutual attraction of
particles.
Apart from this role in a kind of explanatory heuristics, utility has a more
specific analytical function in Hume’s social theory.
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(1) Something like the concept of utility (or more precisely, a

consequentialist conceptualization of environmental circumstances,
choices and consequences) facilitates the conceptualization of
distinctions between: a) individual goals and motifs for action: b)
external ‘natural’ circumstances and constraints of actions: and c)
the social contingencies and interdependencies relevant for the
consequences of actions. Deontological conceptions of norms, or
conceptions of norms that inform rather than constrain, are not so
helpful for making these distinctions explicit. Distinctions like these
are important for a non-metaphysical social theory as they are
necessary to grasp the importance of the specific ‘logic’ imposed by
certain types of social situations or of social processes and
mechanisms (such as the logic of competitive mechanisms), which
need to be analysed in their influence on social outcomes. I will
come back to this issue in section 6.
(2) In combination with the concept of sympathy, utility provides the
epistemic and motivational link from individual motifs to the
collective good in the sense of ‘the benefits of all individuals’. The
concept of utility thus provides a language to describe and analyse
types of social situations that are now known as ‘coordination
problems’, which may or may not be complicated by distributive
conflicts of interest. An important subclass of coordination
problems is public good problems, a classical characterization of
which is given by Hume (1739 – 40: III.ii.7). The language of utility
abstracts from the manifold historically grown institutional and
motivational patterns that have evolved around the practical
‘solution’ of these problems. This abstraction is a virtue if one is
interested in general principles driving the formation of institu-
tions. A one-dimensional metric of benefit like the concept of utility
is necessary to identify abstract and general types of social situations
or, more specifically, general structural types of coordination
problems. According to Elie Halévy (1928: 13), we find in Hume
‘three logically distinct and perhaps contradictory doctrines’, which
all can be taken as answers to the question: ‘How is it conceivable
that the moral sense which inspires me to pursue the general utility
and not my private interest, should be a constituent part of my
nature?’ In my reading, the three ‘doctrines’ as described by Halévy
are alternative types of social situations, each of which can be
regarded as a paradigmatic starting point. Hume suggested three
main alternative types of social situations: situations characterized
by natural convergence of interests (with price-mediated exchange
on markets as paradigmatic institutional solution); situations
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characterized by a fusion of interests by way of benevolence as

sympathetic identification (with the family as paradigmatic case);
and artificial convergence of interests (with justice, incentive
mechanisms and the government as paradigmatic artificial solu-
tions).
Even though it is not necessary for establishing utility as an explanatory

principle in the sense outlined above (probably some non-hedonistic
conceptions of advantage or preference would do the job), Hume does
endorse a hedonistic conception of utility as an ultimate standard of value.
This is suggested by his frequent use of the notion of pleasure and most
clearly by several passages in which he rejects ‘unnatural’ monkish virtues as
neither instrumentally nor intrinsically valuable. Unlike the norms of
justice and benevolence, monkish virtues according to Hume do not survive
the theoretical reflection upon themselves. As it seems conceivable that
monkish virtues can be explained in terms of the stabilization of particular
social arrangements under the Humean conditions of scarcity and limited
benevolence, the rejection of the possibility of an intrinsic value of monkish
virtues must rely on some kind of hedonistic axiology. If this axiology is
available, it is unclear why it should be impossible to use it as a guidance for
more encompassing socio-economic reforms beyond the criticism of
monkish virtues and established religion, e.g. as a calculus for re-
distribution. In this respect Hume’s oeuvre shows some ambiguity or
perhaps even inconsistency, which also gave rise to the question of whether
he was a conservative or a Whiggish reformer, as suggested by Binmore
(1998: 507 – 8). But even if he is seen as a Whiggish reformer, this does not
imply that Hume’s socio-economic reasoning is committed to ethical
hedonism as a first principle or axiom in a Benthamite fashion.
Let me summarize: utility is used by Hume as an explanatory principle.
Utility is often used by Hume as a shorthand expression for ‘systematic
tendency to a certain end in the context of a complex interdependent
system’. This is related to, but not entirely captured by, the common
observation that he is a rule- rather than an act-utilitarian. This common
observation may be found wanting because the talk of rule-utilitarianism
neither expresses clearly enough the explanatory problems that bothered
Hume, nor does it capture his concerns with regard to non-cognitivist meta-
ethics. It also tends to suggest an unsatisfactory account of the issues of
systematic interdependence whose treatment is one of Hume’s outstanding
achievements. He recognizes that not just single acts but also single types of
behaviour (e.g. ‘co-operation’) and sometimes also behavioural standards
and social practices are useful if and only if a certain scheme or system can
be assumed, and not if regarded in isolation (see e.g. Hume 1777a: 202,
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1976: App. III; Pt. 8). Thus the elements of justice mutually support each
other and hence may be seen as emerging in a process of co-evolution.
4. Utility and instrumental rationality: Hume’s asymmetric

consequentialism
The emphasis on utility as an explanatory principle is not at odds with kinds
of social theories (such as theories in the Neoclassical or Hobbesian
tradition), which at least some of the readers of Hume quoted above (e.g.
Friedrich Hayek and Vernon Smith) would criticize as excessively
rationalistic. In this section I try to show in which sense they are right.
The answer has two parts: (i) for Hume, instrumental rationality is no
independent explanatory principle; (ii) he allows for a relatively wide range
of possibilities concerning relevant structures of social situations, including
their endogenous change. Of course, keeping the structural types of social
situations, which are deemed relevant, limited and fixed in a certain way,
imposes something like an aprioristic element. (Theories considering only
interaction structures imposed by scarcity and rivalry are ‘more’ aprioristic
than those considering also, say, interaction structures occasioned by non-
rival use of resources.)
Let us start with instrumental rationality. Standard decision theory
defines acts as mappings from states of the world into consequences.
Modern utilitarian economists, most notably John Harsanyi and Peter
Hammond, have established close links between individual instrumental
rationality (as captured by the axioms of choice theory under uncertainty)
and utilitarianism. Put somewhat loosely, choice theory is conceived as
forward looking and representing all that matters in the consequence
space. In analogy to individual decision theory based on first-order
preferences, utilitarianism can be understood as a second-order (or ethical,
or social) correlate of such a consequentialist conceptualization of
individual action.
In this section I will show that despite this isomorphism between
consequentialist practical reasoning on the individual and the social level,
instrumental rationality (in contrast to utility) is not an explanatory
principle for Hume. This may sound surprising, especially when we
remember Hume’s contribution to the clarification of the concept of
instrumental reason. If one thinks of utilitarianism in the axiomatic way, it is
hard to avoid the conclusion that utilitarianism somehow entails instru-
mental rationality at the individual level.8 Put another way, a utilitarian is in
no good position to reject the meaningfulness of the demands of
instrumental rationality at the individual level. Certainly, this axiomatic
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linkage does not trivially extend to utility and instrumental rationality as

explanatory principles. Understanding why this is not the case is important
for grasping the specific character of Hume’s utilitarianism. His views on
instrumental rationality are useful to see the differences between Hume
and some versions of neoclassical economics or Hobbesian positions, both
of which endorse, like Hume, a broadly hedonistic psychology. As will
become clear in this section, instrumental rationality does play a certain
role in Hume’s logic of explanation by supporting important distinctions.
But this role is markedly different from that in neoclassical economics
where instrumental rationality is ‘an engine of truth’ because it allows for
economizing on empirical investigations with regard to motivational
patterns (see the above quotation from Lange 1945).
The most often quoted and analysed passages of the whole Humean
oeuvre perhaps refer to instrumental rationality. In these famous passages,
Hume makes use of provocative and seemingly paradoxical examples to
emphasize that instrumental rationality is primarily a formal concept and
needs to be kept separate from substantial theories of the good,
psychological theories about goals and motives etc. Hume famously
declares that ‘reason is, and ought to be, the slave of passions’, and that
(as the dramatic climax of a number of choices that all are or seem to be
based on enormous distortions in the relative valuation of alternatives)
‘Tis not contrary to reason for me to chuse my total ruin, to prevent the least uneasi-
ness of an Indian, or person wholly unknown to me. ‘Tis as little contrary to reason to
prefer even my own acknowledged lesser good to my greater, and have a more ardent
affection for the former than the latter.
(Hume 1739 – 40: II.iii.3)
A few short remarks concerning the context, the scope and the status of
these passages are in order. As far as the status is concerned, they are
strictly definitional and aim at clarity as far as the role and scope of
reason in practical matters is concerned: passions/affections may never
properly be called unreasonable: ‘In short, a passion must be accom-
pany’d by some false judgement, in order to its being unreasonable; and
even then ‘tis not the passion, properly speaking, which is unreasonable,
but the judgment.’ (Hume 1739 – 40: II.iii.3). The scope of these passages
includes both forms of understanding, judgments from demonstration
(logical truths applying to the relationship between ideas; e.g. demands of
consistency) and contingent judgements from empirical observation
(applying to the relationships between objects in the ‘real’ world).
Neither of the two types of reasoning, which could be called analytical
and synthetic respectively, and neither of the two types of knowledge
gained by them, is apt to move us or to oppose the motivational force of
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some passion. The passages appear in the context of Book II (‘Of the
Passions’) of the Treatise where Hume wants to show that neither of the
two forms of understanding are motives for action or forces that may
oppose passions as motives of the will.
How does Hume’s approach relate to more rationalistic views using the
concept of instrumental rationality? While implying no methodological
commitment, this account of instrumental rationality may be considered as
an informal version of individual rationality as a kind of formal coherence
among preferences and choices as captured by the axiomatic systems
proposed by Frank Ramsey or Leonard Savage (which is now common
among economists). In the following, I compare Hume’s way of using
instrumental reason in social theory with Hobbes and neoclassical
economics. According to Hume, reason imposes formal requirements on
us, which are embedded in a complex texture of motivating forces and
mediating mechanisms. What reason ‘requires’ (correcting distortions of
imagination, myopic perspectives, or partiality) in an abstract sense is one
thing. The extent to which these requirements actually contribute to the
human faculty of reflective correction of errors is a quite different thing,
depending on emotional and cognitive mechanisms and their biases and
on empirical circumstances triggering some of these biases. Reason directs
our judgements by imposing demands of consistency and correct
calculation; it may show us objects of and means to our desires. This is
not so far from the Hobbesian view: ‘For the thoughts are to the desires as
scouts and spies, to range abroad and find the way to the things desired.’
(Hobbes 1651: VIII, 35) Now Hobbes’s theory of politico-economic
institutions is commonly viewed as more rationalistic than Hume’s. The
question is: What makes the differences between Hobbes and Hume?
The difference is not to be found in the way in which Hume must reject
all attempts to make abstract rationality the ‘stand-alone’ basis of normative
and institutional phenomena in the real social world. Such a stand-alone
view probably is implied by some neoclassical versions of the economic man
referred to above and is clearly at odds with Hume’s epistemology. But it is
also at odds with Hobbes’s view, who (contrary to some excessively
rationalist game-theoretic reconstructions) emphasized passions as driving
forces as well as myopic distortions in decision making. The difference of
Hume’s theory and Hobbes’s more rationalistic system is related to
Hobbes’s more narrow and static account of society and of motivational
forces, which make it plausible for Hobbes to focus on the logic of a
particular social situation of anomic rivalry, which became paradigmatic for
a whole tradition of theories. Hence, Hobbes can unambiguously ‘derive’
good human institutions as the unique embodiment of the demands of
reason, the structure of which is determined by the logic of the particular
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conflict-intensive type of coordination problem that is the central focus of

this theory. For Hume, the demands of reason could not possibly be the
basis of a unique characterization of human institutions, which functionally
respond to the demands of the human condition. He believed that human
nature has some more or less constant elements (see Coase 1994: 110), but
the historically relevant pattern of motivational forces and environmental
conditions is endogenous to the process of the development of human
institutions. In addition, this process and the sub-mechanisms related to it
have their own logic, which is not at all captured by the logic of one
particular type of social coordination.
Hence Hume’s limitation of the role of reason can be understood as a
combination of a negative and a positive claim. The negative claim is that
reason never produces a motive and hence never moves anything. The
positive claim is that instrumental reason as a practical guidance for action
cannot be thought of operating in abstraction from cognitive, emotional
and social mechanisms, but in the context of those mechanisms, and
furthermore in the context of social situations and social mechanisms/
processes. What reason ‘requires’ (e.g., correcting distortions of imagina-
tion/impartiality; see Hume 1739 – 40: III.iii.1) in an abstract sense is one
thing. The extent to which these requirements are practically met in
concrete choice situations is a quite different thing, and a question lending
itself to further theoretical investigation, as it generally depends on:
(a) empirical circumstances (e.g. experiences that these distortions

lead to disadvantageously inconsistent judgements as our position
vis-à-vis the world changes over time), and
(b) the relative strength of calm passions, which may correct ‘our
violent propension to prefer the contiguous’ (Hume 1739 – 40:
III.ii.7).
This view is the basis for seemingly contradictory statements by Hume.

Intrinsic ends cannot be irrational, but, nonetheless, we are in a position to
state that humans ‘so often act in contradiction to their known interest’
(Hume 1739 – 40: III.ii.7). Reason is, and ought to be, the slave of passions,
but ‘reason requires such an impartial conduct’. Despite these well-defined
requirements, ‘‘tis seldom we can bring ourselves to it, and that our
passions do not readily follow the determination of our judgement’ (Hume
1739 – 40: III.iii.1). Things are even more complicated as he seems to
suggest that there are two kinds of corrective tasks, which both may be
relevant in the broader context of decision processes. We should
distinguish between a belief-correcting function of reason properly speak-
ing, where reason is counteracting the distortions of imagination in order
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to prevent continual contradictions, and arrive at a more stable judgement

of things, and a sentiment-correcting function of (as Hume puts it on
several occasions) ‘reason’ improperly speaking, which properly should be
called the calm passions.9
The point is not that the fact that humans are endowed with reason plays
no role whatsoever when it comes to the task of explaining the kind of
socio-economic arrangements that may be expected to prevail in the
general course of things. Hume’s naturalism is not a biologistic reduction-
ism. The point is rather that reason needs to be distinguished from patterns
of motivational force as the latter are the causal forces relevant for
explaining the structure of socio-economic arrangements. Hume (1777a:
235) summarizes the role of reason as follows: ‘But though reason, when
fully assisted and improved, be sufficient to instruct us in the pernicious or
useful tendency of qualities or actions; it is not alone sufficient to produce
any moral blame or approbation. Utility is only a tendency to a certain end;
and were the end totally indifferent to us, we should feel the same
indifference towards the means.’ That is, reason has an important, if
limited, role: it allows us to grasp the logic of social situations and
coordination problems including the general pattern of useful actions in
certain types of cases. Hence the world would be different if humans were
not endowed with reason. In this spirit, Hume (1777a: 161) suggests the
following quasi-evolutionary argument for a limited role of reason: ‘does
nature [. . .] embrace such complicated and artificial objects, and create a
rational creature, without trusting anything to the operation of his reason?’
Nonetheless, socio-economic phenomena such as the state cannot be
explained as requirements of reason exclusively based on the logic of some
paradigmatic social situation. Analysing the logic of individual decisions
and the logic of social situations (à la Hobbes) is important, but it is not
enough for socio-economic theory, which must not, in general, uncritically
rely on two kinds of abstractions: from the logic of social mechanisms and
processes and from actual behavioural tendencies on the individual level.
According to Hume, such abstractions may be used under certain
conditions, as will be explained in the penultimate section.
5. Hume’s basic programme and the scope of general principles

It is time now to fit together the bits and pieces of Hume’s theory provided
so far and give a rough overall sketch of his system. And it is time to give
some examples showing how Hume combined motivational forces, analysis
of the logic of social situation and of mechanisms/processes in his
explanation of socio-economic phenomena. This and parts of the next
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section are devoted to these tasks. The programme and the pivotal
elements of Hume’s system are to be found in a fully-fledged form in the
Treatise of Human Nature: human social life must be seen as a part of nature
in a wider sense. We are in need of a de-mystifying account even of the most
intricate aspects of human agency and social life that does not rely on
metaphysical postulates. This applies particularly to phenomena such as
morality, which used to be derived from super-natural powers.
Confronting the principles of human agency with an adequate account
of external conditions allows for limited generalizations regarding human
behaviour and its pattern in particular environmental, social and
institutional contexts. This rules out simple utilitarian or contract-based
explanations of the normative infrastructure of modern civil society. Under
given institutional constraints, we may yet expect ‘general and certain’
predictions ‘as any which the mathematical sciences afford us’, as Hume
(1993: 14) declares in the essay ‘That Politics may be Reduced to a Science’.
Hume’s analysis of human nature as well as the descriptions of
environmental conditions as expounded in the Treatise offer conceptualiza-
tions that summarize the logic of a variety of social situations, which are
paradigmatic in economics (price-mediated scarcity, public goods-pro-
blems; see Hume 1739 – 40: III.ii.7). Hume emphasizes the role of scarcity
in imposing its logic upon socio-economic institutions in general, making it
clear that his explanation of justice as an artificial virtue as well as the role
of private property and of the government hinges upon scarcity and would
fail under conditions of abundance as well as under conditions of
ubiquitous absolute poverty. Understanding the role of scarcity, he also
did not fail to grasp the function of the price system as a mechanism of
resource allocation, as is shown not only in his economic essays but also in
various passages in the History of England (Hume 1754 – 61).
For Hume, human agency is by no means completely determined by the
immutable elements of human nature. Such a view would be at odds with
the empiricist and sceptical stance of his epistemological position. In
particular, the psychological pattern of economic motivation is endogenous
with regard to social mechanisms and historical processes, such as the
process of economic growth, the rise of commerce and civil society. Hume’s
interest in history was motivated by the observation that macro-processes
provide fertile ground for the application of experimental moral science
because they are likely to be driven by increasingly robust and stable
patterns of motifs, which tend to be fostered and stabilized by the
institutional patterns emerging in this process. In addition, he remarked
that the effects of pure chance and whimsical idiosyncrasy tend to be
eliminated in the context of such macro-processes due to the law of large
numbers. Hume (1993: 5) summarizes the reason for this in a ‘general rule’
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put in italics: ‘What depends on a few persons is, in a great measure, to be ascribed
to chance, or secret and unknown causes: what arises from a great number, may often
be accounted for by determinate and known causes’. According to Hume, the
sceptic, the world is still too young to allow for many general truths in
human affairs, but in the History of England (Hume 1654 – 61) he managed
to show the systematic interrelations between social and economic changes
in the formative period of modern society, or more precisely, how changes
in the historical environment affected the way in which human passions
operated and thereby stimulated economic growth.
This fits well within his more general project of a natural history of
the evolution of the network of social ties, which is the main task of
empirical moral science. Hume endorses an optimistic view concerning
the potential of the commercial society and economic growth to
promote human values. In addition to the increasing opportunities for
consumption experiences and leisure, he emphasizes the enlargement of
the scope for entrepreneurial activity. Moreover, growing economic
interdependence brings more people into contact with each other and
thereby provides enlarged opportunities for social moral learning.
Economic growth and the growth of knowledge go hand in hand.
Ethical learning, the growth of scientific knowledge and the growing
awareness of economic interdependence all foster the understanding of
the advantages of political institutions built on individual liberty and
stability of possession. In this context, his arguments in defence of the
manifold advantageous effects of luxury deserve to be mentioned as a
particularly crisp attempt to model some of the benign interrelationships
between economics, politics and ethics (Essays ‘Of Refinement in the
Arts’ and ‘Of Commerce’, Hume 1993: 154 – 76).
Hume’s ethical-political optimism notwithstanding, his view of socio-
economic processes does not take the form of the Panglossian view
according to which whatever is, is best. His distance to this view is
profoundly related to his fundamental concern that valuation and
motivation are two entirely different things. This tenet informs the
translation of his general theory of agency into psychological micro-
foundations for social and economic theory. Hume gives self-interest its due
but also provides us with a stock of non ad-hoc arguments, which allow us to
go beyond self-interest. In particular, his accounts of the motivational
patterns referring to social or professional classes (landowners, priests)
make immediately clear why motivational patterns are not necessarily
benign or welfare enhancing. These generalizations are derived from
confronting human nature with the specific circumstances under which
certain classes of individuals live. Consider the following paradigmatic
passage from the essay ‘Of Interest’:
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There is no craving or demand of the human mind more constant and insatiable than
that for exercise and employment; and this desire seems the foundation of most of our
passions and pursuits. Deprive a man of all business and serious occupation, he runs
restless from one amusement to another [. . .]. Give him a more harmless way of em-
ploying his mind or body, he is satisfied and feels no longer that insatiable thirst after
pleasure. But if the employment you give him be lucrative, especially if the profit be
attached to every particular exertion of industry, he has gain so often in his eye, that
he acquires, by degree, a passion for it, and knows no such pleasure as that of seeing
the daily increase of his fortune. And this is the reason why trade increases frugality,
and why, among merchants, there is the same overplus of misers above prodigals, as
among the possessors of land there is the contrary.
(Hume 1993: 182 – 3)
I only comment on three of the aspects under which this passage is of

interest: First, this passage leads us into Hume’s economic psychology
presenting in a nutshell his pluralistic theory of economic motivation,
within which three independent types of motifs play a role:
(1) the craving for exercise and employment

(2) the desire for pleasure, amusement and leisure (which is more
specific than and kept distinct from consumption necessary for bare
biological subsistence) and
(3) the desire for wealth accumulation.
Second, it shows how the idea of endogeneity of preferences is given

substance when it is combined with a pluralistic psychology of motivation
and a suitable account of class-related patterns, and how it may become a
key to the explanation of socio-economic changes in history. Third, the way
in which the idle and prodigal landowner is modelled suggests that
understanding some historically found patterns of motivation in no sense
does entail their justification. For Hume, the structure of the good is
accounted for by some concept of utility, but this structure does not
immediately translate into the ‘corresponding’ psychological mechanisms,
and much less into social structures, mechanisms or institutions that have
the tendency to promote the good.
6. Consequentialism, motives and mechanisms

Aristotelian social theory is built on a very close and immediate relationship
between individual character (including a descriptively rich account of
human virtues and vices, psychological tendencies, etc.) and social
institutions. The institutions of the polis were seen as depending on and
developing individual virtues. Modern social theory is motivated by the
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insight that such an immediate relationship between the properties of

individuals and institutions is no longer plausible under circumstances
relevant for dynamic individualist market societies. Individual motives and
psychological dispositions may be complex, heterogeneous and subject to
change. Now the task of social theory is to explain or predict outcome
patterns that are to some extent stable or typical. If such patterns are to be
explained in terms of, say, the beliefs, goals, actions, etc. of individuals, it is
necessary to find a method to deal with this problem of motivational
complexity.
In normative theory, Kant and Hume may be seen as the culmination of a
modern analysis of a specific normative sphere in which motifs and
character play a secondary role (see Schneewind 1990, 1998): the sphere of
justice. This development can be seen as answer to those problems raised by
modern societies. The Humean framework (like the Kantian one)
distinguishes sharply between normative demands, actual internal motivat-
ing forces and external constraints. This, in turn, provides the ground for a
kind of strategy in socio-economic theory, which is typical for economics:
combining a parsimonious account of agency/motivation with a precise
account of the ‘environment’: of external constraints and social mechan-
isms. And this is what I wish to argue in the following. Humean
utilitarianism provides a basis for the insight that complex motivational
patterns at the level of the individuals need not necessarily be made explicit
and used in the explanation of complex institutional phenomena. As
mentioned above, Hume recognized the explanatory potential of patterns
of constraints, game structures and processes. This enabled him to see the
specific merits of parsimonious (abstract, non-specific) accounts of
motivation without abandoning the quest for psychological realism
altogether. Seen in this way, utilitarianism is not at odds with aiming at
an empirically well-based account of mental mechanisms, of cognitive and
emotional processes and of (what he called) virtues mediating the forces of
the passions, which ultimately drive decisions. But trying to make sense of
mental/psychological phenomena does not imply that they always must be
a key explanans in social theory. Hume’s utilitarianism is a framework for
giving psychology its due without yielding to problematic forms of
psychologism.
First, the quest for motivational realism clearly is not at odds with the use
of counterfactual thought experiments. Hume sometimes introduces
thought experiments based on counterfactual assumptions (for instance,
unbounded generosity and a land of cockaigne, which render justice
superfluous, as he argues) to show that certain theories fail (such as the
theory of justice as the unique set of rational requirements) and his own
explanation hinges upon certain assumptions. Second, simplified motiva-
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tional assumptions are also introduced on more constructive grounds, i.e.

not related to thought experiments with a critical purpose, but somewhat
similar to the use of ‘unrealistic models’ in economics. In his essay ‘On the
Independence of Parliament’, Hume demonstrates why certain assump-
tions (in this case that every man is to be held a knave) are useful in the
context of a specific problem despite the fact that they are not true in
general. They may be rendered suitable by the context of a particular
configuration of circumstances or due to the properties of a certain type of
social mechanism.
A particularly important class of the specific mechanisms just mentioned
are, of course, economic mechanisms, in particular competitive and
evolutionary mechanisms. In economics, simplified or unrealistic accounts
of human agency (‘the economic man’) are suggested with various
methodological justifications:
(a) economic man as an useful approximation to reality;

(b) economic man as an ideal type (along the lines of Carl Menger);
and
(c) economic man as an ‘as if’-construct (as proposed by Armen
Alchian, Milton Friedman and others).
(a) and (b) are likely to be unattractive for a Humean for reasons that
cannot be dealt with here in detail. Rational self-interest of human beings
plays a certain role for Hume’s social theory, but the qualified way in which
it does is badly accounted for by the term ‘approximation’. The ideal type-
methodology is unacceptable for Hume because it invokes too strong
aprioristic elements. The ‘as if’-interpretation of modelling assumptions
comes closer to the way Hume used unrealistic assumption such as holding
everybody a knave. Let me explain. First, ‘as-if’ explicitly emphasizes that
descriptive adequacy of modelling assumptions is insignificant. It is not
important whether the assumption under consideration can be made sense
of as an idealization or as an abstractive approximation of human
behaviour in general. Second, and more importantly, it has the potential to
put simplifying assumptions about motifs into context with regard to the
mechanisms that play a role in the explanatory task under consideration.
For instance, it may be argued that, in contexts including certain forms of
economics competition, instrumental rationality plus self-interest is a
legitimate behavioural ‘as if’-assumption (see Alchian 1950). It may be
legitimate even though something like Hume’s more complicated view of
decision processes and particularly his theory of distortions in imagination
and passions is empirically found to be correct. One could call this ‘the
force of social situations and mechanisms’ with regard to which Hume
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commented as follows: ‘So great is the force of laws, and of particular

forms of government, and so little dependence have they on the humours
and tempers of men, that consequences almost as general and certain may
sometimes be deduced from them, as any which the mathematical sciences
afford us.’ (Hume 1993: 14).
Why may an unrealistic model of human agency be legitimate according
to this view? Because, if some social mechanism such as a political
mechanism or economic competition is effective, the social outcomes may
be shown to be predictable on the basis of the homo oeconomicus assumption
or the assumption that everybody is a knave. Perhaps it could even be
shown that the same applies for a much wider range of individual decision
routines or of ‘automatic’ quasi-behaviour based on very primitive rules for
pattern-recognition and so forth. It is another question (not to be pursued
here) whether and why this should disturb the practitioner of models thus
justified by their predictive success. This does not matter so much for the
point made here. The important question is: What may make the use of
strongly simplified assumptions concerning agency legitimate? One of
Hume’s achievements is that he identified particular social mechanisms (or
processes), and not just a loosely defined sphere of society as the ‘business
sphere’, as the necessary supporting condition for suchlike simplifications.
While Hume certainly was no forerunner of theories based on homo
oeconomicus as an ideal type or as a behavioural approximation, he perhaps
was the first who made the arguments that can support something like ‘as if’
explicit. He saw that social mechanisms such as competition may render
simplifications admissible. For instance, he explicitly ponders the question
of whether a ‘reduced’ version of what he thinks is an adequate model of
the human agent (for instance, an agent reduced to self-interest) may be
sufficient to explain some particular social phenomena (Hume 1739 – 40:
III.ii.3). But he most likely would have rejected privileging homo oeconomicus
in the context of the ‘as if’-methodology as this implies privileging an
excessively rationalistic model of agency. Be that as it may, the way in which
Hume discusses the use of simplified accounts of agency (related to the
logic of social mechanisms and strategic structures) is an important
example for the contribution of his sceptical utilitarianism to the
foundations of socio-economic theorizing.
Experimental economists who are sceptical about the explanatory scope
of rationality find the Humean theory attractive. Like Hume, they often are
interested in socio-psychological mechanisms such as sympathy and
reciprocity, which, along with other mental mechanisms, are crucial in
the explanation of the evolution of fairness, justice and artificial human
institutions, such as stable private property, contracts and the government.
In these respects, Hume may be taken to foreshadow ideas favoured by
369
Richard Sturn
modern experimental economists: mental models, different motivational

and communicative mechanisms such as reciprocity, sympathy, etc. But it
would be one-sided to see Hume as a precursor of a psychological turn in
economics. Despite his undeniable quest for psychological ‘realism’, the
use of simplified models of agency plays a role in the development of
Hume’s theory and particularly of its systematic, unified character. He
writes:
Among the [circumstances incommodious to the requisite conjunction of humans,

R.S.] we may justly esteem our selfishness to be the most considerable. I am sensible,
that [. . .] the representations of this quality have been carried much too far; and that
the descriptions, which certain philosophers delight so much to form of mankind in
this particular, are as wide of nature as any account of monsters, which we meet with
in fables and romances. So far from thinking, that men have no affection for any thing
beyond themselves, I am of the opinion, that tho’ it be rare to meet with one, who loves
any single person better than himself; yet ‘tis as rare to meet with one, in whom all the
kind affections, taken together, do not overbalance all the selfish.
(Hume 1739 – 40: III.ii.2)
Hume then goes on arguing that:

The same self-love, therefore, which render men so incommodious to each other, tak-
ing a new and more convenient direction, produces the rules of justice, and is the first
motive of their observance.
(Hume 1739 – 40: III.ii.8)
Moreover:
‘Tis no less certain, that ‘tis impossible for men to consult their interest in so effectual a
manner, as by an universal and inflexible observance of the rules of justice, by which
alone they can preserve society. Since therefore men are so sincerely attached to their
interest, and their interest is so much concerned in the observance of justice, and this
interest is so certain and avowed; it may be asked, how any disorder can ever arise in
society [. . .].10
(Hume 1739 – 40: III.ii.7)
I conclude that even with regard to the emergence of the most basic
institutions such as private property or the government, he believes that the
best explanations do not employ the whole set of mechanisms and
motivational forces that he introduces. (see also Hume 1739 – 40: III.ii.3).
7. Concluding remarks
Some of Hume’s concerns with regard to the importance of cognitive and
emotive mechanisms and of a realistic account of individual decision
processes can be re-phrased in the following way. Valuation and motivation
370
are two different things. Axiological structures, the structures of the good,
do not simply and immediately translate themselves into the ‘correspond-
ing psychological’ mechanisms, and much less into social structures,
mechanisms or institutions that have the tendency to promote the good.
Even though humans ‘seek pleasure’, pleasure does not have unmediated
motivational force. Rather, the motivational force of the good/pleasure is
subject to various kinds of distortions at various levels. This is important,
because it prepares the stage for the rejection of two kinds of social
theories, which Hume clearly wishes or would wish to reject: technocratic
utilitarianism and rationalist contractarianism. These social theories imply
that the force of ‘the good’ translates itself rather directly into suitable
institutional patterns, either by way of contract or by way of a rational
benevolent institution of theory-based planning. This hardly can be right
for someone who is sceptical about the claims of reason and the
motivational force of the good.
On these grounds, contractarian or utilitarian accounts of social
institutions (which invite the idea of a comprehensive re-design of the
whole institutional pattern by a rational and benevolent utilitarian
planner) have to be rejected. Both theories, according to a Humean
view, suffer from a naive short-cut of motivation, causation, reason and
the good that are supposed to work together in a straightforward way in
bringing about institutional patterns, thus failing to provide an adequate
account of the conditions of successful development of institutions and
leaving little room for good explanations of failures in institution
building. A clear consequence of this approach to social theory is that
deliberate socio-economic reform is something that should be regarded
with great caution, given the complexity of mechanisms that have to be
taken into account. Naive rationalism in reform politics, therefore, is
bound to fail or to produce unplanned effects, the desirability of which is
questionable. Hume’s theory certainly offers no calculus for comprehen-
sive rational reform of institutions along Benthamite lines. Hume does
not teach that humans do or ought to or could solve all moral problems
or tensions by appeal to one single principle. His position can be used to
underpin a moderate conservatism in politics. Many statements by Hume
suggest that his political preferences are not too badly summarized by that
label. Notice yet that the sharp distinction between evaluation and
motivational mechanisms rules out not only rationalistic reform politics,
but also any ‘What is, is best’-presumption. Moreover, notice that Hume’s
emphasis that it is not possible to change human motivation does not rule
out the possibility of rational reform tout court. According to him,
normative and institutional constraints are subject to change, at least in
principle.
371
Richard Sturn
Men are not able radically to cure, either in themselves or in others, the narrowness of
soul, which makes them prefer the present to the remote. They cannot change their
natures. All they can do is to change their situation, and render the observance of jus-
tice in the immediate interest [. . .].
(Hume 1739 – 40, III, 537)
Notes
* While remaining responsible for any shortcomings, I am indebted to Marco Guidi for
critical comments to a previous version.
1 See Hume (1777a: 256, App. III): ‘The case is not the same with the social virtues of
justice and fidelity. They are highly useful, or indeed absolutely necessary to the well-
being of mankind: but the benefit resulting from them is not the consequence of every
individual single act, but arises from the whole scheme or system concurred in by the
whole, or the greater part of society.’
2 Referred to as Hume 1739 – 40 in the following.
3 Martin Hollis (1994: 73) observes that ‘a careful reading of Hume finds that
imagination is involved in the association of ideas and the expectations arouse by
constant conjunctions [. . .]. But it is not altogether easy to integrate these active
elements with the rest of Hume’s science of mind, where associations occur
passively in the main [. . .]’. In addition to the ‘active’ elements stressed by Hollis,
one should mention the role of reflexivity in Hume, which does not only provide the
basis for a kind of moderate internalism in his theory of normativity (as argued by
Pauer-Studer 2004) but, in my view, is also a key to the reconstruction of his
moderate views in epistemology. A profoundly reflective stance comes to the fore in
passages such as the Appendix to the Treatise of Human Nature where Hume
discusses problems of inductivism in the context of personal identity. More directly
related to the explanation of social phenomena, in the Essays Hume (1777b) talks
of ‘general principles, if just and sound, must always prevail in the general course of
things’ (Essay ‘Of commerce’). This suggests the existence of explanatory useful
general principles, which survive critical reflection (‘if just and sound’). The
moderate position is also visible in his diagnoses concerning the current state of the
‘art of reasoning’ in the moral-political sciences, which ‘is still imperfect’, implying
that some kind of progress is to be expected in this area. This implies the existence
of standards and criteria against which degrees of progress can be assessed. Notice
moreover that in that in this passage Hume attributes the unsatisfactory state of
affairs in social theory to the as yet immature state of active faculties of the mind
(‘the art of reasoning’), the second reason being insufficient statistical evidence
(Essay ‘Of Civil Liberty’).
4 Quoted from Mitchell (1918: 45).
5 It should not be taken for granted that Hume is a mere social theorist. For a different
view, see, e.g., Pauer-Studer (2005). For Hume’s problems with normativity, see
Schneewind (1990).
6 These contributions are discussed in most textbooks on the history of economic
analysis; for a general overview of these contributions see Rotwein (1987).
7 For Hume’s influence on Plant, see Coase (1994: 182, fn. 5).
8 As it is put by A. Sen, Paretianism is a weaker form of welfarism as compared to
utilitarianism.
372
9 This is my interpretation of some seemingly contradictory passages in Hume. In this

view there is little difference with regard to the role of reason in Hume (1739) as
compared to Hume (1777a). Notice that Selby Bigge, in his Editor’s Introduction to
Hume’s Enquiries (1777a: xxviii), suggests that Hume attributes to reason a more
important role in his Enquiries (as he puts it, Hume is ‘more tolerant to the claims
of reason’ in the Enquiries than in the Treatise).
10 For the relation between the roles of public utility, imagination and private interest in
the explanation of rules of justice see the lengthy footnote in Hume 1739 – 40, III: 504.
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Abstract
Whereas in philosophy David Hume was long regarded as a negative
thinker to be criticized rather than read, many thinkers interested in social
and economic theory from Adam Smith onwards found key concepts,
distinctions and problems as developed by Hume useful and inspiring. This
applies not only to his seminal contributions to technical problems in
economics. It is argued that the way in which Hume employed ‘utility as a
positive principle’ (most notably in his ‘experimental’ moral theory) is of
pivotal importance in this context. It allows for:
– distinguishing between internal motifs and external circumstances

and constraints; and for
– making explicit the abstract logic of social interaction structures,
mechanisms and processes.
374
Both are necessary conditions for employing the logic of social situations
and mechanisms in the explanation of social institutions and economic
processes. It moreover prepares the ground for the use of simplified or
cartoon-like models of individual agency in economic and social theory, but
also for its critique. On this basis, Hume’s influence on various strands of
social and economic thought, but also the specific differences with regard
to more ‘rationalistic’ approaches (such as Hobbesianism or important
versions of neoclassical economics) can be assessed more clearly.
Keywords
David Hume, utility, utilitarianism, homo oeconomicus, instrumental ration-
ality, general principles, explanatory social theory, mechanism and process,
methodology
375

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Euro. J.

History of Economic Thought 11:3 345–375 Autumn 2004

The sceptic as an economist’s philosopher?

1. Introductory remarks and overview

Address for correspondence

stream of modern thinking, John Stuart Mill as well as Hume’s quasi-

The remainder of the paper is organized as follows. In section 2 I outline

regularities in nature obtruding themselves on the mind’, as the late Martin

instance, he often made use of thought experiments or models based on

an undesigned ecological system that emerges out of cultural and biological

Hume’s thought in general and many of Hume’s distinctions in particular

(i) Jerome B. Schneewind (1990: 354 – 77) locates Hume’s

3. Hume’s methodological utilitarianism: Utility as a positive principle

his utilitarianism is no act-utilitarianism. Act-utilitarianism has much less

between natural and artiﬁcial virtues can hardly be understood without

(1) Something like the concept of utility (or more precisely, a

characterized by a fusion of interests by way of benevolence as

Even though it is not necessary for establishing utility as an explanatory

4. Utility and instrumental rationality: Hume’s asymmetric

linkage does not trivially extend to utility and instrumental rationality as

conﬂict-intensive type of coordination problem that is the central focus of

(a) empirical circumstances (e.g. experiences that these distortions

This view is the basis for seemingly contradictory statements by Hume.

to prevent continual contradictions, and arrive at a more stable judgement

5. Hume’s basic programme and the scope of general principles

I only comment on three of the aspects under which this passage is of

(1) the craving for exercise and employment

Second, it shows how the idea of endogeneity of preferences is given

6. Consequentialism, motives and mechanisms

insight that such an immediate relationship between the properties of

tional assumptions are also introduced on more constructive grounds, i.e.

(a) economic man as an useful approximation to reality;

commented as follows: ‘So great is the force of laws, and of particular

modern experimental economists: mental models, different motivational

Among the [circumstances incommodious to the requisite conjunction of humans,

Hume then goes on arguing that:

9 This is my interpretation of some seemingly contradictory passages in Hume. In this

– distinguishing between internal motifs and external circumstances

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