John Stuart Mill and the Pursuit of Wealth in the 1836 Essay

John Stuart Mill was in his twenties when he drafted the essay that became the reference text on the methodology of economics for decades. It was probably intended as a rejoinder of the a priori method used by his Radical father, James Mill, against the attack of the Whig historian Thomas Babington Macaulay (Whitaker Reference Whitaker1975; Cook Reference Cook2009, p. 24). Macaulay (Reference Macaulay1829) did not think the formal a priori method used by utilitarians like James Mill could produce any meaningful result in the science of government. In his autobiography, John Stuart Mill confessed he was not happy with how his father addressed the “famous attack” of Macaulay. In his opinion, his father should have argued: “I was not writing a scientific treatise on politics. I was writing an article for parliamentary reform" (J. S. Mill [1873] Reference Mill2006, p. 165). Over time, Mill concluded that both Macaulay and his father were mistaken (J. S. Mill [1873] Reference Mill2006, p. 165).

In his essay “On the Definition of Political Economy; and on the Method of Investigation Proper to It,” first published in the London and Westminster Review in 1836, Mill argued that one should not confuse the “essentially distinct, though closely connected, ideas of science and art” (J. S. Mill [1836] Reference Mill2006, p. 312). In this, Mill was repeating the first sentence of Bentham’s “Manual of Political Economy” ([1800] Reference Bentham and Bowring1843), a text he had read and annotated with his father a few years earlier (Guidi Reference Guidi2010). However, Bentham was concerned with the art of government, not with pure science. Bentham formulated a utilitarian political philosophy to reform the law. In an essay of Reference Mill1863, Mill would engage with the utilitarian art of morals and legislation (on which, see Persky Reference Persky2016), but he did not make utility a central concept of the definition or the method of political economy. For the young Mill, political economy was “the science which treats of the production and distribution of wealth, so far as they depend upon the laws of human nature” ([1836] Reference Mill2006, p. 318). Mill borrowed Jean-Baptiste Say’s definition of political economy while removing the centrality of consumption.Footnote ³ Moreover, rather than focusing on commodities, Mill positioned man, with his “mental nature,” as the agent of political economy ([1836] Reference Mill2006, 319). To base a science of political economy on psychological laws was a radically new idea.

A passage of the essay will be the reference point for discussion on the method of economics for seventy years:

The central claim advanced by Mill in the previous quote was that political economy studied an abstract conception of man in the pursuit of wealth. Before John Stuart Mill, other economists had argued that wealth was the subject of political economy. The starting point of James Mill’s essay “Government” was to assume that “the actions of men are governed by their wills, and their wills by their desires: That their desires are directed to pleasure and relief from pain as ends, and to wealth and power as the principal means” (Reference Mill1820). Then, in his Introductory Lecture on Political Economy delivered at Oxford University in 1826, Nassau Senior argued that the theoretical branch of political economy rested on a few self-evident propositions such as “every person is desirous to obtain, with as little sacrifice as possible, as much as possible of the articles of wealth” (Senior Reference Senior1827, p. 35).

Contrary to what his father argued for the science of government, for John Stuart Mill, in political economy there was no need to go back to the primitive desire for pleasure and the aversion of pain. The starting assumption was the pursuit of wealth, and individuals were characterized by their ability to judge “the comparative efficacy of means for obtaining that end” (Mill [1836] Reference Mill2006, p. 321; our emphasis). Whereas Senior took the desire for wealth as universal and evident from scrutinizing one’s consciousness, for the young Mill it was only a simplifying assumption in an attempt to build a science.

Political economy studied wealth, and its main protagonist was man as a wealth-seeking creature. Wealth required effort and it could be accumulated. Yet, John Stuart Mill ([1836] Reference Mill2006, p. 314) did not wish to restrict the definition of wealth to material objects: wealth could be any agreeable object of desire limited in quantity.Footnote ⁴

In order to understand how mankind would act in real economic settings where a large set of motives are at work, the student of political economy must first understand mankind’s behavior under the influence of one motive at a time. In the 1830s, Mill stated that political economy was an abstract science that followed the a priori method. Like geometry, it reasoned deductively from an assumed hypothesis:

In both cases, the conclusions of the scientist are true only in the abstract ([1836] Reference Mill2006, p. 326). The domain of political economy is restricted to the parts of human life for which wealth, broadly conceived, is the object. Yet, even within this realm, when the laws of political economy are applied in a particular case, it is “necessary to take into account all the individual circumstances of that case” ([1836] Reference Mill2006, p. 330). When the “laws of the mind” deduced in political economy do not correspond to the observed phenomena, it does not mean that they are false, or that they admit exceptions, but rather that a countervailing tendency was at play in the particular case under study. Likewise, in mechanics, friction is not an exception to the law of gravity but a disturbing cause that counteracts the tendency of heavy bodies to fall ([1836] Reference Mill2006, p. 337).

A Broader Scope in Mill’s Logic and PPE

Following Auguste Comte, Mill recast political economy as a branch of the social science, also known as sociology. Comte did not think much of the scientific pretenses of political economists. In the last volume of his Cours de philosophie positive, he argued that all the components of social phenomena were mutually interconnected and could not be studied separately (Comte Reference Comte1839, p. 272). Despite his great admiration for Comte’s intellectual enterprise, Mill reaffirmed in his System of Logic ([1843] Reference Mill, McRae and Robson2006) the separateness of political economy based on the different set of causes that could be isolated from the other causes at work in complex social phenomena. Moreover, he argued that social science followed the “concrete deductive method.” Also known as the “direct deductive method,” it was applicable to complex phenomena, like those studied by astronomy, that could not be understood merely by direct observation (Mill [1843] Reference Mill, McRae and Robson2006, pp. 454, 462). It consisted of three steps: induction, ratiocination, and verification. The scientist would start from laws of nature, obtained through induction, then deduce tendency laws, before “collating the conclusion of the ratiocination with the concrete phenomena themselves” ([1843] Reference Mill, McRae and Robson2006, p. 896). In the distinct branch of political economy, however, Mill considered that direct verification of the theory was not possible because of the absence of empirical laws generalized from specific cases and the impossibility of controlled experiments ([1843] Reference Mill, McRae and Robson2006, p. 908).Footnote ⁵

Despite this reframing of the method of political economy within a broader philosophy of science, Mill still quoted at length the same passage from his 1836 essay. Political economy dealt with phenomena “in which the immediately determining causes are principally those which act through the desire of wealth, in which the psychological law mainly concerned is the familiar one, that a greater gain is preferred to a smaller” (Mill [1843] Reference Mill, McRae and Robson2006, p. 901). This desire for a greater gain operated both in the sphere of production and in the sphere of distribution.

However, Mill had already remarked in 1836 that political economy studied “man’s nature as modified by the social state” (Mill [1836] Reference Mill2006, p. 321). This qualification of the domain of political economy grew into an important line of defense of mainstream economists against their critics (more below). In his Logic, Mill remarked that even if the method was universal, “the conclusions of the science, being all adapted to a society thus constituted, require to be revised whenever they are applied to any other” ([1843] Reference Mill, McRae and Robson2006, p. 903). This also meant that his deductive method for political economy was better adapted to a stable state of society.

When he came to write his Principles, Mill wanted to write a broad treatise like Smith’s Wealth of Nations. As the title stated, the Principles of Political Economy with Some of Their Applications to Social Philosophy ([1848] Reference Mill2006) “was not a book merely of abstract science, but also of application, and treated Political Economy not as a thing by itself, but as a fragment of a greater whole; a branch of Social Philosophy, so interlinked with all the other branches, that its conclusions, even in its own peculiar province, are only true conditionally” (Mill [1873] 2006, p. 242). Most commentators of Mill, starting from Nassau Senior (Reference Senior1848, p. 304), noted the discrepancy between the programmatic essay with its narrow conception of the individual and strict method, and the broad scope of the Principles. Footnote ⁶

In the middle decades of the nineteenth century, political economy appeared as a mature and successful science in the eyes of the British public. The prosperity that followed the repeal of the Corn Laws boosted the economists’ confidence in their outlook. Mill ([1848b] Reference Mill2006, p. 456) had famously remarked in his Principles that “happily, there is nothing in the laws of Value which remains for the present or any future writer to clear up.” John Elliot Cairnes restated the Millian methodological creed in his Character and Logic Method of Political Economy in Reference Cairnes1857.

The Mental Calculus

Mill had tried to salvage the core propositions of Ricardian theory and policy from its criticisms by recasting them in a rigorous scientific foundation, but in the process, he broke away from classical political economy by putting the individual at the center of a methodological program. When we study the whole range of his writing, we can see in Mill a commitment to individual agency and an understanding of how societies can progress by institutional design (Schabas Reference Schabas2005, p. 126; Fontana Reference Fontana1986). In the province of political economy narrowly conceived, Mill’s focus of the human “mental nature” paved the way for the psychological turn in the second half of the century (Schabas Reference Schabas2005, p. 133).

William Stanley Jevons combined Bentham’s political calculus of pleasure and pain with Mill’s search for economic laws based on individual psychology. In the first sketch of his “Mathematical Theory of Political Economy,” presented in Reference Jevons1862, Jevons argued, “A true theory of economy can only be attained by going back to the great springs of human action—the feelings of pleasure and pain” (p. 158). Yet, echoing Mill’s methodological prescriptions, Jevons also remarked that “economy does not treat of all human motives. There are motives nearly always present with us, arising from conscience, compassion, or from some moral or religious source, which economy cannot and does not pretend to treat. These will remain to us as outstanding and disturbing forces; they must be treated, if at all, by other appropriate branches of knowledge” (Jevons Reference Jevons1866, p. 282).

Within a few years, Jevons had produced a theory that rid economics of “the cost of production doctrine of value, the natural rate of wages, and other misleading or false Ricardian doctrines” (Jevons [1879] Reference Jevons2013, p. ixvii). With respect to preceding English theories of political economy, it’s fair to say that—together with Carl Menger and Léon Walras—Jevons instigated a “Marginal Revolution” (Hutchison Reference Hutchison1978, p. 66ff.). He broke new ground particularly on the use of mathematics (Schabas Reference Schabas1990). Nonetheless, even if he reasoned differently and arrived at different results, Jevons’s individualistic starting point of economic inquiry was in continuity with Mill (De Marchi Reference De Marchi1972).

However, Mill’s wealth-seeking man was a simplifying fiction, whereas Jevons’s Reference Jevons1871 “mechanics of human interest” applied indiscriminately to “persons” even though he restricted his investigation to a limited domain of wants.Footnote ⁷ More importantly, Mill relied only on a mechanistic analogy to describe the scientific method, whereas Jevons saw mechanics in the head of individuals. Jevon’s early interest in the working of abacuses led him to conceptualize the human psyche as operating like a counting machine and to describe human behavior with the same logic (Maas Reference Maas1999). Although Jevons acknowledged that a person’s mind is “inscrutable” to another person, the natural laws of the mind, such as “that every person will choose the greater apparent good,” would be observed at the aggregate level of a nation (Jevons Reference Jevons1871, pp. 21–24). So, even though he did not use the expression “economic man” himself, Jevons prepared the way for the neoclassical reappropriation of the concept by Edgeworth, Pantaleoni, and Pareto in the last two decades of the century (see section IV below). In the meantime, the abstract and deductive approach advocated by Mill and Jevons for political economy had been the subject of various criticisms.

Baptizing the Economic Man

The expressions “economic man” and “homo œconomicus” emerged in the 1870s in critical discussions of English political economy. The first English occurrence of the expression of “economic man” appeared in a review of Cairnes’s Some Leading Principles of Political Economy published in Reference Walker1874 by the American economist Francis Amasa Walker. He used the opportunity of his review to quote and mildly criticize the famous passage from Mill’s [1836] Reference Mill2006 essay: “Mr. Mill does not in his later writings abide by his own definition of the economic man, but generally assumes other ‘motives and passions’ than those with which alone, he says, political economy is concerned” (Walker Reference Walker1874, p. 320). Walker did not claim the paternity of a new concept and assumed that the readers of The Nation would understand his personification of Mill’s assumptions regarding human nature as studied in political economy. Two years later, Walker used again the expression “economic” man in The Wages Question.

In 1872, a group of German social reformers had created an association to promote scientific research and policies to address the social question (Hagemann Reference Hagemann, Augello and Marco2001). In a speech given at one annual meeting of the Verein für Socialpolitik, the secretary of the association, Adolf Held, directly attacked the “old” English political economy. In the words of the Catholic professor: “The new school demands a complete abandonment of the endeavor to set up natural laws of universal application, … It demands, above all, the abandonment of the premise that man in his economic action is influenced only by egoism. … It demands that the economic man [Wirtshaftende Mensch] shall be considered a member of an organized society (Held Reference Held1877, p. 164; also cited by von Philippovich Reference Philippovich1891, p. 224). Held’s plea for a policy-oriented social and historical political economy directly attacked what he perceived to be the central tenets of the classical methodology defended by Mill: the universalism of economic laws, the deductive method, and the selfish economic man isolated from institutions. It is worth noting that Mill never claimed that the wealth-seeking man assumed in political economy was selfish. By characterizing the economic man as selfish, critics of political economy amalgamated Mill and his followers with the loathed “selfish system” attributed to Thomas Hobbes and Bernard Mandeville.Footnote ⁸

In Victorian England, Thomas Carlyle and John Ruskin attacked political economy, but they did not seem to refer precisely to the economic man. Finer methodological criticisms were formulated by the Irish economists Cliffe Leslie and later by John Ingram, both of them influenced by Auguste Comte, Wilhelm Roscher, and Henry Maine (Hutchison Reference Hutchison1978, p. 78; Cook and Tribe Reference Cook, Tribe, Faccarello and Kurz2016, p. 305). In an essay first published in 1875, Leslie argued that economists throughout Europe could be roughly divided according to the methodological conception they held, either English or German (Leslie Reference Leslie, Ingram and Bastable1888, p. 83). Ingram (Reference Ingram1878) brought this methodological analysis further. He acknowledged that Mill and Cairnes had refined the methodology of orthodox political economy. Whereas David Ricardo assumed he was “dealing with human beings as they actually exist,” Mill and Cairnes recognized that the “economic man” was based on “unreal assumptions” (Ingram Reference Ingram1885, p. 381). For Ingram, the future belonged to the German historical approach and the sociology of Comte. The “radical vice” of unscientific orthodox economics lay “in the too individual and subjective aspect under which it has been treated” (Ingram Reference Ingram1885, p. 400). The individualistic perspective had to be subordinated to an organic vision of society. The fact that some English-writing authors such as Leslie and Ingram, and later Arnold Toynbee and William Cunningham, defended the historical method against the deductive abstractness of Ricardo, Mill, and their followers led some to speak of an “English Methodenstreit” (Koot Reference Koot1987).

In his introductory lecture at University College London in 1876, Jevons observed that political economy was in an “almost chaotic” state. He agreed with Leslie that history was relevant, but he posited it belonged to the “concrete part” of the science. Applying Spencer’s evolutionary idea to the science itself, Jevons argued for the “differentiation” of the branches of political economy (Jevons Reference Jevons1876, pp. 623–624). Properly reformed, the “abstract” branch of mathematical “economics” could follow a deductive method (Jevons [1879] Reference Jevons2013, p. xxxvii). In his Reference Jevons1879 review of the second edition of Jevon’s Theory, Leslie responded to Jevons that historical analysis should be at the heart of political economy, not relegated to another sociological branch (Leslie Reference Leslie, Ingram and Bastable1888, p. 66). While Leslie was sympathetic to Jevons’s attack on Ricardian economics, and particularly on Cairnes’s doctrinal synthesis of it, he nonetheless criticized Jevons for his overreliance on the deductive method (Leslie Reference Leslie, Ingram and Bastable1888, p. 197).

The Nebulous Beginning of Homo Œconomicus

If the economic man acquired its English name in the context of the mild criticism that Walker addressed to Mill in Reference Walker1874, the Latin variant of homo œconomicus first appeared in the harsher criticism made by French Catholic economist Claudio Jannet in Reference Jannet1878. Born in 1844, Jannet received a doctorate in law from the University of Aix in 1867 and later came under the influence of the French sociologist Frédéric Le Play. Jannet became the first professor of political economy at the Université Catholique de Paris in 1877. While he is a completely forgotten figure of the history of economic thought, in the eponymous entry of the Dictionary of Political Economy, it was said that “Jannet was probably the most scholarly and certainly one of the best and most widely informed of the French economists of his generation” (Castelot Reference Castelot and Palgrave1896, p. 472; Reference Castelot1894). There is no evidence that Jannet knew about Walker’s work in the 1870s, and thus it is possible he had not encountered the expression “economic man,” but he was certainly very familiar with Mill’s work and the methodological debates in political economy.

Jannet defended a peculiar form of Social Catholicism.Footnote ⁹ He supported freedom of contract and free trade, and he was grateful to liberal economists for having combated socialism. Even if he was sympathetic to the historical inclination of Wilhelm Roscher, he vigorously disapproved of the interventionist policies advocated by the Socialists of the Chair, such as Adolf Held and Adolph Wagner, on the basis of their “fake science.” History was not a tool for social transformation, but it could reveal the natural organization of societies. For Jannet, the laws of political economy were universal because they were given by God.

With Comte, Jannet denied the separateness of political economy. Social science was one and had to study the whole of mankind whose goal is happiness. English political economy took humanity out of the equation: “The influence of national life, that of the family, the connection of men to places, custom, the action of the idea of right [droit] and the sentiments of social benevolence are eliminated” (Jannet Reference Jannet1878, p. 1067). Writing a long survey of the state of the social science in the Catholic periodical Le Correspondant, Jannet dismissed the caricatural conceptions of man given by the “old school,” which tried to reduce man either to “algebraic equations” or to a statistical “homme moyen”—a probable reference to the work of Adolf Quetelet. Jannet asserted: “In reality, this sort of homo economicus is like Rousseau’s natural man: it never existed!” (Jannet Reference Jannet1878, p. 1067).Footnote ¹⁰ For Jannet, the natural goodness of man assumed by Rousseau was a false dogma of the French Revolution. At the opposite end, neither could the individualistic and aggressive nature of individuals postulated by Hobbes, “Homo Homini Lupus,” serve as a foundation for a true science compatible with Christian teaching (Jannet et al. Reference Jannet, Stiegler, Gide and Passy1890, p. 30). Rather, the necessary starting point of social science should be the “constant action of the original sin,” as Frédéric Le Play had observed in his studies (Jannet Reference Jannet1878, p. 1074). This explained the necessity of domestic authority, of religion to fight vice, and of the duty of wealth towards members of the lower classes. Thus, “the subject of economic observation should be the family and not the isolated individual” (Jannet Reference Jannet1878, p. 1074).Footnote ¹¹

In his Groundwork of Economics published in Reference Devas1883, Charles S. Devas, a lecturer in political economy in a Catholic college near London, probably made the only direct reference to Jannet’s conceptual innovation. Referring to the above passage in Jannet’s article and paraphrasing it, but without attributing to him the paternity of the expression, Devas denounced the English economists of the first half of the nineteenth century who “dressed up a ridiculous homo oeconomicus, just as in political science Rousseau had dressed up a ridiculous homme de la nature” (Devas Reference Devas1883, p. 43). For Devas, these excesses had led to an agnostic historical reaction that denied the centrality of “good will” and “revelation” in guiding men’s moral behavior in society.

Jannet and Devas addressed a methodological criticism to English political economy. Like some German economists with similar conservative political views, they were probably as upset as those economists, if not more, by the liberal assumptions of English political economy.

Conciliatory Approaches

In the middle of the decade, the business journalist Walter Bagehot wrote the “Postulates of English Political Economy.” Bagehot did not use the expression “economic man.” He defended the deductive and abstract method of political economy as appropriate to analyze “a society of grown-up competitive commerce” ([1876] Reference Bagehot and Hutton1880, p. 17). Mill would probably have agreed. After all, he had criticized Bentham for offering a general social philosophy that was in fact applicable to “organizing and regulating the merely business part of the social arrangements” (Mill [1838] Reference Mill2006, p. 99).Footnote ¹² For Bagehot, only in England could one talk of non-wealth-seeking motivations in terms of “frictions” (Bagehot [1876] Reference Bagehot and Hutton1880, p. 17). It was “absurd” to try to apply the conclusions of the abstract political economy to less developed nations (Bagehot Reference Bagehot and Hutton1880, p. 80). Since commercial activities had changed the nature of men, Bagehot did not see a contradiction between the abstract and the deductive methods (Bagehot [1876] Reference Bagehot and Hutton1880, p. 15). The “first men,” just like the “present savage men,” “did not conform to the standard of economical man; the being of reality was not the being of the hypothesis” (Bagehot Reference Bagehot and Hutton1880, p. 83). In particular, they could not appreciate the commodities called “wealth”: “The desire, so strong in civilised man, for wealth, has been excited in him by the experience of ages, and has been transmitted to him by inheritance” (Bagehot [1876] Reference Bagehot and Hutton1880, p. 15). Just as political economy takes a “one-sided view of man,” it also “takes an abstract one-sided view of wealth” (Bagehot Reference Bagehot and Hutton1880, p. 81). Political economy takes human wants as given and does not judge of the goodness of articles of wealth for human life, whether it is a beer or a book of religion. And yet, this conceptualization of wealth, inseparable from the definition of political economy and its method, was not relevant to study non-commercial societies (Bagehot Reference Bagehot and Hutton1880, p. 80). Historical methods were thus useful to understand the evolution of societies toward the commercial stage of economic men. After Charles Darwin and Herbert Spencer, many economists like Bagehot, who defended the abstract method of political economy centered on the economic man, also felt the need to relativize the context of its applicability.

Even if very few thinkers were directly influenced and bought into the whole set of Darwin’s ideas, most held to a general view that species and societies evolve through time (Hull Reference Hull, Creath and Maienschein2000, p. 48). Thus, what separated the early nineteenth-century representation of man from its late-century variants was the role of history and the theory of evolution that had to be accounted for in the explanation of social phenomena (see Claeys Reference Claeys and Claeys2019).

While the debate between induction and deduction certainly spilled over countless pages throughout the nineteenth century, attempts to establish an uncontestable methodological canon led some economists to compromise. When academic economists tried to solidify a corpus of principles of economics in the 1880s, they attempted to respond to these criticisms while presenting a unified vision of the science. Commenting again on the famous passage from Mill, Walker—who, in the meantime, had become president of the American Statistical Association—remarked in his treatise on Political Economy that “we have here all the elements of the economic man” (Walker Reference Walker1883, p. 16). Using a bodily metaphor, Walker argued that historical and social knowledge could be added on top of the abstract construction: “Such a scheme should constitute the skeleton of all economical reasoning; but upon this ghastly framework should be imposed the flesh and blood of an actual, vital Political Economy, which takes account of men and societies as they are, with all their sympathies, apathies, and antipathies; with every organ developed, as in life” (Walker Reference Walker1883, p. 18).

From his chair of moral philosophy at Cambridge, Henry Sidgwick reflected upon the evolution of political economy over the nineteenth century. Sidgwick wrote his Principles of Political Economy to restate the core of the science while acknowledging important points recently made by critics (Sidgwick Reference Sidgwick1883, p. 7). He used the concept of “economic man” a few times in the Principles, defining it as the characteristic of men “always seeking to obtain for the commodity that they exchange the largest real return that they know to be obtainable taking all kinds of gain and loss into account” (Sidgwick Reference Sidgwick1883, p. 391). Sidgwick explained the discrepancy between this behavior and what is observed in society at large by the effect of “custom,” or what we would today call “social norms.” It is very likely that Sidgwick borrowed the expression “economic man” from Walker since he quoted his Wages Question (Reference Walker1876) many times.

The other Cambridge professor, Alfred Marshall, also positioned himself as a conciliatory figure in the methodological debate. In the 1880s, Alfred Marshall referred explicitly to Walker’s “admirable Political Economy” as well as to Sidgwick’s Principles of Political Economy. Highly influenced by evolutionism and German philosophy of history, Marshall adopted an ecumenical approach: “induction and deduction go hand in hand” (Reference Marshall1890, ch. v). Comte and Roscher were right when they claimed that other methods were useful, but they were wrong when they denied the usefulness of deductions, since facts alone were silent (Marshall Reference Marshall1885, p. 39; Reference Marshall1890, p. 74). On the other side, contrary to what was often claimed, Ricardo and his followers were not establishing universal truths but only developing “machinery to aid us in reasoning,” an “engine for the discovery of concrete truth” (Marshall Reference Marshall1885, p. 22).

Marshall defended John Stuart Mill, at the cost of turning the economic man on his head.Footnote ¹³ He thought that Mill’s passage on the economic man from his 1836 essay had been misunderstood: “It is an English habit to leave much to be supplied by the common sense of the reader” (Marshall Reference Marshall1890, p. 80n1). Marshall went as far as arguing that when economists had assumed a selfish economic man, “they did not express their meaning exactly” (Reference Marshall1885, p. 27; Reference Marshall1890, p. 78). In his view, the economic man is not selfish, since wealth is primarily pursued for the benefit of the family: “he is generally hard at work saving capital chiefly for the benefit of others” (Reference Marshall1885, p. 28). Marshall argued that economists dealt with individuals of flesh and blood. In the end, the wealth-seeking man was only a convenient assumption because it led to actions that were measurable in monetary terms. It is no surprise then that Marshall defined economics as “the study of man’s action in the ordinary business of life” (Reference Marshall1890, p. 1). His conception of the economic man matched his definition of economics.

Referring to all the economists we have discussed so far was John Neville Keynes’s The Scope and Method of Political Economy (Reference Keynes1891), a 350-page synthesis of the methodological debates on political economy in the nineteenth century.Footnote ¹⁴ Like Marshall, Neville Keynes adopted a conciliatory tone (Blaug Reference Blaug1992, p. 52). Neville Keynes supported the intimate connection between wealth and economics conceived as an abstract science, but he argued that the desire for wealth was only a shorthand for the desire to acquire “purchasing power” to satisfy one’s various wants (Blaug Reference Blaug1992, p. 117). In that perspective, economic man was conceived as acting toward his “own material advantage and the advantage of those immediately dependent upon [him]” (Blaug Reference Blaug1992, p. 115). Gone was the view of economic man as a greedy creature. In Neville Keynes’s view, the economic man was a real and enlightened self-interested man. He might wish to increase his fortune to care for his children or to give to charitable causes. Thus, from his utilitarian perspective, both egoism and altruism were compatible with a wealth-seeking vision of human beings.

Positive Views on Economic Man and Homo Œconomicus

By the 1880s, Jevonian mathematical economics had taken a firm hold in Britain (Schabas Reference Schabas1990, ch. 6). The next generation of neoclassical economists proudly reclaimed the economic man as the ordinary hero of their theories. Jevons’s conception of man was referred to as “a pleasure machine” by his devoted disciple, Edgeworth. In Mathematical Psychics (Reference Edgeworth1881, p. 55n1), Edgeworth used the expression only once in a footnote referring to Mill’s Logic and to Walker’s Wages. Footnote ¹⁵

Edgeworth later used the expression “economic man” to capture the essence of economics in some of the 115 entries he wrote for Robert H. I. Palgrave’s Dictionary of Political Economy (see Barbé Reference Barbé and Black2010, p. 173). The Dictionary also contained an entry on “economic man” written by the Cambridge logician and lecturer in psychology and moral sciences William Ernest Johnson. He defined the economic man as “a more or less imaginary being postulated for theoretical purposes by abstract political economy” and moved by his “material interests” (Johnson Reference Johnson and Palgrave1894, p. 676). In the entries “Functions,” “Gossen,” “Margin,” “Maximum Satisfaction,” and “Total Utility,” Edgeworth painted a portrait of the economic man more in line with the new mathematical economics. For instance, in the entry “Functions,” Edgeworth wrote: “It has been well said that every theory in economics may be regarded as the solution of a problem in the calculus of maxima and minima: to obtain the greatest satisfaction with the least effort and sacrifice being the aim of the economic man. The language of that calculus is the mother tongue of abstract economics” (Reference Palgrave1896). For Edgeworth, the “advantage” of the economic man is represented by a “function of several variables.” He strives to attain “maximum satisfaction,” to maximize his “net total utility” (Reference Palgrave1896; Reference Palgrave1899). Thus, at the turn of the century, the mathematical imagination of Jevons and Edgeworth had created an economic man very close to the modern microeconomics textbook account of the universal utility maximizing agent. The economic man was no longer merely attracted to wealth as Mill had postulated, and neither was he identified with the typical English businessman as Bagehot had argued.

In Principii di economia pura (Reference Pantaleoni1889), Maffeo Pantaleoni adopted the Latin expression of homo œconomicus in a constructive way.Footnote ¹⁶ For the first time, the expression was not used merely for criticizing English political economy but to explicitly characterize the subject of pure economics, just as Edgeworth would do a few years later in Palgrave’s Dictionary. Footnote ¹⁷

Pantaleoni devoted the first chapter of his Principii to the subject matter of the economic science. He described the specific characteristic of the homo œconomicus in terms of the “hedonic hypothesis,” that is, the desire “to obtain a given result with the smallest comparative means; or, conversely, to obtain any maximum result with any given means” (Reference Pantaleoni1889; Reference Pantaleoni1898, p. 5).Footnote ¹⁸ In his view, it was possible to obtain true economic deductions from the hedonistic hypothesis, and thus to offer accurate practical prescriptions, since the hedonistic hypothesis was realistic. Pantaleoni found inspiration for his realism in Herbert Spencer’s reading of Darwin’s principle of natural selection, an idea that figured prominently in his thought (Mosca Reference Mosca2015; Sunna and Mosca Reference Sunna and Mosca2017). In Pantaleoni’s view, the hedonistic hypothesis was realistic because the ends of homo œconomicus necessarily coincided with the self-preservation of the individual and the species.

In his demonstration of the reality of homo œconomicus, Pantaleoni quoted Spencer’s Data of Ethics (Reference Spencer1874): “Sentient existence can evolve only on condition that pleasure-giving acts are life-sustaining acts” (Reference Pantaleoni1898, p. 15). Pantaleoni argued that natural selection worked “through the elimination of individuals for whom life-sustaining acts [were] not productive of pleasure, and in whom acts prejudicial to life occasion no pain” (Reference Pantaleoni1898, p. 16). Only those who acted like a homo œconomicus could survive. In this sense, homo œconomicus represented the empirical reality, if not already in the present, surely in the future. Behavioral discrepancies were destined to be eliminated by natural selection. He classified these discrepancies as “anti-economic” behaviors, like the acts of the anchorite, the preference for a lower remuneration, or the many forms of altruism (Reference Pantaleoni1898, p. 19). Yet, there could also be discrepancies between individual egoism and the “tribal egoism,” that is, self-preservation of the species (Reference Pantaleoni1898, p. 20). In this case, natural selection would again eliminate the discrepancy, since only species presenting a concordance between individual egoism and tribal egoism could survive.Footnote ¹⁹

The association of the homo œconomicus with the idea of preservation of the species suggests that Pantaleoni could have borrowed this Latin expression from the idea of Homo sapiens. Indeed, just before introducing the concept of homo œconomicus in his Principii, Pantaleoni quoted Patrick Geddes’s An Analysis of the Principles of Economics (Reference Geddes1885). In this book, Geddes discussed Darwin’s principle of natural selection and used the expression “Homo” for the human species.Footnote ²⁰ Geddes referred to the works of Walker—who was also himself influenced by Darwin and Spencer (see Hodgson Reference Hodgson1992)—and used the expression “economic man,” but never “homo œconomicus.” It is plausible that Pantaleoni made the connection. In any case, Pantaleoni read the English expression of “economic man” in Walker, since he quoted his different works multiple times in the Principii. It is not clear, though, if Pantaleoni knew of Jannet’s work before writing his Principii. He would, at least, learn of Jannet’s Le capital, la spéculation et la finance au XX^e siècle in 1892 when Pareto wrote a positive review of it for the Giornale degli economisti.

Cleansing the Concept: From Motives to Logic

The refinement of the concept of homo œconomicus, so proudly claimed by Pantaleoni, characterized the intellectual path of Vilfredo Pareto. On 4 July 1891, Pareto wrote to Pantaleoni that he had just met Jannet in Paris, a “very cultivated person” whose reasoning, however, seemed to be grounded on wrong “bases” (Pareto Reference Pareto and de Rosa1960, p. 42).Footnote ²¹ In fact, Pareto met Jannet just after he finished reading Pantaleoni’s Principii. Four days later, Pareto wrote to Pantaleoni many critical comments on his book, most of them about the concept of homo œconomicus (Pareto Reference Pareto and de Rosa1960, p. 43–49). Like Jannet, who had argued that neither homo economicus nor Rousseau’s natural man ever existed, Pareto wrote to Pantaleoni that the hedonistic homo œconomicus of political economy did “not exist in nature” (Pareto Reference Pareto and de Rosa1960, p. 47). Although, contrary to Jannet, Pareto did not reject the abstract concept. He wanted to refine it. Pareto focused his criticisms on the method. When pure economics failed to describe reality, rather than invoking “anti-economic” motives of real individuals as Pantaleoni did, the homo œconomicus could be revised. This revision would require constant reference to the “naked experimental facts,” knowing that the amended hypothesis, even in the best case, would still remain an approximation of reality (Pareto Reference Pareto and de Rosa1960, p. 49). For Pareto, pure economists should abandon any temptation to provide practical prescription based directly on abstract deductions (see Pareto Reference Pareto and de Rosa1960, pp. 45–48).

Pareto outlined in this letter the steps that would characterize his intellectual path in the refinement of the concept of homo œconomicus. First, he compared pure economics to rational mechanics, arguing that rational mechanics did not introduce anti-mechanic criteria to explain the elasticity of matter but rather complemented it with a theory of elasticity (Pareto Reference Pareto and de Rosa1960, pp. 46–47). Second, he found problems in the description of the economic motive. If pure economics led to deductions that were not observed, as Pantaleoni admitted, this could be due to a misguided conceptualization of economic motives in terms of utility. For example, contrary to what was assumed in pure economics, real individuals engaging in exchange could hardly calculate final degrees of utility before making their choices (pp. 47–49). They were probably acting “more out of habit than reasoning” (p. 48). This problem was linked to Pareto’s more fundamental criticism about the means–end relationship. Third, he argued that it was very hard to assume that the actions of real individuals would “only follow from their conscious will [deliberato volere]” (p. 48). Pure economics was implicitly assuming that real individuals were able to adapt their means to their ends, but this hypothesis had to be made explicit.

Pareto wrote this letter to Pantaleoni while he was finishing his article “Lasciate fare, lasciate passare” (Reference Pareto1891) for the Giornale degli Economisti. In this paper he developed the analogy between pure economics and rational mechanics as he would do in his Considerations on the Fundamental Principles of Pure Political Economy ([1892–93] Reference Pareto, Marchionatti and Mornati2007).Footnote ²² According to Pareto, abstraction was necessary for the scientific analysis of simple and artificially isolated aspects of reality, but before providing practical prescriptions, a synthesis of all these aspects of reality was needed (see Guala Reference Guala1998; McLure Reference McLure2001, pp. 21–27). Furthermore, since the phenomenon studied by science was always an ideal phenomenon—which could never coincide identically with reality—it was necessary to compare deductions with experience as often as possible (Pareto [Reference Pareto1892–93] Reference Pareto, Marchionatti and Mornati2007, pp. 7–8).Footnote ²³

First, Pareto tried to clarify the concept of utility by introducing the concept of “ophelimity.” In his Cours d’économie politique (Reference Pareto1896), he pointed to the difference between the objective utility that parents see in a medicine for their child and the subjective utility felt by the child, who dislikes the medicine. Then, he made a distinction between subjective utility and ophelimity, understood as the capacity of something to satisfy needs or desires. The ascetics see utility in the annihilation of any satisfaction of needs and desires; their subjective utility therefore is not their ophelimity but rather the annihilation of any ophelimity (Pareto Reference Pareto1896, p. 6). Utility was economic, moral, or ethical, when it provided for the social aggregate material well-being, the development of more perfect morals, or ethical development, respectively. Ophelimity was economic, moral, or ethical, when it satisfied needs and desires of the individual of a material, moral, or ethical kind, regardless of whether they were useful (see McLure Reference McLure2007, pp. 26–27).Footnote ²⁴ In Pareto’s Cours, the homo œconomicus was a hedonist who maximized pleasure and minimized pain by responding solely to the forces of economic ophelimity.

Over the years, however, Pareto emancipated himself from ophelimity by assuming that homo œconomicus had preferences whose origins need not to be investigated from an economic point of view. Pareto made it easier for economics to escape from psychology by economizing on the mental laws postulated by Jevons and Mill.Footnote ²⁵ Once Pareto had discarded the necessity of inquiring into the motives of actions, he turned his attention to the relation between ends and means, the other issue he had raised in his 1891 letter to Pantaleoni. Between 1898 and 1900, by abandoning the idea of hedonism, Pareto reached his own definition of homo œconomicus. We find the clearest exposition of his new conception in the “Summary of Some Chapters of a New Treatise of Pure Economics of Prof. Pareto,” a first draft of his Manual, published in the Giornale degli Economisti in 1900.

The “Summary” opened with a question of method, suggesting that deductions and inductions could complement each other with the aim of “cementing the fact to the idea” (Pareto [1900] Reference Pareto2008, p. 455). Following this method, premises and deductions should be confirmed by experimental observations. In case of a discrepancy, the initial hypothesis would be modified since only premises approximating reality could generate deductions approximating reality. The “Summary” started with “the fact of choice,” a “direct outcome of experience” that did not need to be analyzing “entities such as the final degree of utility, rareté, or ophelimity, whose capability of being measured [was] a matter of controversy” ([1900] Reference Pareto2008, p. 453). Pareto argued: “The fact that there can be choices relieves us from having to examine the motives” ([1900] Reference Pareto2008, p. 457). We do not have to assume that “the blows afford [the ascetic] greater pleasure than a good dinner”; we just need to assume that he voluntarily “prefers ten strokes to the good dinner” ([1900] Reference Pareto2008, p. 457–458). With a direct reference to Edgeworth’s idea of “pleasure machine,” Pareto argued that homo œconomicus was just a choice machine:

Homo œconomicus was an abstract agent making choices. Mill ([1836] Reference Mill2006) had postulated that the economic subject could judge the “comparative efficacy of means” to obtain wealth. For Pareto, what mattered was not the motives of the individuals but that they adopted actions that “tend logically to an end”—whatever these could be—and “change logically, with changing circumstances” (Pareto [1900] Reference Pareto2008, p. 456). In this way, economists would have a science “which studies in what way the means are linked to the end, that is, to the choice carried out by the individual” ([1900] Reference Pareto2008, p. 456).

The “Summary” was a turning point in Pareto’s reflection (see Bruni and Guala Reference Bruni and Guala2001; Bruni Reference Bruni2013), especially in his attempt to respond to the criticisms on the measurability of utility, pleasure, and ophelimity (Moscati Reference Moscati2018, pp. 79–116). Yet, his answers constituted only a step in the process of refinement of the concept of homo œconomicus. The “Summary” represented above all Pareto’s answers to the criticisms of the concept of homo œconomicus and to the method of pure economics that he had addressed to Pantaleoni in 1891. This accomplishment was the result of Pareto’s adoption of the “experimental method,” which he associated with the “deductive-concrete” method of Mill’s System of Logic, a work he had studied meticulously in his youth (see Mornati Reference Mornati2018, pp. 140–148; Marchionatti and Gambino Reference Marchionatti and Gambino1997).Footnote ²⁶ The methodological explanation Pareto gave in the “Summary” of pure economics as an experimental science implicitly described his own intellectual development, situating himself in a historical process that started with Mill. Following Mill, economists first moved by induction from the fact to the idea. In this way, they observed an element common to a large number of phenomena: “men act logically in order to increase their pleasure as much as possible and to diminish their pain” (Pareto [1900] Reference Pareto2008, p. 466). Then, they deduced some consequences, moving from the idea to the fact. Finally, they compared their deductions with experience. If any discordance was found, then pure economists like Pareto moved again from the fact to the idea, by modifying and completing the latter (Pareto [1900] Reference Pareto2008, pp. 466–467). This process led Pareto to reject the hedonistic hypothesis that all homo œconomicus aimed at increasing their pleasure and diminishing their pain. Even the ascetic could be a homo œconomicus. In this respect, Pareto broke away from Pantaleoni’s assumption that the ascetic had an anti-economic behavior that would be eliminated by natural selection (Pantaleoni Reference Pantaleoni1898, pp. 17–20), as well as from Bentham, who saw in ascetism a principle opposed to the principle of utility (Bentham Reference Bentham1789, p. vii). The cleansed hypothesis was that homo œconomicus acted logically, that is, that they could judge the comparative efficacy of means to obtain their aims, whatever these may be. Through this process, according to Pareto, pure economists approximated experimental facts by abstract ideas, and thus acted as experimental scientists.

Mill applied the deductive method to political economy, but at the same time he did not think that his concrete deductive method was applicable to this science. The concrete deductive method might be appropriate for social science as a whole, but the special branch of political economy proceeding deductively did not admit direct empirical verification. In contrast, for Pareto, pure economics could be an experimental science, like physics or astronomy (Pareto [1900] Reference Pareto2008, p. 466). The experimental method would help pure economics restrict itself to a narrow class of phenomena that would better approximate empirical observations.

Pareto’s surprising idea was that pure economics could follow the experimental method because it was also the method adopted by the homo œconomicus. Homo œconomicus could logically associate means to ends by adopting the experimental method. In his Manual, Pareto argued that “an objective phenomenon appears to our minds only in the form of a subjective phenomenon” ([1906] Reference Pareto, Montesano, Zanni, Bruni, Chipman and McLure2004, p. 22). The objective phenomenon, however, could be approximated by the subjective phenomenon. In a similar way, the causal relation between two subjective phenomena could approximately coincide with the causal relation between two objective phenomena. Actions based on the subjective relations approximating the causal relation between two objective phenomena are logical. However, actions based on subjective relations that are far from the causal relation between two objective phenomena are only apparently logical, that is, non-logical. According to Pareto, the repetition of experiences could help to reduce possible errors, thereby gradually adapting actions to aims. This brought him to a noteworthy parallelism: repeated experiences in ordinary life could help to identify relations like “the relations a scientist discovers in his laboratory” ([1906] Reference Pareto, Montesano, Zanni, Bruni, Chipman and McLure2004, p. 23). “Little by little, by constantly experimenting and comparing his theoretical deductions with reality,” a person in ordinary life will modify the subjective relations and replace them by other relations, “which will come closer to reality” ([1906] Reference Pareto, Montesano, Zanni, Bruni, Chipman and McLure2004, p. 25). Pareto stated explicitly that the “scientist’s experimental studies are of this kind, as are many of man’s practical actions, including those studied by political economy” ([1906] Reference Pareto, Montesano, Zanni, Bruni, Chipman and McLure2004, p. 25).Footnote ²⁷ Thus, individuals acted as homo œconomicus by adopting the experimental method of scientists, that is, Mill’s concrete deductive method. Economists could not rely on controlled experiments, and “must be content with observation” ([1906] Reference Pareto, Montesano, Zanni, Bruni, Chipman and McLure2004, p. 8). However, the observation of “the many logical, repeated actions” ([1906] Reference Pareto, Montesano, Zanni, Bruni, Chipman and McLure2004, p. 72), like market transactions, could provide the material for empirical verification of the assumptions of economics, especially when these were stripped down to their purest form.

Mill ([1843] Reference Mill, McRae and Robson2006) considered political economy to be a separate branch of sociology. Pareto also encased pure economics in the larger discipline of sociology, but he articulated the relation between the two disciplines in a different way. The study of real persons could be obtained by adding to homo œconomicus the study of all “non-logical actions” originating from what he called “residues,” “derivations,” or “interests,” which he discussed extensively in his treatise on general sociology published in 1916 (see Pareto [1916] Reference Pareto and Livingston1935; see also McLure Reference McLure2001, pp. 50–58). As he wrote in his Manual: “The same man, whom I consider as a homo œconomicus for an economic study, may be considered as a homo ethicus for a moral study, as a homo religiosus for a religious study, etc.” Pure economics could thus be completed by other branches of social studies (Pareto [1906] Reference Pareto, Montesano, Zanni, Bruni, Chipman and McLure2004, p. 9).