Utility as an economic category

The basic question of any science is the question of the beginning: where does the theory begin? The posing of this question is also characteristic of economic theory. The vast majority of modern economists believe that the foundation of economic theory is represented primarily by a utility function. When dealing with labor, money and other factors, market agents behave selectively - they prefer one thing over another. Undoubtedly, in these preferences, utility is the deciding factor. The concept of utility involves clarifying the nature of its beginning. The understanding of the category of utility is based on the work of the early English utilitarians, a philosophical trend according to which the value of human behavior is determined by its utility. Utility itself is presented as pleasure or happiness received by all the parties involved during the action. This understanding of utility is based on value teachings, according to which pleasure or happiness is the highest value. So, for example, one of the founders of utilitarianism, I. Bentham, believed that in relation to human society "... an invariable property is the desire to increase the sum of all pleasures."

The reference of economists to psychology is explained by the fact that we are talking about its interdisciplinary relationship with economic science. An example is the deep penetration of utilitarian ideas into the work of marginalists, who postulated psychological hedonism: any citizen in his economic behavior seeks to maximize pleasure, and it is on this basis that he makes decisions about entering into any commodity-money relationship. If in Bentham's works an individual can still make mistakes in choosing the optimal trajectory to achieve happiness, then the neoclassicists endowed a person with the super ability to accurately calculate his needs necessary to achieve maximum satisfaction. To do this, they combined the philosophical model of the hedonist individual and the principle of diminishing marginal utility, which later became known as the first Gossen's law: "... the amount of a given pleasure invariably decreases as we freely get this pleasure until full saturation is reached." development of economic theory, our ideas about the utility function became more and more fundamental. In this respect, the concept of marginal utility developed by W. Jevons, L. Walras, K. Menger and other economists has become a significant success.

This concept made it possible to theoretically comprehend the relationship between supply and demand, but it is not devoid of certain weaknesses. The subject of the study of marginalists is the behavior of homo economicus, created on the basis of a synthesis of the principles of hedonism (the doctrine that pleasure is the highest good and the meaning of life) and diminishing marginal utility. It is clear that there is simply no such person in real life; nevertheless, the supporting structure of marginalism was based on his behavior. Giving a characteristic to this person S.I. Bulgakov remarked: “he ... does not eat, does not sleep, but considers all interests, striving for the greatest benefit with the lowest costs; it is a counting rule that responds with mathematical correctness to the external mechanism of distribution and production. " It is quite obvious that the object of research in this formulation of the question could only be an abstract economic system as the only possible habitat for such an individual, which is in a state of equilibrium that satisfies two conditions: demand coincides with supply, and consumers and producers completely and always satisfy their interests and do not strive to change the current situation. According to L. Walras, to achieve market equilibrium, it is sufficient that the actual demand for each of the two goods was equal to its actual supply.

It should be noted that the psychological concept of utility does not allow one to explain the behavior of economic subjects unambiguously; certain contradictions always arise. For example, according to the concept, the needs of people determine the value of the usefulness of the goods they purchase, while these usefulness themselves cannot be measured. To explain the actions of people, a scale of preferences is needed, but it is not possible to find a justification for it in the intensity of needs. The mathematical apparatus was connected to the case and the idea of indifference curves was born, where everything was determined by the logic of choice. W. Edgeworth (1845-1926), I. Fischer (1867-1947), V. Pareto (1848-1923), the Russian economist E. Slutsky (1880-1948) and J. Hicks ( 1904-1989). This gave rise to two approaches to understanding utility. The first, quantitative, within which the utility could be measured using utiles - a specially proposed value. This approach is called cardinal or quantitative. The second approach was based on indifference curves and considered consumer behavior in the process of choosing a food set. It began to be called ordinal or ordinal. In fact, the theory of marginal utility has emerged as a new concept of value based on the subjective assessment of the utility of each additional unit of the consumed good by an economic entity. Naturally, such a subjective psychological approach, which attaches decisive importance not to production, but to consumption, was fundamentally different from classical political economy, which linked the origin of value with production costs, which are ultimately determined by the amount of labor expended. Jevons succeeded in formalizing the nodal position of the marginality theory of value, proceeding from the fact that production costs do not directly participate in the process of value formation, which depends solely on the last utility: “... production costs determine the supply - the proposal determines the last degree of utility - the last degree of utility determines cost "