From Sensory to Positivist Utilitarianismand Back -- The Rehabilitation of NaturalisticConjectures in the Theory of Demand

Twentieth century demand theory is an outgrowth of the revision of the utilitarian program undertakenby Jevons (1879) in the so-called marginalist revolution. In the original, Benthamite version, theutilitarian program was based on a naturalistic, hedonic theory of behavior. Utility was conceived of asa sensory experience of pleasures and avoidance of pains and, thus, as an ‘objective’, measurable notion(Bentham 1948). In Jevons’ interpretation the concept of utility lost these ‘objective’ sensoryconnotations. In the further development, cardinal notions of subjective utility were substituted for evermore abstract, ordinal index number interpretations. The hedonic underpinnings of utility were graduallyabandoned. The focus narrowed down to the analytical problem of properly representing the theory bya utility function and indifference curves. Since these were considered to be non-observables, thepositivist spirit of the time suggested expressing the theory in terms of observable variables. Demandtheory – or the “pure theory of consumer’s behavior” (Samuelson 1947, 90-1) – that dealt with quantitiesdemanded, prices, and incomes only, was expected to provide the solution.::