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CHARLES UNIVERSITY in PRAGUE FACULTY of SOCIAL SCIENCES International Economy and Political Science IEPS CHARLES UNIVERSITY IN PRAGUE FACULTY OF SOCIAL SCIENCES International Economy and Political Science IEPS Master Thesis Dissertation 2012 Ivana Djikanović CHARLES UNIVERSITY IN PRAGUE FACULTY OF SOCIAL SCIENCES International economy and political science IEPS Ivana Djikanović Ideas of Hedonism and Stoicism Implemented in today’s World of Economy Master Thesis Disseration Prague 2012 Abstract The main motivation for this work was to show that economy cannot be explained just by economy. Many other sciences are essential for understanding economic processes and models of behavior. This paper presents the proven relations between the philosophy, economics and psychology. The study of different economic concepts requires development of an extensive network of connections between humans on the one side, and their social needs and behavior on the other side. The starting point is the return in the time of Ancient Greeks, with whose theoretical approaches can be explained the majority of person’s actions. This paper uses theoretical analyses to assess the impact of the “passions and interests”, hedonic happiness and stoic self-interest on the economic policy and individuals. Through the gently presented forms of hedonism, this work deals with different theories such as theory of modern consumerism, marginal utilitarianism, preference theory, theory of rational allocation. The data gathered in the form of publication analysis, little psychological experiments and real life examples serve to test the hypothesis of the direct relationship between hedonistic impacts on economic theory. The two research questions are dealing with mastery of passions and interest in the economic behavior as well as with the difficulty of achieving overall satisfaction in the selfish, individualistic era. Results are showing that it is not possible to find happiness in material wealth; furthermore it is not possible to act like hedonist in market oriented economy. People are driven by their interests, which are prominent in relation to the passions. In the end, greed and competition for the material possessions make people unhappy and leads them to contradictory choices and non- rational behavior. The general conclusion of the thesis states that in spite of the contrary believes of many theorists hedonism still has a strong conceptual framework for the economic theory. Keywords Hedonism, Consumerism, Individuals, Society, Hedonistic Paradox, Happiness Statements 1. This statement is to prove that this paper is a product of my own work and to confirm that I used the listed sources in producing it. 2. I agree that the paper can be checked for research and studying purposes. Prague, 31 July 2012 Ivana Djikanović Acknowledgments I am extremely grateful to my advisor, Mgr. Tomas Janotik, for his guidance and advices throughout some parts of dissertation process. His comments and constructive criticism helped me to improve my academic skills. I would also like to thank to Doc.Ing. Vladimír Benáček, CSc. He showed me how to improve pertinent details of my work during the Master Thesis Seminar. I am extremely appreciative of the financial support, for the second year of my studies, provided by Charles University Scholarship for developing countries. With their help, I was able to concentrate on my studies and to improve my academic experience. Finally, I am eternally grateful to my family, especially to my parents who gave me strong moral and financial support. Thank you for believing in me. Table of contents Introduction……………………………………………………………………………….1 Methodology ..................................................................................................................3 Qualitative methods........................................................................................................3 Sources............................................................................................................................4 Historical Background - Ancient Greek Ideas.................................................................5 Morality Concept- Freedom of Body and Mind………………………………………..7 Altruistic vs. Egoistic Concept…………………………………………………….........9 Utility Concept………………………………………………………………………………..11 The Stoic Origins of Liberalism…………………………………………………………….13 Passions and Interests as Main Guides of Global Era………………………………….16 Interest…………………………………………………………………………………..22 Linkage between Passions - Interests vs. Public Interest……………………………….23 Universal Passion- Love of Money……………………………………………………...25 Reorganization of the Government……………………………………………………...28 Bentham’s Utilitarianism, Preferences and Social Welfare……………………………..33 Consumerism……………………………………………………………………………...36 Hedonic calculus………………………………………………………………………...38 Time Dimension…………………………………………………………………………40 Paradox of Choice……………………………………………………………………….40 The Ethical Beast………………………………………………………………………...41 Single Case - American Hedonism Called “The Tyranny of Choice”…………………..43 Hedonistic Paradox – Happiness of Homo Economicus………………………………..47 Hedonic Treadmill……………………………………………………………………….49 Happiness, Income and Society…………………………………………………………..51 Political Impact on Happiness……………………………………………………………55 The moral Hole…………………………………………………………………………...55 Cooperation Leads To Happiness…………………………………………………………56 Conclusion…………………………………………………………………………………..59 Bibliography………………………………………………………………………………...63 Introduction Before we begin to explore this topic, we would like to say something more about the subject itself. We would like to introduce dualism in the world which becomes a part of the society, human behavior, political system and economics. The dualism in society exists before the first civilizations came to be and almost in all cases society was under the existence of dichotomy, and it has not worked, and the result was corruption and ruination. In ancient civilizations, the wise people constructed states where the desiring and greedy brought them down as a result of their lust for conquest and rising prosperity. We choose hedonism and stoicism as two sides of the same in order to describe and explain urges of human actions in today’s world of economy and politics. In the short run, people’s decisions and actions can be reshaped from stoics to hedonistic and vice versa. This topic is attractive because it allows making connections between reality, human thinking, principles of behavior and society. Economy as a science cannot be explained just with economy and this concept will remain dominant through the whole work. We will use different natures of correlations in order to understand deepness of the economic processes. Economic sphere is imbued with branches of music, philosophy, psychology, arts, politics, astronomy and every little piece of that Universe can be crucial for understanding one system, and process of human existence and functions. The world is one powerful machine; its mechanism must be essentially understood in order to achieve the optimal social system in which hedonism and stoicism will find their natural string of balance. Strong network of factor’s interdependence and changing, in order to achieve improvement, is anti-altruistic construction of the capitalist world, but we will talk about that a little bit later. This study addresses a wide range of theories and utilizes numerous empirical instruments. In the first part of the dissertation, we will use some basic hedonistic and stoic principles in order to describe today’s economy from their point of view. Some of the theories will be individualistic models of behaviour, ethical hedonism, theory of rational choice, consumerism theory, altruism as well as a concept of happiness. All these theories are distinguished not only for understanding the underlying hedonistic and stoic’s principles but for understanding well- being and the main idea implemented in today’s socio-economic system and culture. In other words, these theories can be used to describe the behaviour of the state and market players as well as general behaviour of people in the society. Also, one of the objectives of this thesis is to show how crucial role hedonism and stoicism have played in the continuous and, at the same way, central issue of economic theory. In the process of showing, there will be use a brief examination of the crucial origins of hedonistic and stoic ideas, which are fruit of the ancient Greeks’ work. In the economic theory, main hedonistic ideas found their role primarily in the works of Hobbes, Helvetius, but their sub sequential implementation started with the work of Jeremy Bentham, John Stuart Mill and Paul Samuelson. It will not be scrupulous not to mention the relationship between elements of hedonism and economic thoughts imbued through leading marginalism theories and marginal school. According to this school, hedonistically based terms became part of the central economic theory. Even microeconomic theory has hedonistic attitude. From the other side, anti-hedonistic alignment has been support by many famous creators of economic theory. Between popular and influential philosophers and economists, who were supporting alternative economic approaches, are Adam Smith, John Maynard Keynes and Marx. They developed stoic’s form of non-maximizing theories, which are independent of the hedonistic background. Before we begin to develop influence of these two philosophical approaches on the economy, and legislative framework we would like to introduce fundamental beliefs of ancient Greeks ideas based on hedonism and stoicism. The hypotheses that will
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