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Who is Afraid of the Past? 
Economic Theorists and Historians of Economics on Altruism 
 
Philippe Fontaine 
Ecole normale superieure de Cachan 
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Historians of economics can rightly observe that most economic theorists 
have a restricted conception of the past, paying little attention to 
contributions prior to 1970. The fact remains, however, that they have 
their own failings on this score. A quick perusal of History of Political 
Economy (1980-1997), the Journal of the History of Economic Thought 
(1980-1997) and the European Journal of the History of Economic Thought 
(1993-97) reveals that historians of economics tend to neglect premodern 
thought and to balk at investigating post-1970 works. Todd Lowry (1991) 
has argued that historians of economics can better understand modern 
economics by incorporating the study of premodern thought. I would like 
to suggest that similar benefits can be expected if they look at modern 
economic analysis from an historical perspective. 
 
The revival of interest in altruism, which occurred around 1970, 
provides an interesting illustration of the way both communities see the 
past. Wishing to advance current economic analysis, economic theorists 
usually refer to recent work. However, the late development of altruism 
research has led them to extend their references to earlier historical 
contributions. In so doing, economic theorists have put earlier and modern 
works on the same footing, investigating both the distant and the near 
past according to the needs of modern theory. On the other hand, since 
the economics of altruism really took shape after 1970, historians of 
economics feel that altruism research does not come within their province; 
accordingly, they have investigated altruism and themes of related 
interest in earlier works, neglecting that modern theories influence our 
evaluation of the latter. 
 
I. ECONOMIC THEORISTS AND THE HISTORY OF ALTRUISM 
 
A standard article on altruism begins with a brief review of the 
post-1970 literature relevant to the argument. Such references help 
situate the contribution of the paper as an attempt to either generalize 
or qualify or refute known results (see, for instance, Andreoni 1989, 
Berheim and Stark 1988, Wintrobe 1981). In other words, modern 
economic theorists refer to recent works to buttress their own arguments. 
And even when they do dip further into history, they often do it with 
little sensitivity. References to earlier authors are deemed useful to 
the extent that they can serve as authoritative legitimation of current 
interpretations. 
 
Interesting illustrations appear in Becker's (1981) and Kolm's (1983) 
uses of Smith's work--a classical reference among economic theorists. 
It is interesting to note that, unlike Becker, Kolm claims that Smith 
acknowledges that selfishness is more efficient than altruism in the 
marketplace, although Kolm concedes that Smith failed to demonstrate 
the informational inefficiency of altruism. Yet, the fact that Becker's 
reading departs from Kolm's is no surprise, since the former emphasizes 
the utility-interdependence view of altruism whereas the latter stresses 
the dual-utility view. In referring to Smith's own formulations, both 
Becker and Kolm seek support for their own views of altruism. Becker 
(1981) thus observes that "Smith ... tries to explain why people are 
more altruistic towards their families than towards strangers, 
but he does not consider what happens when altruistic and selfish 
behaviours 'compete' in market transactions" (pp. 10-11). Likewise, in 
addressing "Das Adam Smith Problem," Kolm (1983) notes that "it is ... 
contradictory to define--and indeed, as with Smith and Pareto, to 
praise--the efficiency of markets by reference to people's egoistic 
preferences ... rather than by reference to people's global preferences" 
(p. 20). Therefore, in referring to the work of Smith, Becker (1981) and 
Kolm (1983) do not mean so much to understand Smith's own theory of 
altruism as to explain how certain of its aspects can serve the purposes 
of modern economic theory. They make it clear, indeed, that their main 
objective remains to contribute to neglected areas of research. Thus, 
Becker refers to the "analysis of the consequences of altruism" (p. 12), 
while Kolm mentions the economics of gifts and the "incorporation of 
social relations and human characteristics, and of preferences over 
these, into the normative analysis of society" (p. 62). 
 
If the interest of economic theorists in the history of economics is 
mainly based on its potential lessons for modern theory, we may expect 
theorists to project old ideas into modern frameworks and therefore to 
lose touch with the context of their production. 
 
II. HISTORIANS OF ECONOMICS ON ALTRUISM 
 
In investigating the historical sources of the notion of altruism, 
historians of economics have put emphasis mainly on Smith, Edgeworth and 
Wicksteed. Many contributions have thus been devoted to Smith's 
"sympathy," taken as concern for others' welfare. Commentators have 
explained that sympathy is as important as self-love in Smith's system 
and that it is widespread in close-knit groups, where it develops on the 
basis of frequent interactions. Hence, it is argued that even partners in 
trade can show concern for each other's welfare (see Dimand and Dimand 
1991). Unfortunately, students of Smith often equate "sympathy" with the 
act of imaginative place-switching (see, for instance, Wilson 1976, p. 
74), whereas Smith actually distinguished between the two. For this 
reason, they have somewhat downplayed the fact that the concern for 
others' welfare can also develop on the basis of empathy. 
 
Once the role of empathy is acknowledged, it becomes obvious that one 
can sympathize with relatives as well as with strangers. Although the 
concern for others' welfare may be more accurate when it rests on frequent 
interactions, it can nonetheless arise from empathy. In Smith, then, the 
significant difference is not, as in modern literature, between sympathy 
in close-knit groups and selfishness in impersonal gatherings. It is 
merely between people who know each other thanks to frequent interactions 
and people who use empathy to accumulate knowledge about each other--all 
of them being sympathetic to some degree, and behaving either selfishly 
or altruistically depending on the circumstances. Accordingly, although 
Smith's sympathy can easily be depicted in terms of utility 
interdependence, it should be remembered that it sometimes requires a 
form of identification with others whereby the individual tries to 
discover what makes them happy or sad. 
 
Collard (1975) devoted an article to "Edgeworth's propositions on 
altruism," where he insisted on his fundamental contributions to the 
theory of altruistic behaviour. Yet, the core of Collard's argument and 
his results are about Edgeworth's "coefficients of effective sympathy," 
whereby one measures the weight given to the utility of another in an 
individual's utility function. Considering two individuals, A and B, 
Collard suggests that when the utility of A depends on the utility of B, 
modified by a coefficient of effective sympathy, A actually shows altruism  
towards B. The problem involved in equating the concern for another's  
welfare with altruism is particularly obvious when both coefficients equal  
1. A gives the same weight to his own utility as to B's. And B attaches  
the same weight to her own utility as to A's. As aresult, A and B maximize  
the same utility function and they both have the same point of maximum  
utility. As Boulding (1962) rightly observes, "In this case the parties  
simply move immediately to their mutual optimum in the field and whether  
this is done by gift or by exchange really makes very little difference"  
(p. 62). This is precisely the problem: the fact that A cares for his own  
welfare as much as he cares for B's does not necessarily imply that he  
contributes personally to B's level of utility. Thus, in suggesting that  
Edgeworth developed an analysis of altruism, Collard obscures one of the 
limitations of Edgeworth's theory. Indeed, the latter makes it difficult 
to distinguish among people whose utility is affected by the level of 
others' utility, between those who participate directly in increasing the 
level of others' utility and those who do not. 
 
Last to be considered is Steedman's ([1989] 1995) contribution on 
Wicksteed. Steedman points to Wicksteed's example of the housewife to 
suggest that it does not make sense to argue that she is egoistical when 
buying potatoes in the marketplace and altruistic when serving them at 
home (p. 113). Steedman recalls that for Wicksteed this example shows 
that there is no opposition between selfishness in the marketplace and 
altruism in the family. Instead, the opposition is between the nature of 
economic relations--the fact that the agent enters an economic relation 
without expressing sympathy for the purposes of his or her partner 
("non-tuism")--and its motives, which can be either selfish or altruistic. 
For Wicksteed, altruism and sympathy operate on different levels of 
analysis. It makes no sense, therefore, to exclude altruistic motives from 
the study of economics, since an individual may enter a transaction to 
further his or her own welfare as that of significant others; but it does 
not make more sense to equate altruism with sympathy, since the 
carrying out of the individual's unselfish purposes requires the 
cooperation of others for whose purposes he has no sympathy. 
 
III. ALTRUISM AFTER 1970: AN HISTORICAL PERSPECTIVE 
 
Once it is remembered that in modern economic theory altruism is usually 
represented by utility interdependence and that the latter is taken as the 
expression of a concern for another's welfare, it appears that Smith's 
analysis of sympathy may shed some light on the way modern economic 
theorists model altruism. The work of Smith makes it clear indeed that the 
utility-interdependence view of altruism, as found in modern economics, 
relies on the idea that people can develop a knowledge of each other's 
utility functions only on the basis of frequent interactions--hence the 
special attention given to close-knit groups in altruism research. This is 
clear from Becker's (1977) response to Tullock's criticism that it is 
impossible for altruists to know the utility functions of beneficiaries: 
"No doubt it is difficult to discover the function of someone living 1000 
miles away, or of an unknown 'poor' person, but surely parents have 
considerable knowledge of the utility functions of their children, as 
brothers or close neighbours have of each other's functions" (p. 507). It 
is interesting to note that Becker ignores the possibility that by putting 
himself or herself in the shoes of others, the altruist can acquire some 
knowledge about their utility functions (1). However, provided that people 
are able to develop a sense of community with others whom they do not 
know, there is no valid reason to restrict altruism to the family or, 
more generally, close-knit groups. 
 
Likewise, once it is realized that in mainstream economic analysis, 
utility interdependence is assumed more than explained (see Kurz 1977, p. 
177; Landes and Posner 1978, p. 419), it may be useful to remember that 
in focussing on the utility-interdependence view of altruism modern 
theorists have mainly followed in Edgeworth's footsteps. In this 
connection, it is worth noting that Edgeworth's analysis of sympathy 
marks a break with Smith: it no longer involves reference to an imaginary 
change of positions; instead it connects sympathy with the vaguely 
defined notion of "social distance" between individuals. In borrowing 
Edgeworth's framework, economic theorists have thus unconsciously set 
aside the possibility that the concern for another's welfare can rest on 
the discovery of his or her utility function, as a result of an imaginary 
change of positions. 
 
Finally, the work of Wicksteed can contribute to explaining why modern 
economists tend to equate sympathy with altruism and usually model the 
latter as a form of utility interdependence. Wicksteed suggests indeed 
that altruism and sympathy concern different levels of analysis. The fact 
that the economic relation is impersonal means that the two transactors 
show no sympathy for each other's purposes. This does not suffice, 
however, for the characterization of transactors as either selfish or 
altruistic. For what makes them selfish or altruistic depend only on what 
motivates them--their own welfare or the welfare of another who is not 
personally involved in the transaction. By contrast, in modern economics, 
the impersonality of the economic relation is often associated with the 
selfishness of agents while the personal character of relations is often 
equated with the altruistic tendencies of members of close-knit groups. 
In other words, the question of motivation becomes secondary in 
determining whether agents are selfish or altruistic. What matters is the 
context of the economic relation. As Becker (1981) notes: "I am giving a 
definition of altruism that is relevant to behaviour, rather than a 
philosophical discussion of what 'really' motivates people" (p. 2). 
 
IV. CONCLUDING REMARKS 
 
I have suggested that both economic theorists and historians of economics 
are uneasy with the past: the former with the distant past; the latter 
with the near past. Advocating an instrumental conception of the past, 
economic theorists rebuild it according to their needs. For instance, 
they overlook the fact that with empathy Smith provided an original 
justification for utility interdependence and that Wicksteed analyzed 
altruism without the help of utility interdependence. Likewise, economic 
theorists present the current orientations of altruism research as 
if they were the ineluctable consequences of the progress of economic 
analysis, when they actually correspond to specific theoretical 
orientations associated with the history of the discipline. For example, 
they do not seem to be aware that in adopting Edgeworth's analysis of 
sympathy, they also inherited his propinquity argument as its foundation. 
 
On the other hand, in not extending their subject to the study of recent 
developments in the economic analysis of altruistic behaviour, historians 
of economics leave unexplored the question of the very selective use of 
earlier contributions by modern theorists and therefore miss the 
opportunity to show that the current orientations of altruism research are 
historically determined. The fact that in the hands of modern economic 
theorists, altruism has gradually become a sophisticated form of 
self-interest indicates retrospectively that retrieving the messages of 
the past is hardly a disinterested undertaking. It likewise suggests that 
in investigating modern economic theory from an historical perspective, 
historians of economics may have something to say about its current 
orientations, which significantly departs from the justifications advanced 
by modern theorists. 
 
NOTES 
 
1. As Boulding (1962) notes, "It is this capacity for empathy--for putting 
oneself in another's place, for feeling the joys and sorrows of another's 
as one's own--which is the source of genuine gift" (p. 61). However, 
Boulding's idea was not followed up in modern economic theory. 
 
ACKNOWLEDGEMENTS 
 
I am grateful to Robert Leonard and Esther-Mirjam Sent for very 
constructive criticisms. 
 
REFERENCES 
 
Andreoni, James (1989). Giving with impure altruism: applications to 
charity and Ricardian equivalence. Journal of Political Economy, 97 
(December): 1447-58. 
 
Becker, Gary S. (1977). Reply to Hirshleifer and Tullock. Journal of 
Economic Literature, 15 (June): 506-507. 
 
________. (1981). Altruism in the family and selfishness in the market. 
Economica, 48 (February): 1-15. 
 
Bernheim, B. Douglas and Stark, Oded (1988). Altruism within the family 
reconsidered: do nice guys finish last? American Economic Review, 78 
(December): 1034-45. 
 
Boulding, Kenneth E. (1962). Notes on a theory of philanthropy. In 
Philanthropy and Public Policy (Frank G. Dickinson, ed.) New York: 
National Bureau of Economic Research. 
 
Collard, David (1975). Edgeworth's propositions on altruism. Economic 
Journal, 85 (June): 355-60. 
 
Dimand, Mary Ann and Robert W. Dimand (1991). Moral sentiments and the 
marketplace: The consistency of The theory of moral sentiments and The 
wealth of nations. In Perspectives on the History of Economic Thought, 
Vol. 5: Themes in Pre-classical, Classical and Marxian Economics (W.J. 
Barber, ed.). Aldershot: Elgar. 
 
Kolm, Serge-Christophe (1983). Altruism and efficiency. Ethics, 94 
(October): 18-65. 
 
Kurz, M. (1977). Altruistic equilibrium. In Economic Progress, Private 
Values and Public Policy: Essays in Honor of William Fellner (B. Balassa 
and R. Nelson, eds) Amsterdam: North-Holland. 
 
Landes, William M. and Posner, Richard A. (1978). Altruism in law and 
economics. American Economic Review: Papers and Proceedings, 68 (May): 
417-21. 
 
Lowry, S. T. (1991). Are there limits to the past in the history of 
economic thought? Journal of the History of Economic Thought, 13 (Fall): 
134-43. 
 
Steedman, Ian (1989 [1995]). Rationality, economic man and altruism in 
P.H. Wicksteed's Common Sense of Political Economy. In The Economics of 
Altruism (Stefano Zamagni, ed.). Aldershot: Elgar. 
 
Wilson, Thomas (1976). Sympathy and self-interest. In The Market and the 
State: Essays in Honour of Adam Smith (T. Wilson and A.S. Skinner, eds). 
Oxford: Oxford Univ. Press. 
 
Wintrobe, Ronald (1981). It pays to do good, but not to do more good than 
it pays. Journal of Economic Behaviour and Organization 2 (September): 
201-13. 
 
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