How do you interpret this paragraph from Mill's Utilitarianism?

"It is better to be a human being dissatisfied than a pig satisfied; better to be Socrates dissatisfied than a fool satisfied. And if the fool, or the pig, are of a different opinion, it is because they only know their own side of the question. The other party to the comparison knows both sides."

Quick answer:

In this paragraph from Mill's Utilitarianism, Mill addresses the claim that utilitarianism is shallow and hedonistic, claiming that intellectual and aesthetic pleasure is much better than mere sensual pleasure. It is therefore better to be capable of the former and remain unsatisfied than it is to be incapable of such satisfaction, and be gratified on a lower level. This argument rests on the idea that even the most frustrated man will not wish to change places with a pig.

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I would suggest that this quotation alludes to Mill's contributions to and understanding of utilitarianism. Utilitarianism, at its most basic, is the claim that ethical decision making ought to be decided through a kind of moral mathematics, weighing the happiness accrued from any given action against the suffering that results. The ideal would be the maximization of happiness for minimal suffering.

Key to Mill's thought, however, is his claim that pleasure must not be weighted all the same, but rather must be judged according to quality as well as quantity. For Mill, there is a kind of scale, and this scale is alluded to in your given paragraph. Socrates is educated, dedicating his life to the intellect and to the search of meaning, and in this, his life is more fulfilling than that of the fool's, and thus, his happiness is weighted as being of a higher quality. Similarly, the pig might be thoroughly happy in its animal state, but its existence and experience will not be equal to that of a human being.

Note, however, that this vision of utilitarianism has very real real-world implications. For Mill, the highest forms of happiness seem to relate to those that contribute to human flourishing and self-actualization, and this perspective does seem to be reflected in the political causes which Mill upheld and defended in his lifetime. Perhaps most notably, and in this he was far ahead of his time, was his defense of the cause of women's rights, and this vision of utilitarianism is reflected in his thinking on this subject. For Mill, those higher forms of happiness, related to the experience of self-actualization, would have been precisely the types of happiness barred to women by the cult of domesticity.

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In this paragraph from chapter 2 of Utilitarianism, Mill is attempting to address one of the most common objections made by critics of utilitarianism. The objection is that utilitarianism is shallowly hedonistic, placing pleasure above all other values. Mill proposes a hierarchy of pleasure, saying that the type of pleasure you obtain from listening to a complex symphony or reading great literature, for example, is of a higher order than the pleasure you derive from eating your favorite food. From this idea, he extrapolates the point that there are superior beings, capable of great intellectual and aesthetic pleasure, and inferior ones, whose pleasures are merely sensual.

At this point, Mill makes the more controversial claim that appears here. The inferior being is easily satisfied, but the superior being is so much higher, and his capacity for pleasure so much greater, that it is better to be the superior being and remain unsatisfied. This is only apparent to the superior being, since the inferior being does not know what he is missing.

The weakness of Mill's argument here is that it is purely an assertion which depends upon the reader identifying himself as a superior being and deciding that he would never wish to be a pig or a fool. If the reader is not persuaded by Mill's rhetoric, the case falls flat.

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Looking at the inverse of the statement may be instructive here. Maybe the wiser creature would be more intensely dissatisfied when dissatisfied, knowing as it does the benefits of satisfaction, compared to the creature with less wisdom and less awareness of a state that does not currently characterize it. 

Maybe the statement really comes down to the idea that wisdom allows one to dwell in multiple states hypothetically and a lack of wisdom restricts or fails this possibility. 

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Mill is playing with the word "satisfaction" and its various meanings. He argues that if we are a "lower form," satisfaction is easily attained in ignorance. However, "higher forms" are distinguished by their constant search for answers and their rejection of simplicity and ignorance.

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The way to satisfaction is the collection of information regardless of intellect.  The more one knows of both sides, the more one may be able to weigh the pros and cons, thus becoming more satisfied with his or her situation and life.  The best way to understand and to offer compromise (thus, Peace), is to walk a mile in the other person's shoes.  Ask questions, collect information, and weigh both sides of the issue in order to be resolved.

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I think this quotation states that intelligence leads to satisfaction.  The more you know, the better off you will be.  Ignorance is not bliss.  More intelligent beings and people have a better chance of being self-actualized.  I would agree to a certain extent, but not so far as to equate satisfaction with happiness.

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I think the last part is the most important. The paragraph implies that only when you can see both sides, when you can weigh the options, when you have choices are you the most satisfied. The comparisons at the start of the paragraph are showing that the more you are aware of your many choices the more satisfied you will be.

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Mill is saying here that the "higher" a being, the more satisfying their life.  A human is higher than a pig, Socrates is higher than a fool.  In both cases, he says, it's better to be the higher being.  The last sentence means that lower people might think they have it better, but that is only because they are not actually able to compare the two states whereas the higher person can compare them and knows he/she has it better.

This comes from a chapter in which Mill is explaining why it is better to have choices and to be more thoughtful than it is to have fewer choices and go through life without thinking.

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