Book III Chapter 1
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Dickens views the utilitarianism exemplified in the Gradgring school to be antithetical to the less rational human qualities. Not only is it harmful to the individual and society to pursue such strict utilitarianism, but it's also based on a fallacy since humans are much fuller creatures. James Harthouse has come to town to work for the school. But James is obsessed with Louisa and finds himself shocked at the way Sissy bests him despite her "low standing." The "rules" he has accepted as universal truth are not so firm, it seems. Harthouse is not a pretty character - he's characterized by ugly qualities and just hides it behind a sheen of utilitarianism. So the latter is a lie, which is what Dickens wants to suggest.