Vilfredo Pareto: An Intellectual Biography Volume III

In the decade following his address at the “Stella” student association in Lausanne and culminating in the publication of the French version of his Manual of Political Economy, Pareto’s conception of theoretical (or “pure”) economics, hitherto constituting an introduction to the field of applied economics which followed broadly in the footsteps of Walras, appears to have undergone a definitive and largely self-sustained development which was distinctly original, even if never disconnected from Pareto’s other interests in the social sciences. Hence, in this chapter, we will describe his ground-breaking theory of choice (Sects. 1.1 and 1.2) as well as the aspects of the Manual which display innovations in relation to Pareto’s economic thinking of the immediately preceding period (Sect. 1.3). We will then characterise the definitive description of pure economics offered by Pareto (Sect. 1.4) together with a selection of his critical—and self-critical—remarks on the discipline (Sect. 1.5).

In 1905, in the Manuale di economia politica (where the proportion of the text dedicated to applied economics is much smaller compared to the Cours d’économie politique, with 30% as compared to 80%), Pareto noted that since “the phenomena studied in pure economics diverge from real-world phenomena … it would be a vain and unreasonable ambition to expect to interpret the latter by reference only to the theories of pure economics”, adding that, in general, “increasingly, the economic system tends to be managed in accordance with the interests of the social classes which dominate the government”. Such considerations helped to open the way towards the wide-ranging and innovative form of sociology which we will examine in Chap. 5; nonetheless, we consider it worthwhile to give an outline here of the practical features of the economic system which attracted the attention of Pareto the applied economist, even if they can be fully understood only from the perspective of Pareto’s very particular brand of sociology. These arguments constitute a development of themes he had already explored in greater or lesser depth, including the theory of international commerce, income distribution, economic crises, the demographic issue, progressive taxation and social welfare. However, there are also a number of new areas such as the notion of the maximum of collective ophelimity in sociology, an outline of the sociological conception of savings, the statistical study of the relationship between economic and social systems, the management of public debt, the possible cooperative management of the Italian railways and strikes.

In the last volume we sought to document the thesis of Pareto’s gradual distancing from his 30-year commitment to liberal activism around the turn of the century, essentially out of his disillusionment at the results which had been achieved or which were achievable.

In this chapter, we intend to trace this fairly rapid and in any case definitive process, which opened the way for a more dispassionate analysis of the political, and more generally the social, scene. To recapitulate briefly, at the end of 1906, Pareto acknowledged, in a rare reference to his own personal feelings, that “a decade or so [ago], [I] started to work on applied economics … and in order to work on applied economics [I] needed to have a party and that party was the liberals”.

As of 1907 Pareto began to voice his conviction that “economics is simply a branch of sociology”, with the suggestion that “purely economic deductions are fairly remote from reality” and therefore provide “only one, often secondary, factor for the resolution of issues which, this notwithstanding, are nevertheless termed economic”. Then, in 1913, Pareto confessed that where in the past he had thought “that economics could be studied independently of sociology”, he now believed that “it is essential to connect economic phenomena with other social phenomena in order to arrive at a theory covering situations arising in the real world”.

Despite the fact that in this period what Pareto wanted to write was not permitted or was not prudent, particularly in regard to the situation in Italy, while what was permitted or prudent he did not choose to write, he paid close attention to the world war as offering the first significant opportunity to put the tools of sociological analysis he had developed in the Treatise on General Sociology to the test. Here we will examine his perspective on war in connection with the international (Sect. 6.1) and with the Italian contexts (Sect. 6.2).

To complete Pareto’s intellectual biography, we may consider it sufficient to provide an overview of Paretology as represented in publications dating to the final period of his life. In this regard it may be stated, paradoxically, that the two works which have most contributed to his lasting fame aroused less interest at the time of their publication than did the Cours d’économie politique. This fact can be explained by the numerous conceptual novelties contained in both the Manual of Political Economy (which also displayed a high level of formal complexity by the standards of the time, even if this was mostly limited to the appendix) and the Treatise on General Sociology (which furthermore was published in the middle of the world war). In the following sections we will summarise what we consider the most interesting among the responses to the Manual (§1), to Socialist systems (§2) and to the Treatise (§3).