Vilfredo Pareto

Works

• 1906Manual of Political Economy

  Develops general-equilibrium economics on the basis of choices and indifference curves and defines the state in which no one can be made better off without making someone worse off.

• 1916Treatise on General Sociology (The Mind and Society)

  A large study of non-logical action: lasting sentiments (“residues”) and the justifications built on them (“derivations”) explain much of social life and the rise and fall of elites.

Position

Pareto is on the map for two bodies of work that are rarely read together. As an economist of the Lausanne school he developed Walras’s theory of general equilibrium and, using Edgeworth’s indifference curves, based it on the ranking of choices rather than on measurable utility. In the “Manual” (1906) he defined the state in which no one can be made better off without making someone else worse off; welfare economics adopted this as the Pareto criterion, Rawls discussed it as the principle of efficiency in “A Theory of Justice”, and Amartya Sen showed its conflict with minimal liberal rights (1970). As a sociologist he held that most action is non-logical: constant “residues” are clothed in changing “derivations”, and governing elites – cunning “foxes” and forceful “lions”, an image taken from Machiavelli – rise and decay; history, he wrote, is a graveyard of aristocracies. Talcott Parsons counted him among the founders of the theory of action (1937); Mosca accused him of taking over his own theory of the ruling class. The theory of residues has often been criticised as vague and hard to test. In 1923 Pareto welcomed Mussolini’s government but in his last articles demanded that freedom of the press and of teaching be preserved; fascist propaganda claimed him as a forerunner. Whether he can be regarded as a precursor of fascism is disputed (R. Cirillo, 1983).

Life & context

Vilfredo Pareto was born on 15 July 1848 in Paris, the son of a Genoese nobleman who had gone into exile as a follower of Mazzini, and a French mother; the family returned to Italy in the 1850s. He studied mathematics and engineering in Turin and graduated from the engineering school there in 1870. For some twenty years he worked as an engineer and manager, first for the Roman railway company in Florence, then at the head of an iron company in the Valdarno, while campaigning as a liberal for free trade and against the protectionist and military policies of Italian governments. In 1889 he married Alessandra Bakunin. Encouraged by the economist Maffeo Pantaleoni, he turned to economic theory and in 1893 succeeded Léon Walras in the chair of political economy at the University of Lausanne. An inheritance in 1898 made him financially independent, and he settled in Céligny on Lake Geneva; after the end of his first marriage he lived with Jeanne Régis, whom he married in 1923. In poor health, he gradually gave up teaching. In 1923 Mussolini asked him to represent Italy on the disarmament commission of the League of Nations and appointed him a senator, but Pareto did not sign the deed of appointment. He died in Céligny on 19 August 1923.

Further main works

• Course of Political Economy (Cours d’économie politique, 1896–97)
• The Socialist Systems (Les systèmes socialistes, 1902–03)
• The Transformation of Democracy (Trasformazione della democrazia, 1921)