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Vilfredo Pareto

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Vilfredo Pareto
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|birth_place = Paris, France1923197df=y}}|death_place = Céligny, SwitzerlandPolytechnic University of Turin>Technical School for Engineers in Turin|institutions = University of LausanneItaly>Italian|field = MicroeconomicsSocioeconomicsNiccolò MachiavelliMaffeo Pantaleoni>Auguste ComteHerbert Spencer>Leon Walras}}Luigi AmorosoOskar R. Lange>Chester BarnardAlain de Benoist>Henry Ludwell MooreMaurice Allais>Alfred MarshallNorberto Bobbio>Gaetano Mosca}}|contributions = Pareto indexPareto chartPareto principlePareto efficiencyPareto distribution|signature = Vilfredo Pareto signature.png}}Vilfredo Federico Damaso Pareto ({{IPAc-en|p|ə|ˈ|r|ɛ|t|oʊ}}; {{IPA-it|vilˈfreːdo paˈreːto|lang}}; born Wilfried Fritz Pareto, 15 July 1848 – 19 August 1923) was an Italian engineer, sociologist, economist, political scientist, and philosopher. He made several important contributions to economics, particularly in the study of income distribution and in the analysis of individuals' choices. He was also responsible for popularising the use of the term "elite" in social analysis.He introduced the concept of Pareto efficiency and helped develop the field of microeconomics. He was also the first to discover that income follows a Pareto distribution, which is a power law probability distribution. The Pareto principle was named after him, and it was built on observations of his such as that 80% of the land in Italy was owned by about 20% of the population. He also contributed to the fields of sociology and mathematics, according to the mathematician Benoit Mandelbrot and Richard L. Hudson:}}

Biography

Pareto was born of an exiled noble Genoese family in 1848 in Paris, the centre of the popular revolutions of that year. His father, Raffaele Pareto (1812–1882), was an Italian civil engineer and Ligurian marquis who had left Italy much like Giuseppe Mazzini and other Italian nationalists.JOURNAL, Amoroso, Luigi, Vilfredo Pareto, Econometrica, January 1938, 6, 1, 1–21, 1910081, 10.2307/1910081, His mother, Marie Metenier, was a French woman. Enthusiastic about the 1848 German revolution, his parents named him Fritz Wilfried, which became Vilfredo Federico upon his family's move back to Italy in 1858.BOOK, van Suntum, Ulrich, The Invisible Hand, 3-540-20497-0, Springer, 2005, 30, In his childhood, Pareto lived in a middle-class environment, receiving a high standard of education, attending the new created Istituto Tecnico Leardi where Fernando Pio Rosellini was his mathematics professor.JOURNAL, Giacalone-Monaco, Tommaso, Ricerche intorno alla giovinezza di Vilfredo Pareto, 23239355, it, Giornale degli Economisti e Annali di Economia, 25, 1/2, 1966, 97–104, 0017-0097, In 1869, he earned a doctor's degree in engineering from what is now the Polytechnic University of Turin (then the Technical School for Engineers). His dissertation was entitled "The Fundamental Principles of Equilibrium in Solid Bodies". His later interest in equilibrium analysis in economics and sociology can be traced back to this paper.

From civil engineer to classical liberal economist

For some years after graduation, he worked as a civil engineer, first for the state-owned Italian Railway Company and later in private industry. He was manager of the Iron Works of San Giovanni Valdarno and later general manager of Italian Iron Works.He did not begin serious work in economics until his mid-forties. He started his career a fiery advocate of classical liberalism, besting the most ardent British liberals with his attacks on any form of government intervention in the free market. In 1886, he became a lecturer on economics and management at the University of Florence. His stay in Florence was marked by political activity, much of it fueled by his own frustrations with government regulators. In 1889, after the death of his parents, Pareto changed his lifestyle, quitting his job and marrying a Russian, Alessandrina Bakunina. She left him in 1902 for a young servant.

Economics and sociology

In 1893, he succeeded Léon Walras to the chair of Political Economy at the University of Lausanne in Switzerland where he remained for the rest of his life. In 1906, he made the famous observation that twenty percent of the population owned eighty percent of the property in Italy, later generalised by Joseph M. Juran into the Pareto principle (also termed the 80–20 rule). In one of his books published in 1909 he showed the Pareto distribution of how wealth is distributed, he believed "through any human society, in any age, or country".BOOK, Mandelbrot, Benoit, Richard L Hudson, The (Mis)behavior of Markets :A Fractal View of Risk, Ruin, and Reward, 2004, Basic Books, New York, He maintained cordial personal relationships with individual socialists, but always thought their economic ideas were severely flawed. He later became suspicious of their humanitarian motives and denounced socialist leaders as an 'aristocracy of brigands' who threatened to despoil the country and criticized the government of Giovanni Giolitti for not taking a tougher stance against worker strikes. Growing unrest among labor in Italy led him to the anti-socialist and anti-democratic camp.JOURNAL, 10.1080/03085149000000016, Bellamy, Richard, 1990, From Ethical to Economic Liberalism – The Sociology of Pareto's Politics, Economy and Society, 19, 4, 431–55, His attitude toward fascism in his last years is a matter of controversy.JOURNAL, Was Vilfredo Pareto Really a 'Precursor' of Fascism?, American Journal of Economics and Sociology, 42, 2, 235, 3486644, 10.1111/j.1536-7150.1983.tb01708.x, Vilfredo Pareto has been labeled a fascist and 'a precursor of fascism' largely because he welcomed the advent of fascism in Italy and was honored by the new regime. Some have seen in his sociological works the foundations of fascism. This is not correct. Even fascist writers did not find much merit in these works, and definitely condemned his economic theories. As a political thinker he remained a radical libertarian till the end, and continued to express serious reservations about fascism, and to voice opposition to its basic policies. This is evident from his correspondence with his close friends. There are strong reasons to believe that, had he lived long enough, Pareto would have revolted against fascism, 1983, Cirillo, Renato, JOURNAL, The Four Paretos of Raymond Aron, Journal of the History of Ideas, 47, 2, 287, 2709815, 10.2307/2709815, 1986, Campbell, Stuart L, Pareto's relationship with scientific sociology in the age of the foundation is grafted in a paradigmatic way in the moment in which he, starting from the political economy, criticizes positivism as a totalizing and metaphysical system devoid of a rigorous logical-experimental method. In this sense we can read the fate of theParetian production within a history of the social sciences that continues to show its peculiarity and interest for its contributions in the 21st century (Giovanni Busino, Sugli studi paretiani all'alba del XXI secolo in Omaggio a Vilfredo Pareto, Numero monografico in memoria di Giorgio Sola a cura di Stefano Monti Bragadin, "Storia Politica Società", Quaderni di Scienze Umane, anno IX, n. 15, giugno-dicembre 2009, p. 1 e sg.)) . The story of Pareto is also part of the multidisciplinary research of a scientific model that privileges sociology as a critique of cumulative models of knowledge as well as a discipline tending to the affirmation of relational models of science (Guglielmo Rinzivillo, Vilfredo Pareto e i modelli interdisciplinari nella scienza, "Sociologia", A. XXIX, n. 1, New Series, 1995, pp. 2017–222 see also in Guglielmo Rinzivillo, Una epistemologia senza storia, Rome, New Culture, 2013, pp. 13–29, {{ISBN|978-88-6812-222-5}}).

Personal life

In 1923 Pareto remarried with Jeanne Regis, just before he died in Geneva, Switzerland, 19 August 1923,WEB,weblink The Encyclopedia Sponsored by Statistics and Probability Societies, StatProb, 19 August 1923, 4 November 2015, yes,weblink" title="web.archive.org/web/20160304204438weblink">weblink 4 March 2016, "among a menagerie of cats that he and his French lover kept" in their villa; "the local divorce laws prevented him from divorcing his wife and remarrying until just a few months prior to his death".

Sociology

Pareto's later years were spent in collecting the material for his best-known work, Trattato di sociologia generale (1916) (The Mind and Society, published in 1935). His final work was Compendio di sociologia generale (1920).In his Trattato di Sociologia Generale (1916, rev. French trans. 1917), published in English by Harcourt, Brace in a four-volume edition edited by Arthur Livingston under the title The Mind and Society (1935), Pareto developed the notion of the circulation of elites, the first social cycle theory in sociology. He is famous for saying "history is a graveyard of aristocracies".Rossides, Daniel W. (1998) Social Theory: Its Origins, History, and Contemporary Relevance. Rowman & Littlefield. p. 203. {{ISBN|1882289501}}.Pareto seems to have turned to sociology for an understanding of why his abstract mathematical economic theories did not work out in practice, in the belief that unforeseen or uncontrollable social factors intervened. His sociology holds that much social action is nonlogical and that much personal action is designed to give spurious logicality to non-rational actions. We are driven, he taught, by certain "residues" and by "derivations" from these residues. The more important of these have to do with conservatism and risk-taking, and human history is the story of the alternate dominance of these sentiments in the ruling elite, which comes into power strong in conservatism but gradually changes over to the philosophy of the "foxes" or speculators. A catastrophe results, with a return to conservatism; the "lion" mentality follows. This cycle might be broken by the use of force, says Pareto, but the elite becomes weak and humanitarian and shrinks from violence.Aron, Raymond. (1967) Main Currents in Sociological Thought: Durkheim, Pareto, Weber – Vol. 2 online edition; excerpt and text searchPareto's sociology was introduced to the United States by George Homans and Lawrence J. Henderson at Harvard, and had considerable influence, especially on Harvard sociologist Talcott Parsons, who developed a systems approach to society and economics that argues the status quo is usually functional.Homans, George C., and Charles P. Curtis Jr. (1934) An Introduction to Pareto: His Sociology. Alfred A. Knopf. New York.Pareto was a lifelong opponent of Marxism.WEB,weblink Vilfredo Pareto – An Overview, Jkalb.freeshell.org, 4 November 2015,

Fascism and power distribution

Benoît Mandelbrot wrote:{{rp|153}}}}Pareto had argued that democracy was an illusion and that a ruling class always emerged and enriched itself. For him, the key question was how actively the rulers ruled. For this reason he called for a drastic reduction of the state and welcomed Benito Mussolini's rule as a transition to this minimal state so as to liberate the "pure" economic forces.BOOK, Contemporary Political Ideologies, Eatwell, Roger, Anthony Wright, Continuum, London, 1999, 38–39, 082645173X, Mandelbrot summarized Pareto's notions as follows:}}The future leader of Italian fascism Benito Mussolini, in 1904, when he was a young student, attended some of Pareto's lectures at the University of Lausanne. It has been argued that Mussolini's move away from socialism towards a form of "elitism" may be attributed to Pareto's ideas.BOOK, Di Scala, Spencer M., Gentile, Emilio, Mussolini 1883-1915: Triumph and Transformation of a Revolutionary Socialist, Palgrave Macmillan, USA, 2016, 978-1-137-53486-6, To quote Franz Borkenau, a biographer:{{rp|18}}}}Karl Popper dubbed Pareto the "theoretician of totalitarianism",Mandelbrot, Benoit; Richard L Hudson (2004). The (mis)behavior of markets : a fractal view of risk, ruin, and reward. New York: Basic Books. pp. 152–155. {{ISBN|0465043577}}. but, according to Cirillo, there is no evidence in Popper's published work that he read Pareto in any detail before repeating what was then a common but dubious judgment in anti-fascist circles.Some fascist writers, such as Luigi Amoroso, wrote approvingly of Pareto's ideas:Author Renato Cirillo argued, on the contrary, that:

Economic concepts

Pareto Theory Of Maximum EconomicsPareto turned his interest to economic matters and he became an advocate of free trade, finding himself in difficulty with the Italian government. His writings reflected the ideas of Léon Walras that economics is essentially a mathematical science. Pareto was a leader of the "Lausanne School" and represents the second generation of the Neoclassical Revolution. His "tastes-and-obstacles" approach to general equilibrium theory was resurrected during the great "Paretian Revival" of the 1930s and has influenced theoretical economics since.Cirillo, Renato (1978) The Economics of Vilfredo ParetoIn his Manual of Political Economy (1906) the focus is on equilibrium in terms of solutions to individual problems of "objectives and constraints". He used the indifference curve of Edgeworth (1881) extensively, for the theory of the consumer and, another great novelty, in his theory of the producer. He gave the first presentation of the trade-off box now known as the "Edgeworth-Bowley" box.Mclure, Michael (2001) Pareto, Economics and Society: The Mechanical Analogy.Pareto was the first to realize that cardinal utility could be dispensed with and economic equilibrium thought of in terms of ordinal utilityJOURNAL, Aspers, Patrik, Crossing the Boundary of Economics and Sociology: The Case of Vilfredo Pareto, The American Journal of Economics and Sociology, April 2001, 60, 2, 519–45, 3487932, 10.1111/1536-7150.00073, – that is, it was not necessary to know how much a person valued this or that, only that he preferred X of this to Y of that. Utility was a preference-ordering. With this, Pareto not only inaugurated modern microeconomics, but he also demolished the alliance of economics and utilitarian philosophy (which calls for the greatest good for the greatest number; Pareto said "good" cannot be measured). He replaced it with the notion of Pareto-optimality, the idea that a system is enjoying maximum economic satisfaction when no one can be made better off without making someone else worse off. Pareto optimality is widely used in welfare economics and game theory. A standard theorem is that a perfectly competitive market creates distributions of wealth that are Pareto optimal.JOURNAL, 10.1080/00220485.1991.10844705, 1182422, How Well Do We Know Pareto Optimality?, The Journal of Economic Education, 22, 2, 172, 2014, Mathur, Vijay K,

Concepts

Some economic concepts in current use are based on his work:
  • The Pareto index is a measure of the inequality of income distribution.
He argued that in all countries and times, the distribution of income and wealth is highly skewed, with a few holding most of the wealth. He argued that all observed societies follow a regular logarithmic pattern:
  1. log N = log A + m log x
where N is the number of people with wealth higher than x, and A and m are constants. Over the years, Pareto's Law has proved remarkably close to observed data.
  • The Pareto chart is a special type of histogram, used to view causes of a problem in order of severity from largest to smallest. It is a statistical tool that graphically demonstrates the Pareto principle or the 80–20 rule.
  • Pareto's law concerns the distribution of income.
  • The Pareto distribution is a probability distribution used, among other things, as a mathematical realization of Pareto's law.
  • Ophelimity is a measure of purely economic satisfaction.

Major works

  • Vilfredo Pareto. Cours d'Économie Politique Professé a l'Université de Lausanne. Vol. I, 1896; Vol. II, 1897.
  • Vilfredo Pareto. Les Systèmes Socialistes. 1902.
  • Vilfredo Pareto. Manual of Political Economy. 1906.
  • Vilfredo Pareto. Trattato Di Sociologia Generale (4 vols.). G. Barbéra, 1916.

Works in English translation

Articles

See also

References

{{Reflist}}

Further reading

  • Amoroso, Luigi. "Vilfredo Pareto," Econometrica, Vol. 6, No. 1, Jan. 1938.
  • Bruno, G. (1987). "Pareto, Vilfredo" (The New Palgrave: A Dictionary of Economics), v. 5, pp. 799–804.
  • ENCYCLOPEDIA, Buchanan, James, James M. Buchanan, Ronald, Hamowy, Ronald Hamowy, The Encyclopedia of Libertarianism, Italian Economic Theorists,weblink 2008, SAGE Publications, SAGE; Cato Institute, Thousand Oaks, CA, 10.4135/9781412965811.n156, 978-1-4129-6580-4, 750831024, 2008009151, 258–60, Italian Fiscal Theorists,
  • Busino, Giovanni. The Signification of Vilfredo Pareto’s Sociology, Revue Européenne des Sciences Sociales, XXXVIII, 2000.
  • Eisermann, G.(2001). "Pareto, Vilfredo (1848–1923)", International Encyclopedia of the Social & Behavioral Sciences, pp. 11048–51. Abstract.
  • Femia, Joseph V. Pareto and Political Theory (2006) excerpt and text search{{dead link|date=July 2016 |bot=InternetArchiveBot |fix-attempted=yes }}
  • Kirman, A. P. (1987). "Pareto as an economist" The New Palgrave: A Dictionary of Economics, v. 5, pp. 804–08.
  • Livingston, Arthur. "Vilfredo Pareto: A Biographical Portrait," The Saturday Review, 25 May 1935.
  • Millikan, Max. "Pareto's Sociology," Econometrica, Vol. 4, No. 4, Oct. 1936.
  • Osipova, Elena; Translated by H. Campbell Creighton, M.A. (Oxon) (1989) "The Sociological System of Vilfredo Pareto" in Igor Kon (ed.) A History of Classical Sociology Moscow: Progress Publishers pp. 312–36
  • Palda, Filip (2011) Pareto's Republic and the New Science of Peace 2011 weblink chapters online. Published by Cooper-Wolfling. {{ISBN|978-0-9877880-0-9}}
  • Parsons, Talcott. The Structure of Social Action, The Free Press, 1949.
  • Tarascio, Vincent J. (1968) Pareto's Methodological Approach to Economics: A Study in the History of Some Scientific Aspects of Economic Thought 1968 online edition
  • Forte F., Silvestri P., Pareto's sociological maximum of utility of the community and the theory of the elites, in J. G. Backhaus (ed.), Essentials of Fiscal Sociology. Conceptions of an Encyclopedia, Peter Lang, Frankfurt am Main, 2013, pp. 231–65.

Primary sources

  • JOURNAL, The Mind and Society [Trattato Di Sociologia Generale], Vilfredo, Pareto, Harcourt, Brace, 1935,

External links

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