Vilfredo Pareto Essay

Vilfredo Federico Pareto (1848–1923) was an Italian sociologist and economist. He is known for helping to develop the theory of political elitism, as well as many concepts in the field of economics.

After receiving a degree in mathematics and a doctorate in engineering, Pareto began writing on economic problems and studying politics and philosophy. During time spent in Florence, he was politically active in opposing the ruling Italian Democratic Party. His views reflected classical liberalism, rejecting government intervention in the free market. He was considered, along with French Swiss economist Leon Walras, the leader of the Lausanne school, a school of microeconomics based on equilibrium theory. This theory states that in the free market, prices of all goods, including the price of money and interest, are interrelated.

Pareto joined the faculty of the University of Florence in 1886 as a lecturer on economics and management. After resigning from this position, he began writing and speaking against the government. His critiques made it impossible for him to obtain another academic position in Italy and the police often disrupted his public lectures. He became chair of political economy at the University of Lausanne in Switzerland. In Lausanne, Pareto continued his criticism of the Italian government’s economic policies through his column in the journal Giornale degli Economisti.

Though Pareto was never a member of the Fascist Party, his ideas were admired by Italian dictator Benito Mussolini, who had attended some of Pareto’s lectures at Lausanne, and Mussolini’s followers. After Mussolini came to power, he nominated Pareto for a seat in the Italian senate and designated him as a delegate to the Geneva Conference on Disarmament. Due to poor health, Pareto declined these appointments but did, through written correspondence, offer Mussolini advice on economic and social policy.

Pareto was a significant contributor to the fields of economics and sociology. He published Cours d’economie politique, a three-volume work (1896, 1897), which was a compilation of his lecture notes. In this work, he offered Pareto’s law of income distribution. According to Pareto, the distribution of income and wealth followed a logarithm: log N = log A + m log x, where N is the number of income earners who receive incomes higher than x, and A and m are constants. Pareto also questioned the concept of utility, suggesting that when people make economic decisions, they are guided by what they think is desirable for them, not what necessarily corresponds to their well-being. He developed what has become known as Pareto optimality. The Pareto optimal allocation of resources occurs when it is not possible to make someone better without making someone else worse.

In 1916, Pareto wrote Trattato di Sociologia Generale (English translation published in 1935 as The Mind and Society). In this work, he contends that human activity could be reduced to what he called residue, referring to actions based on nonlogical sentiment, and derivation, which stood for the logic people offered for their actions after the fact. It was also in this work that he explained his idea of “circulation of elites,” whereby governments were in equilibrium when there was an equal number of what he considered class-1 people (those who favored innovation) and class-2 types (conservatives) serving in the government. Pareto believed that when the government is dominated by one of these classes of people, eventually the opposing class will take power.

Along with Italian philosopher Gaetano Mosca and German sociologist Robert Michels, Pareto is considered part of the Italian school of elite theorists.

Bibliography:

  1. Borkenau, Franz. Pareto. New York:Wiley, 1936.
  2. Homans, George C., and Charles P. Curtis Jr. An Introduction to Pareto. New York: Knopf, 1934.
  3. Pareto,Vilfredo. Manual of Political Economy. Edited by Ann S. Schwier and Alfred N. Page. New York: A. M. Kelley, 1971.
  4. The Mind and Society [Trattato di sociologia generale]. Edited by Arthur Livingston. London: Jonathan Cape, 1935.
  5. The Rise and Fall of the Elites. Totowa, N.J.: Bedminster, 1968.
  6. The Ruling Class in Italy before 1900. New York:Vanni, 1950.
  7. Sociological Writings. New York: Praeger, 1966.

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