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Vilfredo Pareto
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| Biography: Vilfredo Pareto |
The Italian sociologist, political theorist, and economist Vilfredo Pareto (1848-1923) is chiefly known for his influential theory of ruling elites and for his equally influential theory that political behavior is essentially irrational.
Vilfredo Pareto was born in Paris on July 15, 1848. His father, an aristocratic Genoese, had gone into political exile in France about 1835 because he supported the Mazzinian republican movement. He returned to Piedmont in 1855, where he worked as a civil engineer for the government. Vilfredo followed his father's profession after graduating from the Polytechnic Institute at Turin in 1869. He worked as director of the Rome Railway Company until 1874, when he secured an appointment as managing director of an iron-producing company with offices in Florence.
In 1889 Pareto married a Russian girl, Dina Bakunin, resigned his post with the iron company for a consultancy, and for the next 3 years wrote and spoke against the protectionist policy of the Italian government domestically and its military policies abroad. His reputation as a rebellious activist led to an intimate acquaintance with the economist Maffeo Pantaleoni. This association led to Pareto's interest in pure economics, a field in which he quickly became proficient and well known. His reputation gained him an appointment in 1893 to the prestigious post of professor of political economy at Lausanne University.
In 1894 Pareto published his first noted work, Cours d'économie politique, which evoked a great deal of commentary from other economists. Two years later he inherited a small fortune from an uncle, a windfall which caused him to think of retiring to pursue research. At this point he began to develop the theories for which he is most famous, elitism and irrationalism in politics.
In his own earlier political career Pareto had been an ardent activist in behalf of democracy and free trade, as had been his father before him. The reasons for the marked change in his political outlook have been much disputed, ranging from the Neo-Freudian analytical account, to the interpretation which stresses certain developments in his own career, to the explanation which maintains that, quite simply, he changed because of the results of his own vast studies. By the time his next book, The Manual of Political Economy, was published in 1906, his ideas on elites and irrationalism were already well developed. The following year he resigned from his chair of political economy at Lausanne to devote all his energies to researching his theories.
Pareto retired to his villa at Celigny, where he lived a solitary existence except for his 18 Angora cats (the villa was named "Villa Angora") and his friend Jane Régis, a woman 30 years younger than he who had joined his household in 1901, when his wife left him. In 1907 he began writing his most famous and quite influential work, The Treatise on Sociology; he completed it in 1912 and published it in 1916. (The work was published in English translation as The Mind and Society in 1935 in a four-volume edition.) In 1923 he secured a divorce from his wife and married Jane Régis. Later the same year he died.
Pareto's theory of elitism is sometimes simplistically explained on the basis of his aristocratic heritage. However, as recent scholarship has shown, throughout his life and in his published works he often expressed extreme distaste with the titled Italian aristocracy, just as he was anti-socialist, anti-government-interventionist, anti-colonialist, anti-militarist, anti-racialist, and "anti-anti-Semitic." Attracted to fascism when it first came to power in Italy, he later opposed it. He is perhaps best described as an iconoclastic individualist.
The Mind and Society is at one and the same time a debunking of Marxism and of the bourgeois state. Pareto's method of investigation is inductive or positivistic, contemptuously rejecting natural law, metaphysics, and deductive reasoning. On the basis of very extensive historical and empirical studies, Pareto maintained that in reality and inevitably the true form of government in any state is never a monarchy, hereditary aristocracy, or democracy but that always all social organizations, including states, are governed by a ruling elite. This ruling elite, which has greater vitality and usefulness than other elites, dominates them until it in turn is overturned by a more powerful elite - Pareto's theory of "the circulation of elites." Political behavior itself, both of the masses and of the elites, is basically emotional and nonrational. The function of reason is to justify past behavior or to show the way to future goals, which are determined not by reason but by emotional wants.
Further Reading
Elitism is today, in one variety or another, the leading approach to the analysis of empirical political behavior by political scientists. Consequently, the literature on the subject, and on Pareto, is enormous. A good general introduction is James Burnham, The Machiavellians: Defenders of Freedom (1943). Pareto's name is almost always coupled with Gaetano Mosca's. For an approach which stresses the difference, even antagonism, between the two, see the introduction to James H. Meisel, ed., Pareto and Mosca (1965); the first nine essays in this work discuss various aspects of Pareto's life and work. See also George C. Homans and Charles P. Curtis, An Introduction to Pareto (1934), and Franz Borkenau, Pareto (1936).
Additional Sources
Powers, Charles H., Vilfredo Pareto, Newbury Park, Calif.: Sage Publications, 1987.
Vilfredo Pareto, (1848-1923), Aldershot, Hants, England; Brookfield, Vt., USA: E. Elgar Pub., 1992.
| Political Dictionary: Vilfredo Pareto |
(1848-1923) Italian sociologist and economist. His sociology (The Mind and Society, 1935) was once highly influential, but now only his arguments about the inevitable domination of political structure by elites survive. His work as an economist, by contrast, is much more influential than in his own day. He has given his name to a number of linked concepts which must be carefully distinguished:
(1) The Pareto condition. If a move from state of affairs A to another (B) leaves nobody feeling worse off than before and at least one person feeling better off, the move satisfies the Pareto condition (or criterion or principle), and the move itself is called a Pareto improvement or just Paretian. B is then Pareto-superior to A, which is Pareto-inferior to B.
(2) Pareto-optimality. If there is a state of affairs C such that no (further) Pareto improvements can be made, C is Pareto-optimal. That is, it is a situation in which nobody can be made to feel better off except by making at least one person feel worse off. The set of all Pareto optima is called the Pareto frontier.
The various Paretian concepts are central to welfare economics and social choice, for both technical and ideological reasons. A choice procedure which ranked some A above some B, even though everybody prefers B to A, violates the Pareto principle even in its weakest possible formulation and therefore seems perverse; nevertheless, some apparently reasonable voting procedures do just that. This strange fact is used in the proof of Arrow's impossibility theorem. Ideologically, welfare economists have seized on the Pareto principle because it has seemed value-free. Arguments about redistribution of income and wealth are necessarily value-laden, so it is regarded as uncontroversial to accept all and only Pareto improvements as improvements in welfare. This is linked to a defence of free trade, free markets, and libertarianism. A trade in which P offers money to Q in exchange for R is Paretian: P would rather have the goods than the money and Q would rather have the money than the goods. After the trade, they both feel better off, whether R happens to be an apple, a quantity of shares, or the rent of Q's property for a while.
Critics of the claim that the Pareto concepts are value-free argue variously:
(1) that market transactions may impose external costs on others and/or corrupt the morality of the participants;
(2) that Paretians slide too easily from saying ‘at the Pareto frontier, only transactions which make at least one person feel worse off can be made’ to saying ‘at the Pareto frontier no further exchanges are admissible’, which rules out any form of redistribution and regards all points on the Pareto frontier as equally justifiable; and
(3) that Paretianism and liberalism are actually incompatible at the deepest level (A. Sen, ‘The impossibility of a Paretian liberal’, Journal of Political Economy, 1970).
| Columbia Encyclopedia: Vilfredo Pareto |
Pareto, Vilfredo (vēlfrĕ'dō pärĕ'tō), 1848-1923, Italian economist and sociologist, b. Paris, of an exiled noble family that returned to Italy in 1858. He studied mathematics and engineering in Turin and worked as an engineer for many years, meanwhile becoming increasingly interested in social and economic problems. His economic writings won him (1893) a professorship of political economy at the Univ. of Lausanne. His notable contribution in applying mathematics to economic theory is found especially in Cours d'économie politique (1896-97). In his sociological studies he sought to differentiate the rational and nonrational factors in social action. He used that concept as the basis for his theory of the cyclical development and fall of governing elite groups. One of the originators of welfare economics, he defined total welfare as an improvement in a person's condition that was not achieved at any other person's expense. His chief work in sociology, Trattato di sociologia generale (1916), has been translated as Mind and Society (4 vol., 1935).
Bibliography
See G. C. Homans and C. P. Curtis, Jr., An Introduction to Pareto: His Sociology (1934, repr. 1970); study by F. Borkenau (1936); J. H. Meisel, ed., Pareto and Mosca (1965); R. Cirillo, The Economics of Vilfredo Pareto (1979); J. Freund, Pareto (tr. 1988).
| Quotes By: Vilfredo Pareto |
Quotes:
"Give me a fruitful error anytime, full of seeds, bursting with its own corrections."
| Wikipedia: Vilfredo Pareto |
| Lausanne School | |
|---|---|
 |
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| Birth | 15 July 1848 |
| Death | 19 August 1923 (aged 75) |
| Nationality | Italian |
| Field | Microeconomics Socioeconomics |
| Influenced | Luigi Amoroso |
| Contributions | Pareto index Pareto chart Pareto's law Pareto efficiency Pareto distribution Pareto principle |
Vilfredo Federico Damaso Pareto (Italian pronunciation: [vilˈfreːdo paˈreːto]; 15 July 1848 – 19 August 1923), born Wilfried Fritz Pareto, was an Italian industrialist, sociologist, economist, and philosopher. He made several important contributions to economics, particularly in the study of income distribution and in the analysis of individuals' choices. "His legacy as an economist was profound. Partly because of him, the field evolved from a branch of social philosophy as practiced by Adam Smith into a data intensive field of scientific research and mathematical equations. His books look more like modern economics than most other texts of that day: tables of statistics from across the world and ages, rows of integral signs and equations, intricate charts and graphs."[1] He introduced the concept of Pareto efficiency and helped develop the field of microeconomics. He also was 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 built on observations of his such as that 80% of the land in Italy was owned by 20% of the population. He also contributed to the fields of sociology and mathematics.
Contents |
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; his mother, Marie Metenier, 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.[2] In his childhood, Pareto lived in a middle-class environment, receiving a high standard of education. In 1867, he earned a degree in mathematical sciences and in 1870 a doctorate in engineering from what is now the Polytechnic University of Turin. 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.
Civil engineer to liberal to 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 did not begin serious work in economics until his mid-forties. He started his career a fiery liberal, 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 Bakunin. She later left him for a young servant.
Economics and sociology
In 1893, he was appointed a lecturer in economics 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".[3] Later in life he began writing numerous polemical articles against the government, which caused him much trouble. His observations about the Pareto distribution had changed him from an ardent free enterprise apologist to somewhat of a socialist, and after his death a champion of Italian and other fascists.[4]
Personal Life
In the 1920s Pareto remarried. He died in Geneva, Switzerland, 19 August 1923, "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 before his death."[4]
Sociology
In his Trattato di Sociologia Generale (1916, rev. French trans. 1917) published in English under the title The Mind and Society (1935), he put forward the first social cycle theory in sociology. He is famous for saying "history is a graveyard of aristocracies".
A great deal of Talcott Parsons' theory of society is based on Pareto's works. Parsons aimed at a sociology canon made of Emile Durkheim, Max Weber, and Pareto.
Fascism and power distribution
Benoît Mandelbrot writes:
"One of Pareto's equations achieved special prominence, and controversy. He was fascinated by problems of power and wealth. How do people get it? How is it distributed around society? How do those who have it use it? The gulf between rich and poor has always been part of the human condition, but Pareto resolved to measure it. He gathered reams of data on wealth and income through different centuries, through different countries: the tax records of Basel, Switzerland, from 1454 and from Augsburg, Germany in 1471, 1498 and 1512; contemporary rental income from Paris; personal income from Britain, Prussia, Saxony, Ireland, Italy, Peru. What he found -- or thought he found -- was striking. When he plotted the data on graph paper, with income on one axis, and number of people with that income on the other, he saw the same picture nearly everywhere in every era. Society was not a "social pyramid" with the proportion of rich to poor sloping gently from one class to the next. Instead it was more of a "social arrow" -- very fat on the bottom where the mass of men live, and very thin at the top where sit the wealthy elite. Nor was this effect by chance; the data did not remotely fit a bell curve, as one would expect if wealth were distributed randomly. "It is a social law," he wrote: something "in the nature of man".[4]
Pareto's discovery that power laws applied to income distribution embroiled him in political change and the nascent fascist movement, whether he really sided with them or not. Fascists such as Mussolini found inspiration for their own economic ideas in his discoveries. He had discovered something that was harsh and Darwinian, in Pareto's view. And this fueled both the anger and the energy of the Fascist movement because it fueled their economic and social views. He wrote that, as Mandelbrot summarizes:
"At the bottom of the Wealth curve, he wrote, Men and Women starve and children die young. In the broad middle of the curve all is turmoil and motion: people rising and falling, climbing by talent or luck and falling by alcoholism, tuberculosis and other kinds of unfitness. At the very top sit the elite of the elite, who control wealth and power for a time -- until they are unseated through revolution or upheaval by a new aristocratic class. There is no progress in human history. Democracy is a fraud. Human nature is primitive, emotional, unyielding. The smarter, abler, stronger, and shrewder take the lion's share. The weak starve, lest society become degenerate: One can, Pareto wrote, 'compare the social body to the human body, which will promptly perish if prevented from eliminating toxins.' Inflammatory stuff -- and it burned Pareto's reputation."[4]
Vilfredo 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.[5]
He had calculated a power curve and an alpha of 3/2 for the slope of that line. And he thought from the measures and his calculations that he'd found an "iron law" though in reality he'd discovered something more prosaic. People since then have gone back and recalculated the slope, found it varied from place to place and time to time, and should be closer to 2.[4]
To quote Pareto's biographer:
"In the first years of his rule Mussolini literally executed the policy prescribed by Pareto, destroying political liberalism, but at the same time largely replacing state management of private enterprise, diminishing taxes on property, favoring industrial development, imposing a religious education in dogmas".[6]
Karl Popper called him the "Theoretician of Totalitarianism".[4]
Pareto was sympathetic to Mussolini, largely because Mussolini claimed to be championing ideas congruent to the ones he had just expressed and Mussolini had admired his ideas. He accepted a "royal" nomination to the Italian senate from his admirer, Mussolini. We will never know if he truly was a supporter of Fascism because he died less than a year into the new regime's existence. However, on being sent an anti-Semitic book, Pareto's reply indicated no repulsion for it.[7]
The fascist writers were much enamoured of Pareto, writing paeans such as the following of his:
"Just as the weaknesses of the flesh delayed, but could not prevent, the triumph of Saint Augustine, so a rationalistic vocation retarded but did not impede the flowering of the mysticism of Pareto. For that reason, Fascism, having become victorious, extolled him in life, and glorifies his memory, like that of a confessor of its faith."[8]
But the truth is he'd simply quantified an observation of the human condition. In most societies a few people are outrageously rich, a small number very rich, most people in the middle or poor.
Economic rules
A few economic rules are based on his work:
- The Pareto index is a measure of the inequality of income distribution.
- 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.
See also
References
- G. Bruno (1987). “Pareto, Vilfredo" The New Palgrave: A Dictionary of Economics, v. 5, pp. 799–804.
- G. Eisermann (2001). "Pareto, Vilfredo (1848–1923," International Encyclopedia of the Social & Behavioral Sciences, pp. 11048–11051. Abstract.
- A. P. Kirman (1987). “Pareto as an economist" The New Palgrave: A Dictionary of Economics, v. 5, pp. 804–08.
- Pareto, Vilfredo (1935), The Mind and Society [Trattato Di Sociologia Generale], Harcourt, Brace.
- ^ Mandelbrot, Benoit; Richard L Hudson (2004). The (mis)behavior of markets : a fractal view of risk, ruin, and reward. New York: Basic Books. p. 153.
- ^ van Suntum, Ulrich (2005). The Invisible Hand. Springer. pp. 30. ISBN 3540204970.
- ^ Mandelbrot, Benoit; Richard L Hudson (2004). The (mis)behavior of markets : a fractal view of risk, ruin, and reward. New York: Basic Books.
- ^ a b c d e f 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.
- ^ Eatwell, Roger; Anthony Wright (1999). Contemporary Political Ideologies. London: Continuum. pp. 38-39.
- ^ Borkenau, Franz (1936). Pareto. New York: John Wiley & Sons. p. 18.
- ^ Wood, John Cunningham; Michael McLure (1999). Vilfredo Pareto : critical assessments of leading economists. London: Routledge. p. 331.
- ^ Amoroso, Luigi (1938). "Vilfredo Pareto". Econometrica 6 (1): 21.
External links
- Further information from New School University
- Review materials for studying Vilfredo Pareto
- Vilfredo Pareto Biography at the Concise Encyclopedia of Economics. Library of Economics and Liberty, Econlib
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