Reading and translation

Read the text and answer the following questions:

1. Name Pareto’s most famous works.

2. What is “utility” for him?

3. What is his attitude to ideologies in general?

4. What reason for human activity does he find?

5. What are the main points of Pareto’s theory of society?

6. Why were the Fascists attracted by his works?

7. Speak about the impact Pareto had in sociology and economics.

Vilfredo Pareto

(1848-1923)

V ilfredo Pareto was born in 1848 to an Italian aristocratic family. His father, a Ligurian marchese (marquis) and civil engineer, had fled to Paris in 1835 in self-imposed exile, following the example of Mazzini and other Italian nationalists. Vilfredo was the third child (and first son) of his marriage to a Frenchwoman.

Vilfredo Pareto wrote his famous Cours, where his main economic contribution was his exposition of "Pareto's Law" of income distribution. Over the years, Pareto's Law has proved remarkably resilient in empirical studies. Pareto was also troubled with the concept of "utility". In its common usage, utility meant the well-being of the individual or society, but Pareto realized that when people make economic decisions, they are guided by what they think is desirable for them, whether or not that corresponds to their well-being. Thus, he introduced the term "ophelimity" to replace the worn-out "utility".

In a famous 1900 Rivista article, Pareto declared that all ideologies were just smokescreens foisted by "leaders" who really only aspired to enjoy the privileges and powers of the governing elite. For Pareto, humanitarianism, liberalism, socialism, communism, fascism, whatever, were all the same in the end. Pareto decided to have none of it - and went on a crusade to expose the sham of political ideology and doctrine. He condemned socialists of all stripes roundly in a 1902 book, but took particular aim at logically demolishing the "new gospel" of Marxian economics. As revealed in the Cours and in his own introduction to an abridged 1893 edition of Karl Marx's Capital, Pareto applauded Marxian theories of class struggle and even thought historical materialism was on the right track (albeit not deep and general enough, in his view). But he deplored Marx's Wizard-of-Oz-like conclusion. For Pareto, class struggle is eternal; the promised "classless" society that would emerge under communism was merely ideological fodder for socialist leaders to lay on their flock. Of course, as a good Neoclassical, Pareto could not fathom the labor theory of value either.

In 1906, Pareto published his Manual of Political Economy, his magnum opus on pure economics. Unlike the Cours, the Manual concentrates on presenting pure economics in an explicitly mathematical form. The focus is on formulating equilibrium in terms of solutions to individual problems of "objectives and contraints". It is in the Manual that we find the first representation of what has since become known (and misnamed) as the "Edgeworth-Bowley" box. His sociological observations also begin to indicate the future course of his ideas. In 1900, Pareto had entered into a brief controversy in the Giornale degli economisti with Benedetto Croce. Croce had criticized economists' positivistic approach, particularly the assumption of "rational economic man". Pareto defended economists, but, at the same time, realized that the conventional defense was not even convincing enough to himself. Why did the predictions of economics fail to correspond to reality? Why were its policy recommendations, to him logically irrefutable, not adopted? The explanation, he concluded, echoing Georges Sorel, was simply that much of human activity was driven not by logical action, but rather by non-logical action. On this, of course, economics has nothing to say - which is why, ultimately, economics will always fail empirically. Pareto realized that he had to move beyond economics to look for his answer.

Pareto's theory of society claimed that there was a tendency to return to an equilibrium where a balanced amount of Class I and Class II people are present in the governing elites. People are always entering and leaving the elite thereby tending to restore the natural balance. On occasion, when it gets too lopsided, an elite will be replaced en masse by another. If there are too many Class I people in a governing elites, this means that violent, conservative Class II's are in the lower echelons, itching and capable of taking power when the Class I's finally make a mess of things by too much cunning and corruption (he regarded Napoleon III's France and the Italian "pluto-democratic" system as an example). If the governing elite is composed mostly of Class II types, then it will fall into a bureaucratic, inefficient and reactionary mess, easy prey for calculating upwardly-mobile Class I's (e.g. Tsarist Russia).

Pareto colored his sociological theory with numerous classical and contemporary illustrations of his theory. His quasi-mystical arguments about the non-logical motivations attracted many Italian Fascists (Mussolini himself claimed to have attended his lectures at Lausanne). Pareto, however, was largely disdainful of the Fascist movement - he never had patience for ideologies or ideologues - but he found them quite amusing. He died a mere ten months into Mussolini's reign - before the uglier aspects of Fascism became obvious. The Fascists continued to use his name unreservedly to give intellectual veneer to their movement.

Despite his association with Fascism, Pareto's sociological work has been taken seriously, going through recurring phases of popularity and critical scrutiny. Freudian psychology has given much weight to some of his notions. It is not so much its main thrust, but its roughness, simplicity and incompleteness that are the main sources of complaint.

Pareto's social economics have had a great impact. Pareto managed to construct a proper school around himself at Lausanne, including G.B. Antonelli, Boninsegni, Amoroso and others as disciples. Outside this small group, his work also influenced W.E. Johnson, Eugen Slutsky and Arthur Bowley. But Pareto's big break came posthumously in the 1930s and 1940s, a period which we have decided to call the "Paretian Revival". His "tastes-and-obstacles" approach to demand were resurrected by John Hicks and R.G.D. Allen (1934) and extended and popularized by John Hicks (1939), Maurice Allais (1943) and Paul Samuelson (1947). Pareto's work on welfare were resurrected by Harold Hotelling, Oskar Lange and the "New Welfare Economics" movement. Finally, Pareto's ruminations on the potential efficiency of a collectivist society were aired in the Socialist Calculation Debate that arose between the Paretians and the Austrians.

1. Translate the following proper names:

Ligurian; Mazzini; Benedetto Croce; Georges Sorel; Mussolini; Lausanne; Antonelli; Boninsegni; Amoroso; Johnson; Eugen Slutsky; Arthur Bowley; John Hicks; Allen; Maurice Allais; Paul Samuelson; Harold Hotelling; Oskar Lange; the Paretians; the Austrians.

2. Translate the words and phrases of foreign origin:

marchese; Cours; Rivista; elite; magnum opus; Giornale degli economist; en masse.

3. Translate the following words and phrases:

marquis; self-imposed exile; main economic contribution; resilient in empirical studies; utility; ophelimity; go on a crusade to expose the sham of political ideology; condemn; demolish; Wizard-of-Oz-like conclusion; ideological fodder; fathom a theory; equilibrium; quasi-mystical arguments; be disdainful of; disciples; ruminations;

4. Translate the text about Vilfredo Pareto into Russian.