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Vilfredo Pareto: An Intellectual Biography Volume II

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Abstract

In the Course in Political Economy and in the writings immediately preceding it, Pareto focused his attention, albeit less extensively, on other topics in applied economics such as the demographic question (Sect. 8.1), questions relating to the science of finance (Sect. 8.2), the functional distribution of national income (Sect. 8.3) and economic crises (Sect. 8.4).

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Notes

  1. 1.

    On Pareto’s earliest reflections concerning the demographic question, see Mornati (2018, pp. 152–153).

  2. 2.

    Pareto (1893–1894, pp. 35–36), Pareto (1896–1897, §156).

  3. 3.

    Pareto (1893–1894, p. 39), Pareto (1896–1897, §156).

  4. 4.

    Ibid., §§159–162.

  5. 5.

    Ibid., §179.

  6. 6.

    Ibid., §171. On the other hand, Pareto pointed out that it is particularly in the case of human reproduction that “the hedonistic maximum of the individual [can be in contrast] with that of the country or of the species”, §173.

  7. 7.

    Pareto (1893–1894, p. 37).

  8. 8.

    Ibid., p. 37.

  9. 9.

    Ibid., p. 40. Pareto (1896–1897, §217). Pareto considered Malthus’ claim that effective population growth followed an arithmetical progression to be false, and “unsubstantiated” his claim that virtual growth, that is, growth determined by the generating force alone, followed a geometric progression, ibid., §§200, 212.

  10. 10.

    Pareto (1893–1894, pp. 41–42), Pareto (1896–1897, §196). Pareto (1893–1894, p. 47) concluded from this that socialist promises that “with better social organisation mankind could indulge its procreative instincts uninhibitedly” were not credible.

  11. 11.

    Ibid., pp. 64, 66. Pareto, ibid., pp. 80–81 emphasised the futility of government measures to incentivise or to disincentivise births.

  12. 12.

    That is, checks to procreation caused by obstacles or delays to marriage and, after marriage, bans or limits on child-bearing. The former category, unlike the latter, is in any case influenced by variations in economic circumstances, ibid., p. 70, Pareto (1896–1897, §226).

  13. 13.

    Anything provoking premature death in children, in particular infectious diseases (which can often be the result of poverty), Pareto (1893–1894, pp. 76, 79–80).

  14. 14.

    Pareto (1896–1897, §230).

  15. 15.

    Pareto (1893–1894, p. 51). Pareto (1893a, p. 7) having then reiterated that Malthus “was right” in affirming that “the human race, like any other animal species, possesses a natural tendency to breed beyond the limit of subsistence”, denounced Malthus’ opponents for “the injustice … of expecting to measure this phenomenon precisely by reference to the two progressions which have been the subject of so much foolish debate”.

  16. 16.

    Pareto (1896–1897, §222).

  17. 17.

    Ibid., §223.

  18. 18.

    Ibid., §225.

  19. 19.

    Ibid., §268.

  20. 20.

    Pareto to Pantaleoni, 20th May 1896, see Pareto (1984a, p. 449).

  21. 21.

    Pareto to Pantaleoni, 28th October 1896, ibid., p. 478.

  22. 22.

    Pareto (1893b, p. 451).

  23. 23.

    Ibid.

  24. 24.

    Ibid., pp. 451–452.

  25. 25.

    Ibid., pp. 452, 454–455. Pareto pointed out that, out of 100.000 born, 37,806 (25,281) children in Bavaria (Switzerland) die in the first five years of life, while 2382 (3197) die between the ages of 15 and 20, ibid., p. 455 and Pareto (1893–1894, p. 83).

  26. 26.

    Pareto (1893b, p. 456).

  27. 27.

    Pareto (1896–1897, §254).

  28. 28.

    Pareto to Pantaleoni, 21st December 1897, see Pareto (1984b, p. 134).

  29. 29.

    Pareto to Edwin Seligman, 5th January and 1st March 1896, see Pareto (1975, pp. 282, 284). The view had already been expressed in this period in Pareto to Maffeo Pantaleoni, 12th and 14th August 1892, see Pareto (1984a, pp. 266, 268, 272).

  30. 30.

    Pareto to Leon Walras, 28th April 1896, see Pareto (1975, p. 290).

  31. 31.

    Pareto to Edwin Seligman, 1st March 1896, ibid., p. 284.

  32. 32.

    Pareto to Tullio Martello, 15th December 1895, ibid., p. 274.

  33. 33.

    If the rate for progressive taxation were p+[(b(x−x0))/x], where x represents overall income, x0 the minimum income, p the rate applying to the minimum income and b the rate applying to the ratio between the difference between overall income and the minimum income in relation to overall income, it follows that the maximum rate (corresponding to x0 = 0) is p+b, implying that, if p+b<1, the progressive tax “can never absorb either total earnings or increases in earnings”, Pareto to Tullio Martello, 15th December 1895, ibid., p. 275. On the 16th of January 1898 Pareto pointed out to Berthold van Muyden (financial director at the municipality of Lausanne), see Pareto (1989a, pp. 326–327) that, in countries where progressive taxes were implemented, taxpayers’ tax declarations were normally not made public, partly in order not to offer business rivals the opportunity to introduce more effective commercial strategies on the basis of the information gleaned from the tax declarations, and partly in order not to encourage dissembling on the part of taxpayers (such as declaring low sums for fear that to declare greater incomes honestly would make them appear “less shrewd than their fellow-citizens” in their tax dealings).

  34. 34.

    Ibid., p. 328. At the same time, Pareto (1897, p. 233) confirmed that, since (as Cavallotti had also recently observed) “when taxation is excessive, taxpayers defend themselves through fraud”, “in order to obtain a greater return … it would be better to diminish the rates and then ensure that everyone pays exactly what is due (contrary to what the Italian government does)”.

  35. 35.

    Pareto (1894a, pp. 708–709).

  36. 36.

    Pareto (1893c, p. 716). In an address given in Milan on the 20th of December 1892 under the aegis of the Circolo Risorgimento, Pareto specifically denounced the anti-proletarian nature of the extreme tax burden imposed by the Italian state, Il Secolo, 21st–22nd December 1892.

  37. 37.

    Pareto (1893c, p. 717).

  38. 38.

    Ibid.

  39. 39.

    Ibid.

  40. 40.

    Pareto (1893d, pp. 468–469).

  41. 41.

    Pareto (1898, p. 246).

  42. 42.

    Mornati (2018, pp. 141–146).

  43. 43.

    Pareto (1893e, p. 653).

  44. 44.

    Pareto (1896–1897, §473).

  45. 45.

    Pareto (1891a, p. 228).

  46. 46.

    Ibid., pp. 225–226.

  47. 47.

    Ibid., p. 228.

  48. 48.

    Ibid., pp. 229.

  49. 49.

    Pareto (1893–1894, p. 214).

  50. 50.

    Pareto (1896–1897, §747, note 1).

  51. 51.

    Where i represents the interest rate, pT is the price of capital T, … and ∏T is the cost of capital T…

  52. 52.

    In fact, for example, 4/3 = 8/6 = (4 + 8)/(3 + 6) = 12/9.

  53. 53.

    Ibid., §§774–775.

  54. 54.

    Ibid., §778.

  55. 55.

    Ibid., §780.

  56. 56.

    Pareto (1892a, p. 558).

  57. 57.

    Ibid., p. 560.

  58. 58.

    Pareto (1895, pp. 477–478).

  59. 59.

    Pareto (1896–1897, §418).

  60. 60.

    Ibid., §419.

  61. 61.

    Ibid., §421.

  62. 62.

    Ibid., §423.

  63. 63.

    Ibid.

  64. 64.

    Pareto (1895, p. 479).

  65. 65.

    Pareto (1896–1897, §438).

  66. 66.

    Ibid., §439.

  67. 67.

    Ibid., §555.

  68. 68.

    Société d’économie politique (Political economy society), Meeting of 5th December 1892, Journal des economistes, LI, XII-3: 464.

  69. 69.

    Pareto (1896–1897, §946).

  70. 70.

    Pareto (1894b, p. 184), Pareto (1896–1897, §949).

  71. 71.

    Ibid., §949.

  72. 72.

    Pareto to Francesco Papafava, 18th August 1890, see Pareto (1980, p. 651).

  73. 73.

    Pareto (1893–1894, p. 181).

  74. 74.

    Pareto (1892b, p. 511).

  75. 75.

    Pareto (1896–1897, §929).

  76. 76.

    Ibid., §930.

  77. 77.

    Ibid., §931.

  78. 78.

    Ibid., §936.

  79. 79.

    Ibid., §937.

  80. 80.

    Ibid.

  81. 81.

    Already in January 1890 Pareto had commented that thanks to Clément Juglar’s “outstanding study” On commercial crises and on their periodic recurrence in France, in England and in the United States (Des crises commerciales et de le leur retour périodique en France, en Angleterre et aux Etats-Unis) it was possible to “track the development of commercial crises very accurately by reference to the balance sheets of the issuing banks”, Pareto to Francesco Papafava, 20th January 1890, see Pareto (1980, p. 646). For a recent publication on Juglar see Bridel and Dal-Pont Legrand, (2009). Pareto (1896–1897, §945) also credited the French statistician Pierre des Essars for having discerned a correspondence between the beginnings (or ends) of crises and the maxima (or minima) of activity on current accounts, by studying the sum totals of annual credits and debits divided by twice the yearly average balance.

  82. 82.

    Pareto (1893–1894, pp. 181–183). As is known, Walter Bagehot, Lombard Street: A Description on Money Market, p. 56 identified in “very large loans at very high rates” the most effective means available to the country holding the nation’s reserves of metal currency to combat the excessive depletion of these reserves occasioned by extraordinary demands for reimbursement on the part of foreign and national depositors. Increases in interest rates will indeed result in inflows of capital from abroad which, by increasing metal reserves, serve to assuage internal fears which are then definitively allayed by the availability of loans, albeit at rates discouraging their utilisation.

  83. 83.

    Pareto (1896–1897, §329).

  84. 84.

    This phenomenon was due, in Pareto’s view, to building speculation and the moving forward of imports prior to the coming into force, on the first of January 1888, of the new higher customs tariff regime, Pareto (1890, p. 392).

  85. 85.

    Ibid.

  86. 86.

    Ibid.

  87. 87.

    On the crisis in the construction and banking sectors of 1889, Confalonieri (1979, pp. 131–159). Pareto (1891b, p. 40), declared that the building crisis “is not finished …, it has not even reached its climax and in many places will get even worse”.

  88. 88.

    Pareto (1890, p. 392).

  89. 89.

    Ibid., p. 394.

  90. 90.

    Pareto (1891c, p. 30).

  91. 91.

    Pareto (1896–1897, §925).

  92. 92.

    Ibid., §926.

  93. 93.

    Ibid.

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    Fiorenzo Mornati

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Mornati, F. (2018). Other Topics in Applied Economics. In: Vilfredo Pareto: An Intellectual Biography Volume II. Palgrave Studies in the History of Economic Thought. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-04540-1_8

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