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The Economic Theory of Socialism

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Vilfredo Pareto: An Intellectual Biography Volume II

Part of the book series: Palgrave Studies in the History of Economic Thought ((PHET))

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Abstract

After a period spent on critical study of the first volume of Marx’s Das Kapital (Sect. 9.1), Pareto returned to his reflections on socialism in general (Reflections which he had already initiated earlier (Mornati, Vilfredo Pareto: An intellectual biography. Volume I. From science to liberty (1848–1891). Basingstoke: Palgrave Macmillan, 2018, pp. 163–166)), in sociological and ideological terms (Sect. 9.2) and in terms of economic theory (Sect. 9.3), reaching the categorical conclusion that in theory it was a system which answered to the requirements of economic efficiency but was in practice difficult to implement in the light of human intellectual and moral failings.

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Notes

  1. 1.

    Reflections which he had already initiated earlier, Mornati (2018, pp. 163–166).

  2. 2.

    Pareto to Pantaleoni, 6th December 1891, in Pareto, Letters to Pantaleoni, 1890–1896, p. 102.

  3. 3.

    Pareto (1893). A brief controversy followed Pareto’s publication. Guindani and Bissolati (1893) and Leonida Bissolati, The sophism of surplus value according to an Italian liberal economist, “Critica Sociale”, 16th September 1893, pp. 286–288, accused Pareto, as a “defender of capitalism”, of wishing to “show that the appropriations of the capitalists do not consist of the fruits of labour”, ibid., p. 287. They then ask Pareto what the difference is between the exchange value and the work content, since Pareto’s idea that the various factors of production share the positive difference between the use-value of the article produced and the use-value of the various assets used in its production is not valid, being a “miserable sophism”, since “these use-values are not comparable”, ibid. The difference “must be reduced to something concrete so that the worker and the capitalist have something to eat” and this reduction consists precisely in the work involved in producing the difference in question, ibid., p. 288. Thus, for the two socialist critics, “Mr. Pareto’s acrobatics [constitute the] perfect further demonstration of the unassailable solidity of the Marxist theory”, ibid. However, in the same period, the French economist and sociologist André Liesse reviewed Pareto’s contribution in the “Journal des économistes”, LIII (1894), XVII-1, pp. 126–129, expressing wholehearted approval not only of his recognition of the logical inconsistency in the theory of value but also for his insistence on the need for scientific political economy to be independent from the interests of monopolists and politicians. In Lafargue (1894), Paul Lafargue, Marx’s son-in-law and author of the compendium, after having given recognition to Pareto for having taken on the thankless task of attempting a confutation of Marx which French and German economists had already relinquished, accused him of not giving importance to the concepts of value and of capital and of arbitrarily assigning an irreplaceable status to the role of the capitalist. Furthermore, considering it impossible that the allegedly subjective notion of utility could explain objective phenomena such as the exchange value, Lafargue imputed to Pareto the error of denying a priori the validity of the Marxist theory of value. Finally, in a letter to Friedrich Engels of the 2nd of November 1893, see Engels-Lafargue (1959, p. 338), Lafargue described Pareto’s criticism as “highly fanciful”.

  4. 4.

    Pareto to Pantaleoni, 23rd February 1893, see Pareto (1984, p. 349).

  5. 5.

    Pareto (1891, p. 401).

  6. 6.

    For Pareto, capital is “an economic asset like any other” in that it satisfies a human need (by reducing the onus of work) and it is available in a limited quantity, Pareto (1893, pp. 49–50).

  7. 7.

    Ibid., pp. 35–36.

  8. 8.

    Ibid., pp. 39–40.

  9. 9.

    Ibid., p. 42.

  10. 10.

    Ibid., p. 46.

  11. 11.

    Ibid., p. 48.

  12. 12.

    Ibid., pp. 60–61.

  13. 13.

    Ibid., p. 61.

  14. 14.

    Ibid., p. 62.

  15. 15.

    Pareto (1896–1897, §1054).

  16. 16.

    Ibid., §1053. In the same way, Pareto (1894a, p. 80) claimed that Marx was not to blame “for having fomented the discord between classes, which is as old as the world” and credited him with “having shown a profound understanding of historical processes” when he counselled “the socialists to take over the government”, which had aided and abetted in the appropriations of “wealth produced by others”.

  17. 17.

    Pareto (1896–1897, §1054).

  18. 18.

    Ibid., §1055.

  19. 19.

    In the light of pamphlets sent to him by Benedetto Croce, Pareto to Pantaleoni, 19th December 1896, see Pareto (1984, p. 498), expressed the view that the socialists, “were they inclined to study scientific economics” “would, in the space of a few years, produce original and superlative science”, while there was nothing to hope for from the “bourgeois” because “[they] expect from those writing on economics nothing more than a lawyer’s advocacy in defence of their privileges”.

  20. 20.

    887 Pareto (1895a, p. 131).

  21. 21.

    Turati (1895a, p. 213).

  22. 22.

    Pareto (1895b, p. 230).

  23. 23.

    Pareto to Carlo Placci, 15th November 1895, see Pareto (1975, pp. 269–270).

  24. 24.

    Turati (1895b, p. 232).

  25. 25.

    Pareto (1895c, p. 266).

  26. 26.

    This refers to Albert Schäffle, the German economist and author of Schäffle (1874), one of the first analytical and critical studies of the possible future socialist economic system.

  27. 27.

    Pareto (1895c, p. 266).

  28. 28.

    Ibid., p. 267.

  29. 29.

    Pareto to Léon Walras, 28th April 1896, see Pareto (1975, p. 289), reiterated that the socialists were right to demand that “governments, instead of involving themselves in wars and conquest, should keep to improving the conditions of the people”, while his view, based on “a plenty of facts” was that they were wrong in believing that “the conditions [of the people] could be improved by placing production and distribution in the hands of the state”.

  30. 30.

    Pareto (1895c, p. 267).

  31. 31.

    Pareto to Walras, 28th April 1896, see Pareto (1975, p. 289).

  32. 32.

    Pareto (1894b, p. 759).

  33. 33.

    Pareto (1896–1897, §837).

  34. 34.

    Ibid., §§654, 686.

  35. 35.

    Ibid., §656.

  36. 36.

    Ibid., §689.

  37. 37.

    Ibid., §692.

  38. 38.

    Ibid., §655.

  39. 39.

    Pareto (1893, p. 60).

  40. 40.

    Pareto (1896–1897, §383). Pareto to Pantaleoni, 25th September 1896, see Pareto (1984 p. 467), recognised “the usefulness of developing a general theory” of socialist systems, which he could already have included in the part of his Course dedicated to personal distribution.

  41. 41.

    Pareto (1896–1897, §720).

  42. 42.

    Ibid., §725.

  43. 43.

    Ibid., §725.

  44. 44.

    Ibid., §1013.

  45. 45.

    Ibid., §1014.

  46. 46.

    Ibid.

  47. 47.

    Ibid., §1014, note 1.

  48. 48.

    Ibid., §1016.

  49. 49.

    Ibid., §1016, note 1.

  50. 50.

    Because, in conditions of maximum ophelimity, (φb/φa) = (pb/pa) obtains.

  51. 51.

    Assuming (φ1a/pa) = μ1 and padr1a + pbdr1b + … = dλ1.

  52. 52.

    Ibid., §1017, note 1.

  53. 53.

    These might be conceived as internal accounting prices set by the department of the production ministry responsible for administering the capital, with a view to inducing the ministerial department managing the production to put these “very rare” types of capital to use as prudently as possible and, where possible, to replace them with other “more abundant, less precious” forms of capital, ibid., §1017.

  54. 54.

    Ibid.

  55. 55.

    Due to the fact that padRa + pbdRb + … = 0.

  56. 56.

    Due to the fact that asps + atpt + … = pa; bsps + btpt + … = pb

  57. 57.

    Ibid., §1018.

  58. 58.

    Ibid., §1019.

  59. 59.

    Ibid., §1020.

  60. 60.

    Ibid., §1021.

  61. 61.

    Ibid., §1041. Collectivist allocation can be imposed in a number of ways: “by dividing certain products into equal portions, by distributing others by lot, to each according to ability, to each according to endeavour, to each according to genetics”, ibid., tome 2, pp. 402–403.

  62. 62.

    Ibid., §1022.

  63. 63.

    Ibid., §1041.

  64. 64.

    Ibid., §446.

  65. 65.

    Ibid.

  66. 66.

    Ibid.

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    Fiorenzo Mornati

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Mornati, F. (2018). The Economic Theory of Socialism. 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_9

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