uno | dos | tres | cuatro
1. Economía clásica
2. economía neoclásica3. Karl Marx
4. Joseph Schumpeter
5. ordoliberalismo
6. keynesianismo
7. racionalismo crítico
8. crítica filosófica
9. monetarismo
2. economía neoclásica 2.4.1 sociologíaWe don't know what, why and when a concept of economic thinking is included in the canon of economic thinking. We have discussed the topic already several times in this manual, see for instance mathematical modelling. From Vilfredo Pareto only survived the optimum of pareto and the Edgeworth Box. It is to suppose that the student of economics lose with that nonsense ten hours and if we add the mathematical abracadabra in which this concept has been wrapped even more. Time that could be spent in doing relevant things.
We haven't included Vilfredo Pareto in this manual because he is relevant and has contributed some interesting concepts allowing us to analyse reality. From a practical point of view we need to know only Adam Smith, Jean Baptiste Say, Alfred Marshall and John Maynard Keynes.
The first three analyse a free market economy and assume that the personal interest accord with the general interest. Keynes put forward some strong arguments that this is not always the case. See the little book downloadable from the startsite of this website. The basic question is therefore what governmental intervention can do in order to overcome certain problems of market economies and that's what all public debate is about. Léon Walras, Vilfredo Pareto and Carl Menger contributes nothing to this discussion and are therefore useless.
We included Vilfredo Pareto because he appears in any textbook of microeconomics. Perhaps that helps a little bit to eliminate him from public teaching.
It seems that Vilfredo Parete became aware himself that his économie pure, his pure econmy, in other words his economic thinking free from any element that has to do something with reality, doesn't make any sense. After having written his 'Manuale di Economia Politica' in 1906 where he distanced himself from Léon Walras, his predecessor of the university of Lausanne, in the 'Cours d'économie Politique' published in 1897 he was still a loyal follower of his master, he retired from university and dedicated the rest of his live, beside breeding of Angora cats, to sociological studies, what saved a lot of time to his students. One of his students was Benito Mussolini. We don't say that the tragedy could have been prevented when he would had retired earlier, but in any case the studying of the pareto optimum was not helpful.
In any case it seems that he was well aware that the 'économie pure' leads nowhere and is very boring. In 1916 appeared his 'Trattato di Sociologia Generale', but the basic 'ideas", more delusions than ideas, we can find already in his 'Manuale di Economia Politica'. The question rises what he did between 1906 and 1916.
In ten years even an mediocre economist should be able to start at least two companies with at least three employees and that is much more useful then the pareto optimum, because this is completely useless. A market economy doesn't live from people who analyse irrelevant aspects, but from people who make things happen.
The academic biotop nourished by the tax payer allows economists to spend a lot of times with irrelevant things. We admit that the case of Vilfredo Pareto is different, because he inherited the money he squandered, but if the tax payer is involved there is no "pure" science. In other words, people can't follow their hobbies at charge of the tax payer.
That's something he forgot completely in the paragraph below. Someone has to pay for the subsidy of research.
(By the way: If his only interest is to observe the phenomenon without the intention to convince someone, why he wrote a book? If he has no intention to convince someone, he can perfectly keep his wisdom for himself. In other words, he himself is a kind of apostel.)
| Tra gli scopi che può aver uno studio dell'economia politica e della sociologia si possono notare i tre seguenti: 1.° Può quello studio essere una raccolta di ricette che tornino utili ai privati ed alle autorità pubbliche, nelle faccende economiche e sociali a cui intendono. L'autore ha semplicemente di mira quell'utilità, come l'autore di un manuale sull'allevamento dei conigli ha semplicemente per scopo di giovare a chi alleva quelle bestiuole. 2.° Può l'autore possedere una dottrina da lui ritenuta ottima e tale da procacciare ogni sorta di beni ad una nazione od anche all'uman genere, e proporsi egli di divulgarla, a modo d'apostolo, alle genti, per fare queste contente e felici, o semplicemente, come ora suol dirsi, « per fare un poco di bene ». Lo scopo è ancora l'utilità, ma è una utilità molto più generale e meno terra a terra. Dallo studio precedente a questo, corre all'ingrosso la differenza che ci può essere una raccolta di ricette e un libro di morale. Questo modo si attenua nella forma, rimanendo sostanzialmente lo stesso, quando l'autore sottointende la dottrina da lui ritenuta migliore ed accenna semplicemente che studia i fenomeni collo scopo di conseguire il bene dell'umanità. Seguendo tale via la botanica studierebbe i vegetali, collo scopo di conoscere quali sono utili all'uomo, la geometria studierebbe linee e superficie, collo scopo di misurare i campi, ecc. Principiano, è vero, così le scienze, nascendo sotto forma di arte, ma poi, poco alla volta, si svolgono a studiare i fenomeni indipendentemente da altri scopi. 3.° Può l'autore mirare unicamente ad investigare e rintracciare le uniformità che presentano i fenomeni, ossia le loro leggi; senza il menomo scopo di una'utilità pratica diretta, e non mirando in alcun modo a dare ricette o precetti, e nemmeno a procacciare la felicità, l'utile, il benessere dell'umanità o d'una parte di essa. Lo scopo in tal caso è esclusivamente scientifico: cioè di conoscere, di sapere, e basta. Avverto il lettore che in questo manuale procuro di raggiungere esclusivamento questo terzo scopo; | Possible scope of the study of economics and sociology can be: 1. The studies can be a bunch of recipes that help the government and private entities to resolve social and economic problems they are responsible of. In this case the author, similar to the author of a book about breeding of rabbits will serve only the people who are in that business, focus only on the utility. 2. The author can have a doctrine that he assumes to be optimal and that allows to the nation or even to the entire human specie to reach any kind of happyness so that he wants, like an apostle, to proclaim it in order to make people happy or to do something "good" as people have the habit of saying. The goal is the same but in this case the scope of utility is more general and less concrete. The difference between the last one and the first one is almost the same as between a bundle of recipes and a book about moral. This difference is less obvious, although fundamentally remains the same, if the author believes that his doctrine is superior and affirms that he studies the phenomenon only to promote the well-being of humantiy. If we follow this logic botanic would study the plants only for the scope to find out which plant serve man, geometry would study only the lines and surfaces needed to measure the earth etc.. Actually all sciences have their origines in practical needs before the phenomenon are studied independently from a concrete goal. 3. The interest of the author can as well be to consider and study only the general rules behind the phenomenon, without the scope of any direct practical use and without the intention to give any receipts or advise and still less to promote happiness, utility or the welfare of the whole humanity or part of it. The scope is in this case purely scientific looks for nothing else than understanding and knowledge. I advert the reader that in this manual I only try to reach this third goal. Vilfredo Pareto, Manuale di economia politica con una introduzione alla scienza sociale, Capitolo I |
This is more or less the same nonsense as the one of Léon Walras, see methodologica approach. A general affirmation that science doesn't have any practical use is of no help when it comes to distribute the resources dedicated to public subsidized research. In the real world concrete criteria are needed that allows the useful distribution of scarce resources, see research and development.
The author would say that Vilfredo Pareto is a charlatan. First his division is not logical and second his intention is defame all that he doesn't like. It grotesque that an author who produced nothing but pamphlets calls others apostels.
To the category a) belongs for instancs all the manuals about programming languages. Perhaps their scope is not to promote happiness, but well written they can be enormously useful, in any case more useful and even more scientific than the paretian delusions. The case of b) is more complicated. It is to assume that Pareto puts in this group everything he doesn't agree with. It is normal that there all always some thesis that someone doesn't agree with, but in a scientific context arguments are needed, especially if someone helds such extreme positions as Vilfredo Pareto. (See below.)
c) It is not possible to define basic research just by saying that the "scopo in tal caso è esclusivamente scientifico", in other words to define "pure" science as kind of 'l'art pour l'art', because someone has to pay for it. A private company will never finance "pure" science, only the government will do that and we need concrete criteria to steer the resources. Real live is a little bit more complicated than what Vilfredo Pareto assumed.
Vilfredo Pareto and Léon Walras are illustrative examples for something we see very often. Those who praise graphical or mathematical modeling are very often not able to form any meaningful sentence.
It is to suppose that none of the academic staff who teaches year after year the paretian daft ideas had ever read the original version. It is not only to assume, it is sure, because the original version is not available. This text is based on a scan of a very old specimen. However it would be useful if the academic staff would be aware what they are teaching, because in the context of his sociology the paretian optimum is not as harmless, although irrelevant, as it seems.
| Fondamento dell'economia politica ed in generale di ogni scienza sociale è evidentemente la psicologia. Verrà forse un giorno in cui potremo dedurre dai principii della psicologia le leggi della scienza sociale, come forse verrà giorno in cui i principii della costituzione della materia ci daranno, per via di deduzione, tutte le leggi della fisica e della chimica; ma per ora siamo lontani assai tanto da questa come da quella cosa, e conviene tenere altra via. Dobbiamo cioè prendere le mosse da alcuni principii empirici, per spiegare i fenomeni della sociologia, come quelli della fisica e della chimica. In avvenire, la psicologia, allungando ognora più a catena delle sue deduzioni, la sociologia, risalendo a principii ognora più generali, potranno congiungersi e costituire una scienza deduttiva. Ma di tali speranze non è tempo di fare caso. | The basis of economics in general and of social science is without any doubt psychology. Perhaps the day will come where we can deduce from the principles of psychology the laws of sociology as perhaps one day we can deduce one day from the constitution of matter by deduction all the laws of physics and quimistry. But right now we are still far away from this and therefore it is more convenientn to take another approach. We have to start with some well proofed empirical principles in order to study the phenomenon of sociology the same way we do it already in physics and chemistry. In the future psychologie with deductions more and more far reaching and sociology with rules more and more general will be unified to a deductive science. But right know we haven't reach this point. Vilfredo Pareto, Manuale di economia politica con una introduzione alla scienza sociale, Capitolo II |
Vilfredo Pareto is the superlativ of Léon Walras. Léon Walras assumed that economy is steered by eternal economic laws the same way the universe is steered by the law of physics, see methodological approach. Vilfredo Pareto goes one step further. He doesn't give any definition of psychology, but in the context of economics we can assume that he means human behaviour, the motives, feelings, desires, wishes, moods etc. are irrelevant, as long as they are not revealed by a certain behaviour.
In neoclassical theory, at least in the simplified version we find in textbooks, the assumption is simply that human beings react on incentives, in other words that they optimize their benefit, see homo oeconomicus. Due to the simple assumptions of the modell, at least in textbooks, this optimization is a trivial process and happens automatically. There is actually no decision making process needed, reallocation of resources happens in lightning speed without any effort. It doesn't make therefore any difference if we speek of entrepreneurs or capital because entrepreneurs are as unconscious as capital. The productive factors are not workmen, entrepreneurs and farmers but labour, capital and land. Psychology in a broader sense is as irrelevant in that modell as it is in astrophysics. Microecnomics, in the simple form we find in textbooks, studies the relationship between price and amount, in other words the relationship between two effects and not the causes of this effects.
Vilfredo Pareto affirms that psychology is the basis of economics and any social science, "Fondamento dell'economia politica ed in generale di ogni scienza sociale è evidentemente la psicologia" and from the principles of psychology he want to deduce all economic laws. If we can deduce from some basic psycholgical principal economic LAWS is to assume the principles are something as laws as well. Something very stable in space and time that allows to predict the future. This way not only economics is steered by universally valid rules as stable as the gravity that makes the moon turn around the earth, but human beings as well a kind of an universe.
The problem is the same as the one already discussed in methodological approach. In order to predict the economic development we need not only to know which impact will have for instance technological advances, we need to know which technological advances, will happen in the future. In other words, we need to know what we will know. That is impossible.
Human behaviour depends on the circumstances. In order to predict human behaviour we not only need to know the impact of the circumstances on human behaviour, we need to know as well the circumstances of the future. This is impossible as well.
To illustrate this point with a trivial example. The conflict between Israelis and Palestinians is in part due to the scarcity of water. If the quantity of water is limited, the conflict is unavoidable. If new techniques, for instance desalination plants driven by solar energy, made it more attractive to invest in these plants instead of misiles, tanks, policy, secret service etc.. they will change their behaviour.
The question whether social development can be predicted can be discussed in a more "pragmatic" way, see Karl Popper, and a more "philosophical" way, see Ernst Bloch.
[It is well known that there was no sympathy between Ernst Bloch and Karl Popper. This is due to the fact that Ernst Bloch has a "marxist jargon", what induced Popper to believe that similar to Platon, Hegel, Marx had a perfect state in mind, something Popper is opposed to. However the philosophy of Ernst Bloch is different. There is a process towards a perfect state, but this perfect state is very far away in the country of utopia, we can now the direction to utopia, but we can't define it and still more reach it. We will return to this topic in the chapter about Ernst Bloch. In practical terms: Ernst Bloch was one of the most prominent opponents of the government of East-Germany and similar governments.]
The assumption that psychology is
the basis of economics abstracts completely from the fact that "psychology", whatever he understands by that, is in part the result of the enviornment and the environment is the result of very objective data. Even if man were kind of machine that whose functioning can be described by laws, that wouldn't allow to predict economic development. Machines doesn't work the same way independently from the environment.
At first glance it seems a progress in thinking that Vilfredo Pareto introduced human beings in his theory, normally something like that doesn't exist in economic thinking, see Léon Walras, methodological approach, but actually there is not a big difference between Léon Walras and Vilfredo Pareto. The only difference is that Léon Walras at least at the beginning of his book explains us that there are social forces, that can't be described by laws and natural forces, that can be described by laws, but he preferred for the sake of simplicity to exclude the social forces and eliminate human beings from his theory.
The difference between these two and Alfred Marshall, see methodological approach,
Si se quiere medir la diferencia en el nivel intelecutal entre Alfred Marshall y un Vilfredo Pareto hay que volver a bases metodológicas, is obvious. Alfred Marshall takes into account the dynamik between human beings and their enviornment. Human beings change their enviornment, but are at the same time changed by the environment.
There is indeed a line of thinking in psychology, the Behaviorism, that assumes that human behaviour can be explained by simple incentive <=> response schema. However this is only true at the level of physiology and even at that it is doubtfull. It is perhaps possible that the mouth of a lot of europeans waters if they see a pork joint. Moslems find that disgusting, experience of the author, and they would not even eat if they starve. Even at a physiological level humans are conditioned by the environment.
Since the beginning of human history there have been always some groups of people who assigned some stable characteristics to other groups. Unfortunately no ethnical or religious group has ever done us the favour to remain unchanged for a long time and confirm the prejudices. It seems that the only stable thing in history is instability.
It is often said that Vilfredo Pareto was interested in history, especially in the history of antiquity. Well posible that he read enthusiastically a lot of books, but with very little benefit. Nothing that would be accepted by a man of antiquity 2000 years ago would be accepted today. A public fight between a human being and a lion would not amuse the people, they would be upset and a government allowing that, would be overthrown. If today we find an unknown tribe, linguists, antrophologists, biologist, philosophers, physicians would study the phenomenon in detail, but we wouldn't slaughter them. As a productive factor they are irrelevant and the land is worth nothing if there is not any governmental subsidy.
By the way: Professional historians are never looking, if we put a side
semi historians like Hegel, for historical "laws", something that doesn't exist. Historians tries to understand a specific historical situation from accidental circumstances.
Karl Popper in his book "The open society and his enemies" assumes that ideology derives from the philosophers, Platon, Hegel y Marx, who had an ideal vision of the society and their followers tried to impose this imagined ideal society by force. This is nonsense, as we will see in the chapter about Karl Popper. But more plausible is the theses that the assumption of eternally valid laws has an ideological character. Assuming eternally valid economic or even psychological laws reduces the amount of possible alternatives. Karl Popper could have therefore included in his list Vilfredo Pareto. (Beside religion, which is a very closed society.)
Beside these let's say more "philosophical" arguments it is hard to see what the costs of production has to do with psychology. We can't say how much will cost a smartphone in ten years, we assume almost nothing, but in any case that has nothing to do with psychology, but with unpredictible technological advance. We understand completely that for someone who argues, as Vilfredo Pareto and Léon Walras with a markets where products are only exchanged but not produced, the cost of productions are irrelevant, but that changes nothing concerning the fact that they are very relevant in real live.
In the following paragraph he describes the "psychological" laws he had found.
| Per mettere un poco d'ordine nell'infinita varietà delle azioni umane che dobbiamo studiare, gioverà classificarle secondo certi tipi. Due di questi si parano subito a noi dinnanzi. Ecco un uomo bene educato che entra in un salotto; egli si toglie il cappello, pronunzia certe parole, compie certi atti. Se a lui chiediamo perchè, non saprà dirci altro se non che così è l'uso. Similmente egli opera in cose di ben maggiore momento. Se egli è cattolico e sta a sentire la messa, compie certi atti «perchè così si deve fare». Di molte altre sue azioni darà per motivo che così vuole la morale. Ma lo stesso uomo sta nel suo studio e compra una gran quantità di grano. Egli non dirà più che opera in tal modo perchè così si usa, ma la compra del grano sarà l'ultimo termine di un seguito di ragionamenti logici, che muovono da certi dati sperimentali; mutando quei dati, muterebbe anche la conclusione, e quell'uomo potrebbe astenersi dal comperare, oppure anche potrebbe vendere grano. |
To put a little bit of order in the diversity of human behaviour we want to study it is useful to classify it in different types. Two of these types we can see without any problem. Let's take as example a well educated man who enters a room. He lifts his hat, say some words and makes some movements with his hand. If we asked him why he does that, he could only answer that this is what people used to do. Something similar happens in more important things. If he is a catholic he attends at a church service and he does something that is usually done. A lot of things he does because people are used to do it. |
It is obvious what he wants to say, some actions are carried out consciously and other unconsciously, but his affirmations are very far away from being scientific, because only very few actions are actually carried out "unconsciously" and the examples given, the men who enters a room, are fare away from being carried out "uncounsciously". The opposite is true. They are carried out very consciously, because the way someone greets the people when he enters a room depends on the situation. Someone will greet in a very different way if he joins a business meeting than when he joins a party, unknown people in a different way than his friends, women in a different way than men, etc.. The only thing that is normally true is that he will greet the people he meets, but how he greets them depends on the situation and there are big differences depending on the cultural space. Greeting is an action that is carried out very consicously and a lot of circumstances are taken into account.
This is still more true for his second example, attending a church service. It can be assumed that 100 per cent of the people who do that, can give a reason why they are doing that. Well possible that the reasons are not very convincent from a logical point of view, but this kind of action is far away from being carried out mechanically or uncounscioulsy.
If we look at the next paragraph, we see that he mixes the terms logic / illogic and conscious / unconscious, although they have little do to with each other.
[His examples for conscious / inconscious are wrong, but that's what he wants to say.]
Logic / illogical refers to the purely rational sphere. A logical deduction can be tested against reality and any human brain, who understands the logic, will get to the same results. However to persons can react in the same circunstances conscioulsy in a very different way. Some of them behave perhaps in a way that seems illogical to Pareto, porque Pareto assumes that everything he doesn't agree with is not logical.
Based on the examples given above he divides know human behaviour in two categories.
| Possiamo dunque, per astrazione, distinguere: 1.° Le azioni non-logiche; 2.° Le azioni logiche. | We can therefore, by abstraction, distinguish: 1) Illogical actions; 2) logical actions. |
A logical statement can be deduced from some basic assumptions, although there is no need that these basic assumptions are true. In other words, a logical conclusion can be wrong, but independently from any empirircal facts, goal, opinions etc. we can say that it is wrong or right.
If A is greater than B and B greater than C than A is greater than C. That's logical.
However we can't know whether a conscious behaviour is logical or not, because than we need to know all the facts, goals, moral judgement, circumstances etc.. this behaviour is based on. In the example of Vilfredo Pareto: It is well possible that the cereal trader buys a lot of wheat because he believes that the price will raise in the future. If his aim is to make money and the prices actually rise the behaviour is logical. If this is not the case, his behaviour would seem illogical to Pareto, but if we don't know the perhaps incomplete data of the trader or his goals, we can't say that it is illogical.
We admit that in his Trattato di Sociologia Generale he defines more precisely what he understands by "logico". He will call logical the relationship between cause and goal, so that a determined goal can be reached if certain conditions are given.
However this doesn't resolve his problems. If we don't know the data basis a decision or behaviour is based on, we can't they whether it is logical or illogical.
We will see later on,
that he actually addresses the terms conscious / unconcious, although in a weird way.
He is well aware that he has some problem with the terms he uses.
| Diciamo: per astrazione, poichè nelle azioni reali i tipi sono quasi sempre mescolati, e un'azione può essere in massima parte non-logica ed in piccola parte logica, o viceversa. | We want to underline, by abstraction, that in the real world actions the two types are always mixed and an action can be completely illogical and in small part logical or the other way round. |
That's not true. A logical statement is either wrong or false, tertium non datur and an illogical statement is simply wrong.
What actually exists is a behaviour that is in part based on conscious decisions and in part motivated by unconscious feelings, motives, aversions, sympathies, moral judgements, goals etc..
That he means actually conscious and inconscious becames obvious if we take a closer look on the statement above. Logical deduction cannot be in part logical and in part illogical. If there is an logical error, the whole logic is wrong. A sector where logic plays a big role are computer programs. A computer program in Java or whatever language has some basic routines, determined way to formulate conditions and a certain amount of given objects. From these basic "assumptions" we can deduce the rest of the program, however we only get the result desired if the whole program is logically coherent.
Logical and illogical has beside that little to do with "actions". An action has a goal. It is true that the goal of the action can only be reached if the actions carried out are suitable to obtain this goal, but a logical statement doesn't have necessary a goal. A logical statement of the type " living beings are born, propagate and die; A is born, propagates and die; therefore A is a a living being" is a logical statement, but is has nothing to do with an action.
"Nelle azioni reali" we have a different situation. Actions have a goal, but the goal can never be logically deduced. For some people it may be logical that the goal is to earn as much money as possible and for others to maximise social benefit. Goals are not logical nor illogical. In reality it is even more complicated. No one, at least if he or she is not mad, has ONE goal, but a bundle of conflicting goals. Families for instances wish that their son and daughter perform better at school than their school friends. However his son and her daughter will only be happy if the whole society is well trained and educated.
Vilfredo Pareto mixes two thing that has nothing to do with each other. An illogical action for him is a unconsciously taken action, something that people do automatically, without thinking about it, because they are used to do that. However even unconsciouly taken actions can be very logical. Speaking for instance uses a lot of "logic", at least there are some basi rules allowing us to make an infinite number of sentences, but these rules are used "uncounciously". A logical action is for him a consciously carried out action, however a consciously taken action can be very illogical, if the action is not suited to reach the goal. We can consciously make an error, because we are wrong.
A similar error he makes in the next paragraph. He assumes that a in part or completely illogical action is due to the fact people try to give a logocial explanation for an actually illogic action. In reality, it is different. Almost any action is illogic, because the action has a goal and goals are always illogical. Some people want to earn as much money as possible, others want to resolve a concrete social problem, others want to have more leisure time, others want to help certain people etc.etc.. That has nothing to do with logical or not. The only interesting question is whether a certain measure is suitable for a certain goal and the more ambitious the goal, the more difficult it is to realize it.
Let's explain that by an example. The today's discussion about the refugees or migration, in Europe or in the United States, is simple. Everywhere the "boat is full" and nations try to restrict by any means, even military means, immigration. The followers of the "boat is full" theory try to convince us, in the believe that we don't understand their sophisticated argumentation, that the frontiers must be closed. Actually this is not the point. The supporters of immigration understand their philosophy without any problem, but they are looking for more sophisticated solutions. More sophisticated solutions means that we have to find methods to train these people effeciently, we need to train them better for the requirments of their native countries, we have to reallocate the resources spend in development aid to more training in the country and to deliver technical assistance. If this is not possible in their native countries, because of wars, civil wars, social unrest, corrupt governments etc.. we have to allow more immigration, train them and then use their knowledge about their home countries to resolve the problems.
The background, we will that later on, see above, is that for Vilfredo Pareto "logical" are all the goals that pursue the satisfaction of "basic instincts". Logical for him is, if we stick the example above, to send the boats the refugees try to access the european borders to the ground of the sea or to enhance the frontier between Mexico and the United States. In this case the "solution" is simple, but the goal is not very ambitious. That is true at any time. The simpler the goal, the more easy it is to reach it.
For Vilfredo Pareto anybody who pursue more complicated goals or a bundle of goals acts illogically. It is crystal clear that a bundle of perhaps contradictionary goals leads to a more complicated thinking and is relies more on assumptions than simple goals. Trying to train millions of people is much more complicated than building border fences or dumping ships with military force. In an economic context logical means just simple and illogical complicated. The more complex the goals, the more difficult is to reach them and the more we have to rely on untested measures.
We assume that Vilfredo Pareto never tried to realise a more complex project. Beside that he has a strange kind of "associative" thinking. He mixes things that has nothing to do with each other.
| Occorre osservare che l'uomo ha una tendenza spiccatissima a figurarsi come logiche le azioni non-logiche. Tale tendenza è dello stesso genere di quella per cui l'uomo anima, personifica, oggetti e fenomeni materiali. E così questa come quella hanno appoggio nel linguaggio volgare, il quale, serbando le traccie dei sentimenti che esistevano quando si è formato, personifica cose e fatti, e li presenta come risultamenti di logiche volontà. |
It can be observed that men have a strong inclination to imagine actions logical even if they are illogical. This tendency is given to the same reason that leads people to animate and personify objects and material phenomenons. That's why in the language we can find still today traces of the feelings existent at the moment when these words were formed. Things and facts are personalised and presented as they were the result of a logic. |
The author would say, although this is difficult to prove, that economists have a serious problem, if they explain their ideas in plain words and that explains their obsession for mathematica modelling. These models are as faulty as their texts, but is is more difficult to find the errors or the confuse assumptions on which these models are based.
The first problem is that he doesn't define exactly what he understand by "logical". A logical action could be a reasonable response to a given incentive, however this definition doesn't leads us very far. What is reasonable? It is reasonable and logic to hide the buyer any defects of the car, if we assume that he will not appeal to the court. Is it reasonable and logic to betray the buyer or to sell the car for the right price?
However in the next sentence, "...Tale tendenza è dello stesso genere di quella per cui l'uomo anima, personifica, oggetti e fenomeni materiali..." addresses a completely different issue.
It is indeed true that some religions, animism or the greek mythologies personalise plants animals and object and the greeks tried to appease the sea by a sacrifice to Poseidon, was it more or less the same thing cristians do if they worship good asking him to intervene. However all that can be explained by an attempt to acquire influence in a world where people feel helpless.
[Actually from a philosophical point of view this is kind of a "rationalism". People try to find an explanation for the things that happen and modern science, without any doubt much more efficient, has the same origins. This is a main topic of the so called Frankfurt School, but we have no intention to address this topic here. We will discuss some other aspects of the Frankfurt School later one, see Th.W. Adorno, but not this one.]
But that has nothing to do with logical or illogical, because a "logical" alternative was not available. There is no doubt that the ancient greeks would have been better of if they had looked the weather forecast on TV and if they had left the harbour when the weather was good enough to do that, but there was not weather forecast 300 years before Jesus Christ and the best thing to do under these conditions was to pray or something of this kind.
If a medicin man moves a fetish around the head of a paranoid person it is doubtfull that this will help, more efficient, at least in the short run, are drugs like doxepin, but both therapies are "illogical", because the concrete causal chaines are unknown in both cases. The effect of doxepin is not known because the "logic" is understood, or the causal chaines, but because experience has shown it.
We don't know what he really wants to say, because the terms used are vague. If we want to find any sense in his writing, we could say that he is talking about ideologies. An ideologie is actually "illogical" because the intended goal is not the goal officially proclaimed. From a purely "logical" point of view the cold war was a a conflict between two economic orders. Socialism at one side and free market economy at the other side. However this was only a pretext.
There is no doubt as well that political parties are political entrepreneurs, that they try to maximise votes and the programs are quite flexible. Politicians like any other homo oeconomicus try to maximise their profit. It depends on the right incentives set by the constitution that their benefit agrees with the social benefit.
[What is not even bad. It doesn't make any sense that a political party sticks to positions to which only a minority agrees. For a more detailed discussion see Friedrich Hayek.]
The sentence "nel linguaggio volgare, il quale, serbando le traccie dei sentimenti che esistevano quando si è formato" can be understood in two different ways, in a more specific one and in a more general one. Expressions like "get out of bed on the wrong side" date from ancient Rom, where the left side of the body was believed to be "sinister". However from a linguistig point of view the theory is nonsense, because idioms, metaphers, words have a lot of origins, fairy tails, typical situations of daily live, popular culture etc..
In a more general sense, focusing on how words are "loaded" with content, with a semantic value, the thesis is wrong. We don't know how the first words were formed and we have no intention to address this topic here. However in language learning, if we learn our mother tongue, it works the other way round. FIRST we have a word and in the transcurse of our lives we fill this word with content. The world "love" means nothing to a baby when he first here it. Afterwards he associates with the word love the emotions he have towards his parents and afterwards a lot of different feelings, depending on his sensitivity, experience, customs of his environment and so on. The issue is complicated, a word refers to a broad associative space, but we have no intention to address this topic here, but in any case it is to assume that anybody has a different understanding related to the meaning of a word.
[Although it is a very good idea sometimes to define a world clearly. We should be well aware what we mean by capital, savings, interest rates, money when we talk about economic issues, see interest rates.]
The problem with the texts of Vilfredo Pareto is, that they are so confuse, that it is actually impossible to discuss about them. If the interpretation of one sentence needs ten times more space than the sentence interpreted a usefull discussion is not possible. If Vilfredo Pareto were not canonized in economic teaching, there would be no need to discuss it. It is just nonsense.
There is no doubt that the way people interprets the phenomenon has just in the last 2000 years and the way humanity tries to resolve problems as well. But it is hard to see what that has to do with logic.
If a UFO had landed on earth the greeks what had thought that Zeus is visiting the earth, in the middle age people would had thought that the the day of the Last Judgement had come. If a UFO what land today, scientist would try to get a cell in order to analyse the DNS and if they don't find one, they would open a new faculty: extraterrestrial biology. People have learned in the last 2000 years that there are some methods of approaching a problem are more succesfull than others and they are confident that they are in the long run able to explain the phenomenon with these methods.
Even if we admit that in times of Vilfred Pareto psychology was already in statu nascendi, this sentence is nonsense: "Fondamento dell'economia politica ed in generale di ogni scienza sociale è evidentemente la psicologia. Verrà forse un giorno in cui potremo dedurre dai principii della psicologia le leggi della scienza sociale, come forse verrà giorno in cui i principii della costituzione della materia ci daranno, per via di deduzione, tutte le leggi della fisica e della chimica; "
The distinction between psychology and psychiatry was not already made at that time. In psychiatry we have actually causal chaines like in medicine or at least we have kind of black box theories. We don't know what actually happens inside the black box, but we know from experience that if we put something in, in general a drug, we get something out. We don't have "laws", but at least stable relationships. Something as imagined by Vilfredo Pareto applies at most for psychiatry.
Psychology deals with much more complicated interactions. Human beings change their enviornment but the environment changes as well human beings. We don't have this interaction in psychiatry, however psychiatry as well as medicine, actually psychiatry is a specialisation inside medicine, will never be the basis of social sciences, as Vilfred Pareto assumes.
The problem of social science is not only that we don't know the impact of certain parameters, the problem is that we not even know which parameters will be relevant in the future. In order to know that, we have to know what we will know tomorrow. That's impossible.
If it is for instance possible in the future that every smartphone has a little beamer and images projected with the beamer on any surface are controlled by a camera allowing the
operation of a computer the same way we work nowadays on a computer through a keybord, the impact on society is unpredictible.
Vilfredo Pareto didn't understood, at most economists today, the difference between social science and natural science. Natural science focus on the result of a process. This is possible because we have stable causal chaines. Social science focus more on the process.
We can't predict economic development, but we can assume that certain economic orders gives the right incentives. We will discuss the topic again in the chapter about ordoliberalism.
The problem with the texts of Vilfredo Pareto is that they are very confused. He mixes up evertyhing with everything. It is true that people try to propagate their own interests by saying that they defend the general interest. There is no doubt, that ideologies of this kind exists, but that has nothing to do with logical or illogical or conscious or unconscious. It is true that people very often give stupid explanations to phenomenons they don't understand, but that has nothing to do with logical or illogical neither. In all that compote he mixes remarks about religion, linguistics, social issues, which are wrong.
If a certain measure is not suited to obtain a certain goal it is not necessarily illogical if we understand by logic the deduction of conclusion by given assumptions. It is as well possible, and in the context of economics much more relevant, that the needed information to evaluate a situation are not available.
There is no doubt that in some periods of history the explanations given for natural phenomenon are not very convincing. To believe that Helios is responsible for the sunrise and the sunset, as the greeks did, is perhaps not a good explanation for the phenomenon, but the best they could find and in any case that has nothing to do with ideology or logic.
Humanity needs to explain the world, something that give sense to their lives and orientation. A good religion is therefore a religion that can't be refuted by reality. If the Jews on their way to the Promised Land lost a battle against another tribe and Jahwe didn't come to their help they did something wrong and Jahwe was angry. If he helped them, Jahwe was pleased, but in both cases God exists and was always there and punishing God is better than no God at all, because at least he exists and can be appeased. However the problems addressed by religion are not the same as the ones addressed by ideology. There is no doubt that religion can be an ideology used to serve certain interests, but it is a different phenomenon.
We would even agree that Karl Popper forgot in his enumeration of the ennemies of an open society, religion, and that religion has aspects of totalitarism in the sense of Hannah Arendt, because it tries to control everything, however it is a different phenomenon.
Those who believe that the Manuale di Economia was an early work and things improved later on is wrong. That paragraph is from the
Trattato di sociologia generale ten years later.
| Ci sono azzioni che consistono in mezzi appropriati al fine e che uniscono logicamente i mezzi al fine; ce ne sono altre che non hanno tale carattere. Sotto questo, quasi tutte le azioni umane fanno parte della prima classe: per i marinai greci i sacfrifici a Posidone e l' azione del remare erano mezzi egualmente logici per navigare. | There are action suited to reach a certain goal and that establishes a relationship between the measures and the goal. There are others where this is not the case. If we see it like that almost all human actions are of the first class. For the greek sailors there was no difference between sacrifycing to Poseidon or rowing. Both were logical measures for navigating. Vilfredo Pareto, Trattato di Sociologia Generale, Capitolo Secondo, Le azioni non Logiche |
Difficult to say what he wants to tell us. In the Manual di Economia, we remember the man who enters a room greeting the people in an assumed, by Pareto, unconscious and therefore illogical way in opposition to the same man working as a corn trader, where he behaves, at least that what Pareto assumes, in a logical way, illogical is something like unconscious and logical something like conscious.
Now he gives a different definition. Logical is any action, "rational" or not, that serves to reach a certain goal. Illogical is any action, that doesn't serve to reach the intended goal. Defined this way most human actions are logical, because from this perspective rowing and sacrifying to Poseidon serve both, at least subjectivly, the intended goal.
Nor the first definition logical / illogical in the meaning of conscious / unconscious nor this one, logical / illogical in the sense of suitable / not suitable to reach a goal, are useful.
In an economic context the question is simply whether all information needed to reach a goal are available and whether the economic order puts the right incentives. In an economic context nobody acts uncounsciously and no entrepreneur will slaughter a mouton in order to get help from God for his business affairs. (Perhaps there are, but this is irrelevant. At the end the entrepreneurs who take the right decisions will survive and not those who sacrifice the biggest mouton to God.)
The author means indeed that economics is a transversal science, but Vilfredo goes to far, much too far.
The question wheter an action is logic or illogic, conscious or uncounscious, whether myths or religions are kind of rationality aiming to give an explanation of the somehow absurd world are irrelevant in this context.
In the next paragraph he describes kind of a subject <=> object interaction, although it is hard to see why he mentions this one. There are lot of possibilities and for the one he describes, it is hard to find an example. He commits a basic error. He has a certain topic in mind, the development of languages, and from this area he draws general conclusion. Beside the fact that his assumptions about the development of languages are disputed, we can never draw general conclusions from one area.
[That what Pareto is doing the whole time. From certain phenomenon observed in the religious sphere he draws general conclusion about the way of human thinking. That's similar to the error commited if someone assumes that the methodological approach in physics is the best method as well in economics, see methodological approach.]
No example can be found what he describes in the next paragraph. He assumes that someone carries out an action and the action, incidentally, leads to a certain result, expected or not. Afterwards he tries to find a reason why that had happen and finds an explanation. However the what he considers the reason, was actually the effect of the action and based on this result, he carries out another action, which he believed to rely on the first found reason as well, although it is actually based on the effect of the first action.
However the thesis that "Spessissimo si osserva la differenza seguente" is courageous. The authors occurs no example where this kind of interaction happens.
| Le relazioni tra i fenomeni soggettivi sono ben di rado copia fedele delle relazioni tra i fenomeni oggettivi corrispondenti. Spessissimo si osserva la differenza seguente. Certi uomini, sospinti dalle condizioni della vita, compiono certe azioni P...Q; poscia quando si fanno a ragionarvi sopra scoprono, o credono di scoprire, un principio comune a P...Q, ed allora si figurano che hanno compiuto P...Q, come conseguenza logica di quel principio. In realtà P...Q non sono conseguenza del principio, ma sì bene il principio è conseguenza di P...Q. È ben vero che, quando poi il principiò è stabilito, ne seguono azioni R...T, che da esse si deducono, onde, la proposizione riprovata è solo in parte falsa. Tutto ciò si vede bene nelle leggi del linguaggio. La grammatica non ha preceduto, ma ha seguito la formazione delle parole. Ma le regole grammaticali, dopo che furono stabilite, hanno dato origine a qualche forma, che si è aggiunta a quelle esistenti. | The relationship between subjective phenomenon is very often a perfect copy of the objective relationships. We can very often observe the following difference. For any reason some people carry out the actions P...Q. Later on they think on it and realise, or at least they think that they realised it, that P...Q are the consequence of this principle, although actually it is the other way round, the principle is the consequence of P...Q. Once the consequence established follow the actions R...T, which seems to be the logical consequences of the first one. This affirmation is wrong, but only in part. This can be illustrated by the laws of the language. Grammar did not precede the words, but follows the formation of words. However ones established the gramar, new rules were formed on that grammar and added to the preceding rules. |
The example he gives himself for this kind of interaction is not very convincing. He assumes that the beginning have been words, P..Q, but the words were not formed following a preestablished grammar, but created the grammar. Once created, to this grammar were added new rules and people believe that R...T were based on this grammar. P...Q were therefore not based on a principle, the grammar, but created it. The grammar is the effect, not the cause. But then, related to R...T, grammar was the cause and not the effect.
The problem is, that this theory is disputed in linguistics, see Noam Chomsky.
(There are more arguments put forward by Noam Chomsky than the ones who are mentioned in the article. There are thousands of articles about this topic on the internet, easy to find.) The example given by Vilfredo Pareto for this kind of interaction is therefore not very suitable for what he wants to prove.
He could have known, by the way, that the word "word" doesn't mean a lot in linguistics, actually linguists used the word morphem, because Ferdinand de Saussure was already well known in his time of living.
With a lot of A, B, C he reaches finally to the thesis he wanted to tell us from the very beginning. People can be mistaken, in other words asume that a certain effect is due to a certain cause, if actually the effect is the result of something else. This is normal. People are sometimes mistaken. But it is equally possible that people affirms a certain causal relationship knowing that this relationship actually doesn't exist. Rich people for instance will never be against higher taxes by saying that this would reduce their incomes and fortunes. They will say that higher taxes will make it more difficult to them to save money and invest, what will have a negative impact on economics development. (That is the argument put forward by David Ricardo.)
| Si può ignorare che B è conseguenza di A o credere che sia invece conseguenza di altro fatto reale C; o si può, pure sapendo che B è conseguenza di A, deliberatamente volerlo considerare come conseguenza di C. Il primo caso è quello di errori scientifici: e sempre se ne avranno esempii, perchè fallibile è l'uomo. Il secondo caso si osserva nelle finzioni legali; nei ragionamenti che usano fare i partiti politici, per opprimersi vicendevolmente, o in altre simili circostanze; è così che ragiona, nella favola, il lupo che vuole mangiare l'agnello. La maggior parte dei ragionamenti che si fanno per imporre balzelli è di tale fatto: si dice che si vogliono porre quei balzelli B in relazione con un certo principio di giustizia, o d'interesse generale C; ma in realtà B è legato, come effetto o causa, al tornaconto A della classe dominante. | It is well possible that people don't know that B is the consequence of A and that they believe instead that B is the result of another cause C, but it is possible as well that someone affirms B is the consequence of A, although they know that it is the consequence of C. In the first case it is a scientific error and there will always occure errores of this kind, because people can always be mistaken. The second case can be observed in the fictions of legal disputes or in the reasoning of political parties aiming to drive out their political opponents. The same way argues the wolf who want to eat the lamb. Most of the arguments put forward for taxation are of this kind. It is said that taxes are needed, B, because this is needed for fairness reasons or required by the general interes, C, but in fact B is suits, as an effect or a cause, the interest of the dominant class A. |
What he wants to tell us with all that A, B, C and P...Q and R...T is quite simple. Some groups have an interest to sell a measure that only serve a determined group is the general interest. The problem is that this is, as everything that Vilfred Pareto tells including the Pareto Optimum, completley trivial.
We will see later on that Vilfredo Pareto considers any social order that is not based on pure power and force as a "certo principio di giustizia". This is the way we have to understand the Pareto Optimum.
The Pareto Optimum
states that an optimum if reached, if the participants of a change can't improve their situation by further exchange. People will only exchange goods if at least they are not worse after the change than before. The logic is simple. Someone will buy apples, to give an example, until he improves his situation this way. At a certain moment he will have enough apples and will spend his money for something else.
However the Pareto Optimum doesn't take into consideration the initial situation. If Bill Gates buys a saussage on the street, both will profit. The seller of the saussage and Bill Gates, otherwise the deal would not happen. But for Bill Gates the utility of the saussage is almost cero, he can even buy it to feed his cat and give the saussage seller 10 dollars extra, but for the seller of the saussage the utilitiy is high, helps him to get at the end of the month. In other words, something completely denied by Vilfredo Pareto, the general welfare or utility could be improved by taxing a little bit Bill Gates and redistribute the money. Bill Gates doesn't care at all if he has to pay 1 million dollars taxes a year, he would not even realise that, but giving 50 000 dollars to people who has nothing, would change the live of 20 people.
[We simplify a bit in order to make this point clear. Actually the increasing tax rate is based on this idea. The more people earn, the less they care about higher taxation. We have reached a situation were even Bill Gates himself is in favour of higher taxation.]
That means: The Pareto Optimum tells us what is optimal under a given situation, but any attempt to change the initial situation is "un certo principio di giustizia", in other words can't be justified scientifically.
If we look at the example he gives later on, see below, he does not even care how we got to this initial situation. Once established, in whatever way, it is sacrosanct. If one nations conquers another nations, that's the example he will give himself, see below, we can reach a Pareto Optimum. The nation who seized all the resources by force will reach the Pareto Optimum by changing with the conquered nation who possesses almost nothing.
In the Pareto Optimum the basic idea of a market economy has gone. In a market economy free change means controll of power through competition. The Pareto Optimum means only that the government shouldn't intervene and change the initial situation or, to be more precise, following the Vilfredo Pareto it is imposible to say what would be a fair initial situation. Every attempt to change it, included democracy, are humanitarian fantasies or worse.
The problem of course is not Vilfredo Pareto. There are a lot of lunatics on earth. The problem is that he Vilfredo Pareto is part of academic teaching, although the ideological character is obvious.
In the next paragraph he explains us that moral value can't be prooved scientifically. That is highly irrelevant, because it can be prooved that a society who is lacking any moral values and who doesn't try to find compromises will be confronted eternally with social unrest or worse. A five year old child can take the toy he wants from another child by force, that's normal. It is the duty of the parents to teach him that things don't work like that. But Vilfredo Pareto was fifty years old at the time of writing the Manuale di Economia.
Any social order and concepts that doesn't rely on brute force, we will see more explicit expample later on, as democracy, humanity, enlightment, religion is pure ideology.
| Vi sono certi fenomeni ai quali nelle nostre società si dà il nome di ETICI o MORALI, che tutti credono conoscere perfettamente, e che nessuno ha mai saputo rigorosamente definire. Non sono mai stati studiati da un punto di vista interamente oggettivo. Chi se ne occupa ha una qualche norma che vorrebbe imporre altrui, e da lui stimata superiore ad ogni altra. Egli quindi ricerca non già ciò che uomini di un dato tempo e di un dato paese chiamano morale, ma ciò che a lui pare doversi chiamare con quel nome; e quando pure degna studiare qualche altra morale, egli la vede solo attraverso ai proprii pregiudizi, e si contenta di paragonarla alla sua, che è misura e tipo di ogni altra. Quel paragone porta a varie teorie, implicite, od esplicite. La morale tipo è stata considerata come alcunchè di assoluto; rivelata od imposta da Dio, secondo il maggior numero; sorgente dall'indole dell'uomo, secondo alcuni filosofi. Se ci sono popoli i quali non la seguono ed usano, è perchè la ignorano, e i missionari hanno l'ufficio di insegnarla ad essi e di aprire gli occhi di quei miseri alla luce del vero; oppure i filosofi si daranno briga di togliere i densi veli che impediscono ai deboli mortali di conoscere il Vero, il Bello, il Bene, assoluti; i quali vocaboli sono spesso usati sebbene nessuno abbia mai saputo cosa significassero, nè a quali cose reali corrispondessero. Chi sottilizza su tale materia vede nei diversi generi di morale, taluno ora dice anche nelle varie religioni, uno sforzo dell'Umanità (altra astrazione del genere delle precedenti, sebbene un poco meno incomprensibile) per giungere alla conoscenza del sommo Bene e del Vero. | There are phenomenon which are called in our society ethic or moral and that everybody believes to know well, although nobody was able to define them until now. They have never been analysed from an objective point of view. Those who defend them gave certain normative idea that they try to impose on others and which they believe to be superior to others. They don't analyse therefore what has been called moral at a certain time in a certain country, but what they believe to be called like that and if they deign to study it, the perceive it only through their own prejudices and they only compare it with their own which is taken as the measurement. This comparison leads to different implicit or explicit theories. The ideal moral is considered as something perfect, revealed or imposed by God, following the majority or due to the weakness of mankind, following some philosophers. If there are nations who don't follow it and don't respect it, it is due to the fact that they don't know it and the missionaries have the duty to teach it and to open the eyes of these miserable in order to allow them to see the truth. It is igualy possible that the philosophers undergo the hard task to take away the heavy veil that impedes the weak to recognise the real true, beautiful and good. This words are often used, although nobody has ever been able to explain what they actually mean and what correspond them in the real world. Those who think about these issues see in the different types of moral, some even talk about religion, an attempt of humanity (another abstraction of the same type as the preceeding ones, but more comprehensible) to understand the good and the true. |
It is hard to discuss this text. Under normal circunstances, if the author were not part of the canon of public teaching, one would just say that the text is nothing else than the brain flatulence of an ill-humoured old man. If he states that moral and ethics had never be studied before in objective way, "non sono mai stati studiati da un punto di vista interamente oggettivo", he didn't live on this earth or everything he didn't agree with is not objective. (We presume the latter is true.) It is to assume that there is no topic about which so many books have already been written than about moral and ethics: Nicomachean Ethics by Artistoteles, Critique of Pure Reason by Kant, Beyond Good and Evil, The Prince by Macchiavelli and so on and so on. Some of them even agree with his fundamental thesis. Every order that is not based on brute force, is "humanistic" fantasy. His thesis are actually elder than the green hills of Africa.
We agree that debate about moral issues are never as objective as the Pareto Optimum, but the Pareto Optimum is only objectivly true, because it is trivial. Trivial things are always true. That's not an advantageous, that's a problem from a scientific point of view. It is no problem to make find objectivly true laws, valid everywhere and at any time, but the it is much more difficult to make RELEVANT statements.
That certain pressure groups will try to sell their own interests as the general interest is obvious, but he didn't understand really the functionning of market a economy, something we see as well if we take a closer look at his Pareto Optimum. For him an equilibrium is reached if the two trading partners can't improve their situation. In a market economy the equilibrium is reached when it is impossible, given a certain productive potential, to improve the output by reallocating the resources. In a market economy we have therefore two different questions. By whom, what is produced and how. This problem is best resolved by a market economy.
The second question is, how the output, once produced, is distributed. The first question has nothing to do with ideology, this question can be answered in a very objective way, see social market economy or allocation of resources. The second question has some "moral" aspects, however it can be discussed in purely economic terms. For instance it is argued very often that an unequal distribution of income is needed to provide the capital needed for investments. However if capital is not needed for investments, this is not a very strong argument, see interest rates.
Vilfredo has an amateurish perspective on economics. He converts economics in a "moral" science, believing that everything is about A, B, C and P...Q or R...T and their arbitrarily assumed relationships.
If some people can abuse its power, by lobbying or by other means, we have an systemic error. If the dominance of the "classe dominante" is based on something else than efficiency, we have a failure of the system. He puts the wrong questions and to the wrong questions, he gives stupid answers.
The relevant question of an economy is not whether the trading partner change products or not, the question is at what level they do that and the level depends on efficiency. The question is not how many apples are changed for oranges. The question is how many cars were changed for luxury appartments.
The government has therefore to ensure that the intensity of competition is high enough. That can include a very broad range of measures, anti trust laws, promoting start ups, free access to universities, eliminating unnecessary regulation etc..
Vilfredo Pareto regard the problem as a A, B, C, P...Q and R...T problem. That's perhaps the case, but very irrelevant. On that basis we can't have any usefull debate. An argumentation of the type "you affirms that A depends on B, but actually it depends on C, is wrong and therefore you only want to defend your interests C" leads nowhwere, because it can allways be answered that it depends on B and the opponent masks his interests. That way a debate about economic becomes kind of metadiscussion. Economics is about finding out what actually happens. The affirmation that it can always be otherwise is obviously true, but there is no A,B,C needed to explain that. That's trivial. One can ask what Vilfred Pareto had taught at the university of Lausanne, because actually he had no clue of economics.
The real question is how we get more transparency into the system, see preliminaries. From a practical point of view the problem, beside that, is not the theory, but the data. In public administration or governmental spending there is no inherent control about the use of resources. A private company can't pay more then needed, to give an expample, to their suppliers, because this will rise the price and that will push them out of the market. There is an inherent, objective control. It is not even needed, that someone verifies it the prices paid to the suppliers are the best prices, because the market will find the best price alone and those who doesn't find it, will disappear.
The government can pay almost any price, the people who actually will pay, do not even know how much they are paying.
The case mentioned by Vilfred Pareto, a certain political party, pressure group, syndicate etc.. tries to manipulate public opinion is harmless. In this case there will be a public debate on the topic. The real problems rise, if the influence is not known by the public. In this case nor the market nor public discussion will correct the undesirable development.
Concerning the philosophers he scorned, "... i filosofi si daranno briga di togliere i densi veli che impediscono ai deboli mortali di conoscere il Vero, il Bello, il Bene, assoluti..", it would have been better to read them. That way one learns to write logical coherent text that are more that a long list of loosely coupled associations.
The Pareto Optimum is a misleading idea that, because the aspects taken into account in this modell are irrelevant for market economies. Market economies are about control and limitation of power. That this doesn't work sometimes, for a lot of different reasons, is another story. But first we have to understand the logic and then we have to understand why there are sometimes problems. Then we can resolve them. Vilfredo Pareto did not even understood the underlying logic.
As a good fascist that he was he wants to explain us, we will see that more clearly later on, that the only objective force is the law of the strongest. The problem is, with that law any economy would be ruined in one week, because 1) competition between companies that has to deliver the best products at the best price, would be substituted by 2) physical elimination of the competitors. 1) agrees with public interest, 2) not at all. The problem with Vilfredo Pareto is, that he is not trained in economic thinking. He has a more "philosophical" approach, although at a very low level. He is not an economist nor a sociologist. He is a latrine philosopher.
| Nell'epoca moderna quei concetti si modificarono, forse più nella forma che nella sostanza, ma in ogni modo accostandosi un poco più alla realtà, e si ebbe la teoria della morale evoluzionista; ma non perciò venne abbandonato il concetto di una morale tipo, soltanto essa fu cacciata alla fine dell'evoluzione, di cui segna il termine, sia in modo assoluto, sia temporaneamente. S'intende che quella morale tipo, scelta e fatta proprio dall'autore che la propugna, è migliore di tutte quelle che la precedettero. Ciò si può, volendo, dimostrare col sussidio di un'altra bellissima e, ai giorni nostri, potentissima entità metafisica denominata Progresso; la quale ci affida che ogni termine dell'evoluzione segna uno stato migliore di quello dato dal termine precedente; e che, per certe sue virtù occulte, ma non perciò meno efficaci, vieta che quello stato possa diventare peggiore. | In modern times those concepts (humanity and any other concept that does not rely on brute force) has been modified, perhaps more in the form than in the substance, so that they are closer to reality. This way we reached to the evolutionary moral (it is to assume that he refers to Herbert Spencer; for Herbert Spencer coherent moral values presented advantages in the context of evolution), but that doesn't mean that the idea of an ideal moral has been abandonned, but now it was at the service of evolution and once finished this moral will be at leat for a certain time dominant. It is obvious that this moral was ideal for the one who defended and sticked to it was better than any other that preceded. The same thing can be said about an other idea well established today, the metaphysical entity of progress. It states that any progress will lead us to a better state as the preceeding one and it impedes by some secret but efficient virtues that things can deteriorate. |
It is obvious that any point on the contract curve is as nice as another one and therefore there is no progress for Pareto. But the author assumes that if Vilfredo Pareto had really worked and wouldn't have inherited his money, he would have realised a big difference. It makes a big difference if someone has to work 84 hours a week in order to survive or if someone works 35 hours a week and goes on holiday three times a year on his own car or by airplane staying in nice hotels. In his Edgeworth Box the amount of goods and resources is fixed, there is actually no progress and Vilfredo Pareto paid any attention to that. But in the real world, there is a progress. The interesting things happens outside the box.
Mister Pareto was a little bit grumpy and collect liqueurs and breed angora rabbits is not really what we would call to enjoy live. That is really a problem. If someone inherits all the money he need and is unhappy anyway, he is really an idiot.
Step by step he abandones the abracadabra wie P...Q and R...T and says directly what he wants to say. His problem is that he has no clue of economics. Economics is not about moral, economics is about efficiency. If the banks invest more money on the stock markets than in real projects, because the earn more money there, although the impact on productivity is almost zero, it is not a moral problem, it is a systemic problem. At the end even the institutional investors themselves, banks, insurance companies etc. will go bankrupt and there will be no help from the tax payer after the next crash. The incentives are wrong. He has a strange view on economy.
Beside that: He assumes that any "moral" is a pure "humanitarian" fantasy. Later on, see below, he will explain us, that it is impossible to say from a "scientific" point of view that a nation should be impeded to conquer another, because if we impede it, this nation will be unhappy. However from a purely "scientific" point of view it is impossible to impede Vilfredo Pareto to hang himself. What we can actually say, based on empiric data, is that students would save a lot of time if the Pareto nonsense would be eliminated from the academic curricula.
It is quite obvious that people have different goals and aims (more relevant than different morals) and that there is no way to proove whether they are "correct" or not. From an economic point of view however this is irrelevant. From an economic point of view we only need to know if the measures are suitable to reach these goals and aims and if they are compatible with the general goal, improvement of general efficiecency. Someone can try to improve the economic development in Africa without any interest in earning money, but if he things that this is best done by helping them directly, he is perhaps wrong. Another one can have no interest in helping Africa, but to earn money selling them something. It is even possible that in both cases they use the same measures, although the aims are completely different.
Vilfredo Pareto in any case is obsessed by moral issues.
| In realtà, e lasciando da parte quei discorsi vani od inconcludenti, tale morale tipo altro non è se non il prodotto dei sentimenti dell'uomo che la fa propria, sentimenti per la massima parte attinti nella società in cui vive quell'uomo, e per una minima parte suoi esclusivamente; ai quali dànno forma i sentimenti, e che lievemente modifica il ragionamento; ed essa non ha altro valore se non quello di manifestazione di quei sentimenti e di quel ragionamento. Ma il suo autore non l'intende davvero così. Egli ha accolto quella morale spinto dal sentimento, e si pone il problema: come dimostrarla coll'esperienza e la logica? Così necessariamente incorre in pure logomachie, poichè quel problema è, per indole propria, insolubile. | If it comes to the practise and if put aside this vagues and incoherent discussions this moral or ideal is nothing else than the result of the feelings of the one who believe in this moral. In general these feeling are well rooted in the society this individuum is living and less his own feelings. The feelings gives the specifique form to the moral and modifies the way of arguing and the only scope of this arguing is the revealing of these feelings. But the authors doesn't see it like that. His feelings pushed him towards a certain moral what leads to a problem. How to proove it by facts and logic? This leads to sophisms and useless debates because this kind of problems can't be resolved. |
It is impressing how many nonensense fits in one paragraph. "Feelings" are for him a category sui generis, something that exists independently from any context and can't be modified or is the result of experiences, thoughts, circumstances and reason.
Something trained in humanities would never use the word "feelings" in a scientific context. If we want to stick on his A, B, C logic, C, the feeling, can be the result of A, the reasioning, or the other way round. Poor people for instance will never be happy if the distribution of income is unequal, that's obvious. However if the poor believe that unequal distribution of income is the result of personal performance and if they believe they have a chance to improve their situation the acceptance of inequality will be higher than in the case that it is simply the result of military or police power. It is to assume that there are more "feelings" that are the result of the evaluation of a situation than reasionings that are the result of feelings.
The fact that at the end of the evaluation of a situation, at least if we are concerned ourselves, will be a "feeling", is obvious. Any other thing would be strange. Without any "feelings" we woudn't care if we have to work 16 or 8 hours a day, if we die or live, if we are rich or poor. In this case the reasoning would be useless, because whatever the result of the reasoning, it wouldn't have any impact on our live. We would be like a machine, that doesn't care if it works or not, if someone stops it or not, if is destroyed or not. Than we would have a very strong feeling, we would be mad.
In the case of a psychological problem, as in the case of Vilfredo Pareto, the situation is different. Someone who suffers from depression has a certain "feeling", that has nothing to do with the evaluation of the situation.
Vilfredo Pareto assumes that the "feelings" depends on the social environment: "...sentimenti per la massima parte attinti nella società in cui vive quell'uomo...". First of all, he contradicts himself. First he assumes that the "feelings" are the reasons for reasoning, that the feelings precedes the reasoning. Now they depend on the enviornment, but if the enviornment have the effect that all think and argue the same way, than the "feelings" are the result and not the cause of the reasoning.
The thesis has been already put forward by Karl Marx, "...the being determines consciousness...". That seems to be true at first glance, however it doesn't fit very well with empirical data. If that were true, if it were true that some "classes" vote for certain political parties because they have a political programm that best fits with their "feelings", there should be little changes after elections. A change should only happen, if the structure of a "class" changes.
However the pattern is different. Normally people vote for a party, than they see that the political party doesn't resolve the problems, something obvious, hard to believe that a political party can resolve a problem, and vote for another party, who doesn't, obviously, resolve the problems either. If the
"... being determines consciousness..." were true, the system should be more stable, than it actually is.
The expression "...sentimenti per la massima parte attinti nella società in cui vive quell'uomo..." is meaningless. In modern societies everybody lives in a lot of different groups at the same time and there are no homogeneous "classes".
Different opinions are less due to different feelings, but to different access to information. See preliminaries.
Vilfredo Pareto is against almost everything, although most of his opponents are windmills. Vilfredo Pareto is kind of a right wing simplified version of Don Quijote, however he is as well in favour of nothing. The only "objective" moral, following Vilfredo Pareto, is the order imposed by brute force. In this case we don't have any childish moral fantasies. That's why democracy is a religion as well for Vilfredo Pareto. In a democracy "humanitarian" fantasies, that can't be prooved "scientifically would be imposed by the majority.
It is actually true that political parties struggle for power and it can even be true, that this is their only scope. However in order to get to power, they need to convince the majority and in order to stay in power, they hast to proove that the measures proposed in the election campaign actually work, otherwise they will lose the next election. Vilfredo Pareto assumes, as many other radicals like for instance Friedrich Hayek, believes that this will lead to the suppression of minorities. However this theory is hard to prove, because if the minorities had the right to vote, that never happened, what can be explained. Majorities are never a homogeneous group. People can belong to a minority in certain aspects, but to the majority in other aspects. Discriminating a minority would make it therefore more complicated to get a majority. Only in the case that a group with certain characteristics doesn't have the right to vote it makes sense discriminating them.
Democracies are less violent as well, because no majority can be sure to continue being it after the next election. It is therefore clear that Vilfredo Pareto, who wanted an order based an brute force, is against the democracy and his best known follower, Benito Mussolini, abolished it.
Majorities by the way will never vote for something that only serves their individual selfinterest. From an individual perspective the robber for instance has no problem with stealing. That's obvious, otherwise he wouldn't do it. However he would never vote in favour of a political party who is in favour of stealing, because in this case he can be the victim of robbery himself. May sound strange, but democracies comply the categorial imperative of Immanuel Kant:
"Act only according to that maxim whereby you can at the same time will that it should become a universal law without contradiction."
It is hard to understand why Vilfredo Pareto is so obsessed by moral issues. That has nothing to do with economic thinking. A system that would rely on moral values would be crack down tomorrow. Economics is about systemic thinking. Majorities have a tendency to vote for measures that serves the general interest, at least what they believe to be the general interest. It is obvious that the farmers in Europe are in favour of higher duties for agricultural products coming from foreign countries. However it is not possible for the government to serve their interests, because that would be at the expense of the rest of the population. Now the government can propose to rise the customer duties for ALL products, cars, computers, clothes etc.. That would enlarge the group. However in this case the farmers wouldn't vote them, because than the would have to pay more for computer, cars, clothes. The story ends with no customer duties at all.
[The only way to resolve this problem is to introduce customer duties silently and never talk about it. In this case the majority, who will pay them, are not even aware that have been cheated and will therefore not complain.]
The question is therefore if the order the government will establish give the right incentives to promote public health. The voters at the other side will never vote for an incetive that can have potentially a negative impact on their lives. Economics is more about the right incenctives than about religion, ethics, moral etc.. Vilfredo Pareto discusses economic topics as moral philosophers 200 years before him.
Kindchenschema hat nichts mit Religion zu tun.
| Gli uomini, e probabilmente anche gli animali viventi in società, hanno certi sentimenti che in circostanze determinate dànno norma alle loro azioni. Quei sentimenti dell'uomo sono stati divisi in varie classi, tra le quali sono da notarsi quelle denominate: religione, morale, diritto, costume. I confini tra quello varie classi neppure ora si possono segnare con precisione, e fu tempo in cui tutte quelle classi erano indistinte e costituivano un insieme pressochè omogeneo. Esso non hanno precisa corrispondenza oggettiva e sono solo un prodotto della nostra mente; perciò è vano di ricercare, ad esempio, cosa sia oggettivamente la morale, o la giustizia. Eppure gli uomini in ogni tempo hanno ragionato come se morale e giustizia avessero esistenza propria, a ciò tratti dalla tendenza, che in essi é fortissima, di dare carattere oggettivo ai fatti soggettivi, e dal bisogno prepotente di ricoprire con una vernice logica le relazioni dei loro sentimenti. Simile origine hanno la maggior parte delle dispute teologiche, nonchè il concetto veramente mostruoso di una religione scientifica. | Men and perhaps animals that live in society have certain feelings which guide their actions in certain conditions. These feeling were divided up in different groups where the most important once are religion, moral and customs. Even today the limits between them can not be clearly defined even today with precision and for some time no distinction was made between these groups and the formed a homogeneous group. There is nothing that corresponds to reality and some of them are only the product of the brain. Therefore it is useless to ask for instance if moral or justice is something objective, although humans at any time asked themselves whether moral or justice can be justified by themselves and that leads to the tendency to take something purely subjective as something objective and to a strong need to cover with a logical varnish to their feelings. The disputes of theology are of similar kind, although it is monstrous to talk about science in the context of theology. |
There are indeed basic "feelings", like the ones triggered by the famous cuteness, that human beings and animals have in common, otherwise mammals, who depend for some month or years on their mother, would die. These kind of "feelings" are stable in time and space and don't depend on reasoning. The case of religion, moral and customs is completely different, they vary, and a lot, in space and time and therefore it is obvious that they depend on reasoning, because if that were not the case, they wouldn't change. If they change, there must be a reason for their changing. The reasoning is not the result of the "feelings", "Feelings" are the result of reasoning.
Furthermore it is to assume that a change in the evaluation of a situation, what leads to different "feelings", is due to the fact the preceeding evaluation was considered wrong.
To the extend that Vilfredo Pareto was able to love, it is to asume that he loved his women Dina Bakunin. But when became aware that she had another lover and that she had stolen his money, he got to a new evaluation of the situation and different feelings. Feelings depend, as had could know from own experience, from the evaluation of a situation, in other words from the facts available and the theory with which the fact are interpeted.
His idea that "feelings" "non hanno precisa corrispondenza oggettiva e sono solo un prodotto della nostra mente", have nothing that corresponds to them in the real world, is therefore wrong. "Feelings" depend on reasoning and the reason changes because we evaluate the same situation in a different way after having learned something or the situation changes and therefore our reasoning.
If we are frustrated for instance we had had a certain idea about things should work and we are frustrated if they don't work as assumed. Our evaluation of the situation will therefore change.
At a certain degree, at least in childhood,
religion, moral and customs were actually acquainted somehow mechanically. Hard to see how it could be different. In order to make a conscious choice we need alternatives and a child doesn't have one. To ask a child to chose between protestantism, catholicism, islam, budhisme, atheisme, a philosophical system or don't care at all about that is begging a little bit to much. But in a very short time all these "feelings" can change depending on very rational reasoning about these issues. The schooling system can accelerate the process and should do that, because there is no liberty without choice and concepts that are not discussed, risks to be accepted mechanically, see John Stuart Mill, On Liberty.
This basic theory of Vilfredo Pareto is wrong. Reasoning is not the result of "feelings". It is the other way round. "Feelings" are the result of reasoning. This reasoning may be wrong, but it produces the "feelings" and is not the result.
To illustrate with an example: Nationalists believe, between many other strange things, that nations compete with each other and the development of one country is only possible at the expense of another. If it is possible, something difficult in practise, to explain him that at an international level the same rules are valid concerning competition than at the national level his "feelings" will change. He may for instance be induced to believe that customer taxes are usefull to protect, for instance, the cloth industry from the competition of countries in the far-east , but if he realises that he pays suddenly four times more for his trousers, he will quickly see that he was better off without customer duties on clothes, even if he got a job in the cloth industry.
We don't say that irrationalism is a completly inexistent phenomenon. If people become fans of their national soccer team the emotions triggered by world cups are hard to understand. There are obviously emotions that need no object to be triggered, any object can do it. Perhaps a winning national team rise the self esteem, althought there is the risk to lose self esteem if the team they identify with loses. But phenomenon of this kind have little to do with reasoning, because in these cases there is non. It's just madness.
However Vilfredo Pareto mixes two very different things that has nothing to do with each other. At one side he put forward the thesis that reasoning is the result "feelings". That's obviously wrong. It is the other way round.
The second thesis put forward is that some people present something that actually serves only their own interest as the general interest in order to reach or stay in power.
Conservative will say that the income distribution has to be more unequal, otherwise there is no incentive to work more and harder and savings will not be high enough to realise all the investments needed. Or something like that. Socialists will say that the income distribution has to be more equal, because that strengthen general demand and that is needed to reach full employement. Or something like that.
Both argue with the general interest, but actually they want to win the elections and get jobs for themselves and for the member of the party members with merits. It is even well possible that they know that things are a little bit more complicated, because they tell the same stories since 100 years.
But this thesis has nothing to do with the first one.
The first thesis states that reasoning is unconciously based on "feelings". The second thesis states that the reasoning is a conciously manipulation of the public. The first thesis is wrong, the second thesis is right.
However the pure fact that a political party pursue its own interest doesn't mean that this is at charge of the general interest. It is even impossible to get to power and to stay there if this is the case. The same rules apply as in a market economy. The baker doesn't bake his breads in order to make us happy, but the only way to earn money is to make us happy as possible as he can, because otherwise we will buy our bread elsewhere.
The difference between economy and politics is that in economy we have a very strict and objective control and it is not necessary to actually control it, it controls itself. There is no external control needed that determines the costs of a production of a product. It is enough that some company can produce it cheaper than another or in a better quality.
The case of public administration is very different. There is no competition and public employees have no incentive to work the best as they can, because they get their money anyway. Governments have no interests to work well, they have an interest to sell their activities well, because controlling their activities is almost impossible, because the necessary data are not available, see preliminaries.
That's why people are more and more bored about politics and in most democracies the non voters could form a government, because they are the biggest party. However the situation is due to the fact that people expects the solution of their problems from persons and not from political programms, that are too difficult to understand and whose execution is still more difficult to controll. Therefore they focus on persons and elections campaign become more and more similar to advertising campaigns, putting in the center personalities. If people want a change, they have to ask for more information. If there is a demand, there will be supply. See preliminaries.
Summary (We will return on the topic when talking about Friedrich Hayek and Milton Friedman):
In an economic context it doesn't make any sense to analyse "feelings", "moral", "religion" etc.. It is actually true that economics is a transversal science and it doesn't make a lot of sense to take into acount only the (few) parameters that can be measured in money as it happens in modern textbooks about economics. Sociological, technical, political etc. aspects has to be taken into account as well as the interaction between the market players and their environment. But that doesn't mean that we concert economics in a kind of moral philosophy.
The economy can't rely on a "moral". If these where the case, the only thing we can do is to hope that all the market player have a moral integrity. That is nice if that happens, but normally it doesn't happen. What is needed is an order that gives the right incentives, in other words incentives that induces the market player to behave in a way that promotes public wealth. It is a systemic problem, not a moral problem.
Democracies will lead to the right incentives, because majorities are interested in governments that put the right incentives. If this is not the case, we have a problem with transparency, see preliminaries. If some pressure groups succeds in getting privileges at the expense of the rest of the society, there is a lack of transparency. If the majority knew what's going on, they wouldn't allow it.
It is as well true, that bureaucracies tend to extent there activities.
There is even a humoristic presentation of this fact, Parkinson's Law. That means, that bureaucracies have their own interests, an issue addressed as well by Milton Friedman, the problem of bureaucracy. However this is not a religious or moral problem, it is a systemic problems. The incentives are wrong and the incentives are wrong, because there is no control. The solution of the problem is not a discussion about religion, but to introduce more transparency, see preliminaries.
[The simple solution put forward by Milton Friedman, withdrawal of the government, is not viable solution, as we will see later on, see Milton Friedman.]
Economics is a transversal science, but not branche of moral philosophy as assumed by Vilfredo Pareto. The fact for instance that publicly subsidised research an development have little impact on innovations is an organisational, not a moral problem.
The fact that economics teaches the same nonsense for 200 years is not a moral problem. Academic teachers of economics have no incentive to do something useful. If they get paid to teach the Pareto Optimum abracadabra they teach the Pareto Optimum. If there academic career depends on the publication of never discussed discussion paper in "scientific" journals with high impact points, they produce never discussed discussion papers.That's not a question of moral. The incentives given by the system are wrong. Given these incentive the singular academic teacher have no chance but accepting the rule of the game.
We have already seen that famous authors, especially Adam Smith, see natural price / market price, forget what they have said at the beginning. That's comprehensible if someone writes 800 pages. The case of Vilfredo Pareto is different. Vilfredo Pareto is able to produce contradiction at the same page. At the beginning he tells us that a moral is the result of confuse "feelings", " "...tale morale tipo altro non è se non il prodotto dei sentimenti dell'uomo...". The moral concepts are only the result of "feelings". But now he tells us that "feelings" are conected to social issues, that they change throughout history, although he doesn't explain the change. The mere fact that the social circumstances change, can't explain that the "feelings" change as well. It is to assume that a change in the social circumstances leads to a chance in the evaluation of a situation and this different evaluation leads to different "feelings".
It is indeed true that the character, the origin and the history of "feelings" could be studied, although we have no intention to do it. But without any investigation we can see THAT they change and that this change has to do with the evaluation of a situation. To give a simple example. Before 1945 Germany and France were opponents in almost everything. It was assumed that their interests were conflicting, with the well known results. After world war II the situation has changed completely and the "feelings" they have for each other changed as well.
In other words. If it were true what he said at the beginning, "feelings" are the reason for a certain type of reasoning, the "feelings" wouldn't change or only in a way similar to gene mutation. If they change, there must be a reason for it.
| Le ricerche che possono utilmente instituirsi su quei sentimenti sono rivolte a conoscere quale ne è l'indole, l'origine, la storia; in quali relazioni stanno fra di loro e con altri fatti sociali; le relazioni che possono avere coll'utilità dell'individuo e della specie. Anche occupandosi di tali ricerche, è ben difficile che gli uomini procedano in modo interamente sereno e scientifico; a ciò si oppone il profondo commovimento dell'animo che da esse ricevono. Solitamente chi ragiona dei sentimenti ora accennati ne fa due classi, e pone nella prima quelli in cui consente, che sono detti veri e buoni; nell'altra, quelli da cui dissente, che sono detti falsi e cattivi: e quell'opinione informa ogni suo giudizio, impronta ogni sua ricerca. In Europa, dal medio evo sino verso il secolo XVIII, non era lecito di discorrere delle religioni che non fossero la cristiana, se non come di funesti errori; ora è sorta una religione umanitaria-democratica, e questa sola è vera e buona; le altre, compresa la cristiana, sono false e perniciose. Chi manifesta tali concetti si figura ingenuamente essere scientificamente molto al di sopra di coloro che, per il passato, la medesima intolleranza diversamente usavano. | Investigations about the feelings study the character, the origin and the history of these feelings, the relationship between them and with other social facts and the function they have for the individual and the specie. However it is doubtful that the people who study these questions will do that in a serious and scientific way. This is impeded by the great emotions triggered by this kind of study. Anybody who studies these questions divedes the feelings into two categories. To the first category belongs all the "feelings" he agrees with, that he takes for true and good. To the other category belong all the feelings he doesn't agree with, that he take for wrong and nuisible. This opinion will have an influence on all his judgements and investigations. Since the middle ages until the 18th century it was not allowed to discuss about the christian religion or about its errors. Now we have a humanitarian - democratic religion, the only one which is true and good. The others, included the christian one, are wrong and nuisible. Anybody who shares this opinion believes himself to be superior from a scientific point of view in comparison to the ones who believed the same in the past. |
This is once again a slightly different statement. He accepts that "feelings" change and therefore he accepts implicetly that they depend on reasoning. However he still sticks to the thesis that moral values can't be proved "scientificly". The problem is that he mixes to different spheres, the economic sphere and the more private sphere. Free markets are not about moral, they are about efficiency and any attempt to impede the resources to be allocated as efficient as possible, for instance by impeding the access to the market, is inefficient and therefore "immoral", bad and wrong. This is a purely systemic problem, not a moral one and can be judged at a very objective way.
Democracy is not a religion, but a very logical system. More than from any other system we can expect from democracy that the right incentives are put and more than in any other system an abuse of power is unlikely, because the power of government is restricted.
Beside that Vilfredo Pareto is a good example for the thesis he starts with: "Anche occupandosi di tali ricerche, è ben difficile che gli uomini procedano in modo interamente sereno e scientifico." His polemics are always directed towards religion, democracy, humanity, moral values but never against nationalism, fascism, dictatorship.
From a more "private" perspective it meaningless to tell us that moral values can't be proven scientificly, but certain "moral" values, for instance the ones favoured by Pareto, will lead to a lot of stress and very low efficiency. Only an order that is based on brute force is objective for Vilfredo Pareto, see next paragraph.
Normally we would simply say that someone like this is mad and needs psychiatric treatment, but that's not the point. There are a lot of lunatics on earth. The problem is, that he belongs to the canon of academic economics.
| Per esempio, egli è persuaso che la guerra è immorale. Tale proposizione può soddisfare i suoi sentimenti e quelli di altri uomini, ma non si può dimostrare scientificamente, e nessuno può dire se la guerra sparirà mai dalla terra. La ripugnanza dello Spencer per la guerra e per i sentimenti bellicosi è meramente soggettiva; egli, seguendo una via solita per gli uomini, ne fa un principio oggettivo, e con quello giudica la morale dei diversi popoli. Egli non si avvede che per tale modo imita l'uomo religioso, pel quale ogni religione che non sia la propria, è falsa. Lo Spencer ha semplicemente la religione della pace; e tale religione vale nè più ne meno dell'islamismo, del buddismo, o di altra qualsiasi simile religione. | He [Herbert Spencer] is convinced that war is something immoral. This statement satisfies his feelings and those of other people, but it is not possible to demonstrate that scientificly and nobody can say if war will ever disappear from earth. The refutation of Spencer for the war and any kind of sympathy for war is purely subjective. He affirms that this moral is true for anybody, makes a principle out of it and makes a judgement of the moral of different people. He doesn't realise that this way he imitates the followers of a religion who believe that any religion beside the one they believe in is wrong. Spencer has simply the religion of peace and this religion is not worth more or less than any other religion like the islam, budhism or any other similar religion. |
This is clearly a fascist standpoint. He doesn't discuss the question whether or not it is allowed under certain circunstances to use military force, he discusses the question abstracting from any circumstances and later on, see above, he will be more explicit. He discusses the question whether it is allowed to make war just for pleasure. This is a characteristic of fascism. In fascism war is not a means to obtain a goal, war is way of living, were different races triumphe over others showing these way superiority.
The answer to this question is very simple. If Vilfredo Pareto enjoys to make war, we shouldn't impede him to do that together with other people. We should give them a place somewhere on earth where they can kill each other. If he wants to make war only because he is more or less sure that he is going to win it, at Mussoline did in Ethiopia and Greece, we should empower the countries attacked in order that the Paretos were killed, although we assume that in this case Pareto will stay at home breeding his ancora cats.
In ordinary terms. Criminals may have similar pleasures as Pareto, but the solution is simple. The were sent to jail.
If a proof was needed the Pareto Optimum is nonsense, here we have one. The Pareto Optimum is a situation where utilitiy of the trading partners can't be improved without worsening the situation of at least one trading partner. But war is a kind of trading were both trading partners are worse off afterwards and in general at least one loses everything. We understand very well that Pareto didn't take seriously his trivial nonsense, but if even Pareto didn't take it seriously, we can eliminate it from the textbooks of economics.
"Scientific" is used in the text of Vilfredo Pareto, something that happens very often, in an inflationary way: "...non si può dimostrare scientificamente, e nessuno può dire se la guerra sparirà mai dalla terra...". That's idiot. It can't be proved either that it is a stupid idea to shoot oneself in the foot or to drink a liter of petrol, but is is actually a stupid idea. If Pareto needed a scientific proof that this is a stupid idea, why he didn't do it? The author is absolutely convinced that he would had understand immediately that it is a stupid idea.
He continues with his kitchen's philosophy trying to concince us that a robber is unhappy if he is not allowed to steal. The problem is, that this is obvious, but nobody has the intention to make him happy.
If Pareto had the intention to do that, he could had put a sign at the entrance of this house: Robbery allowed.
| Supponiamo una collettività costituita da un lupo e da un agnello: la felicità del lupo sta nel mangiare l'agnello, quella dell'agnello, nel non esser mangiato. Come facciamo a render felice quella collettività? Nell'umano genere, ci sono popoli bellicosi e popoli imbelli; la felicità dei primi sta nol conquistare i secondi, e la felicità di questi, nel non essere conquistati. Occorre ricorrere a qualche altro principio, ed eliminare, per esempio, la felicità dei popoli bellicosi; sentenziarla meno degna di quella dei popoli imbelli, che si considererà sola. Ma in tal caso quel bel principio, che era stato instituito apposta per sciogliere i problemi morali, all'atto pratico si mette da parte, e non serve più a niente. La felicità dei romani stava nel distruggere Cartagine; la felicità dei cartaginesi, forse nel distruggere Roma, per fermo, nel non avere distrutta la città loro. Come farai a procacciare la felicità dei romani e dei cartaginesi? | Let's suppose a collectivity composed of a wolf and a lamb: the happiness of the wolf consists in eating the lamb and the happiness of the lamb consists in not being eaten. What can we do to make both happy? There are human beings that are martially minded and there are human beings that are peaceful. The happiness of the first ones conists in conquering the second ones and the happiness of the later consists in not being conquered. It would be necessary to refer to another principle and to eliminate, for example, the happines of the martially minded, judging them less worthy that the peacefully minded, whose right would be respected only. But in this case this nice principle [he refers to maximise the general utilitiy] which has been put forward to resolve moral problems is put aside when it comes to resolve practical problems and is of no use. The happiness of the romans was to destroy carthago and the happiness of the carthaginians consisted in destroying Carthago or to impede that their town wouldn't be destroyed. What to do to make them all happy? |
The answer to the last question, what to do to make them all happy, is very simple. Send the criminals to jail. We don't want to make happy murderers, rapists, robber, fraudster, etc. etc.. We want to see them in jail and unhappy. That's very simple.
Concerning the people who are martially minded the solution is even more simple. We should send the to the desert with heavy weapons and there they can satisfy their special needs killing each other. An alternative would be to put them to psychiatric care, but that would be more expensive and we cannot be sure that they will be happy at the end.
At the end he explains us what the Pareto Optimum really is about. The Pareto Optimum states that a trade is optimal if none of the two trading partners is worse off after the trade, but the initial situation is not discussed. The rule applies if A) has 5 apples and 6 pears and b) 4 apples and 7 pears as well as in a situation where A) has 500 apples and 6000 pears and b) 4 apples and 3 pears. Normal people would therefore say that the problem is not how muchs apples are changed for pears, but how two change the initial situation. Following Pareto we can't say that it would be a good idea to change the initial situation, because A) with his 500 apples would perhaps lose more utilitiy by giving away an apple than B) would benefit if he gets one apple more.
In the paragraph below he puts it more clearly. We don't know if the utility the romans lose if they were impeded to destroy cartago is not bigger than the increase of utility of the carthaginians. The total utilitiy, of the romans and the carthaginians, can therefore increase or decrease.
This is actually true. However we don't know either if the pleasure a rapist loses if we impede him to rape a woman is not greater than the sorrow of the raped woman. It is therefore possible that the general utilitiy would rise if he is allowed to rape. But nobody cares about his pleasures and he is send to jail for a very long time. The aim is to make him as unhappy as possible.
The Pareto Optimum and the Edgworth books looks neutral in textbooks about microeconomics, but what Pareto actually wants to tell us, he describes in the paragraph below.
| Potrebbesi rispondere: la felicità totale, ove i romani non distruggessero Cartagine, nè i cartaginesi Roma, sarebbe maggiore che ove una di quelle città fosse distrutta. Tale asserzione è campata per aria e non può essere sussidiata dalla menoma prova. Come si fa a paragonare quelle sensazioni piacevoli, o spiacevoli, e a sommarle! Ma per spingere, sino all'estremo le concessioni, supponiamo che ciò si possa fare, e poniamoci, per esempio, il problema di ricercare se la schiavitù è morale o no. Se vi sono molti padroni e pochi schiavi, può darsi che le sensazioni piacevoli dei padroni abbiano una somma (?) maggiore delle sensazioni spiacevoli degli schiavi; e viceversa se vi sono pochi padroni e molti schiavi. Ma tale soluzione no sarebbe certamente accettata, nel primo caso, da coloro che vogliono usare il principio del maggiore benessere del genere umano. Per sapere se il furto è, o non è, morale, dobbiamo noi paragonare i sentimenti spiacevoli del derubato, ai sentimenti piacevoli del ladro, e ricercare quali hanno maggiore intensità? | It could be answered that happiness would be greater if the romans wouldn't destroy Carthago and the Carthaginians wouldn't destroy Rom instead of destroying one of these towns. This is what is affirmed everywhere although there is no proof for that. How can we compare the pleasant and the unpleasant feelings! But in order to follow this logic until the end: Let's suppose that this were possible and let's discuss, as an example, whether slavery is acceptable or not. If there are a lot of masters and only few slaves it is possible that the pleasant feelings of the masters are greater (?) than the unpleasant feelings of the slaves und the other way round if there are only few masters and a lot of slaves. But this solution would not be accepted, in the first case by those who are in favour of the principle of maximisation of the well-being of the human specie. In order to know if robbery is bad or not we must compare the unpleasant feelings of the robbed to the pleasant feeling of the robbed and investigate which of both has a greater intensity? |
Im textbooks about microeconomics this concept is presented in a neutral form. What we have on the contract curve are all points where the trading partners have reaches the optimum, none of them can improve his situation without the other being worse off, under different initial situations.
Only the first part is true, although trivial. If A) wants to make an apple pie and needs four apples and wants to eat one banana and B) wants to make a banana pie and needs therefore four bananas and wants to eat one apple, they will change their apples for bananas if A) has five apples and B) five bananas. After the change A) has four apples and one banana, that what he wants and B) has four bananas and one apple, that what he wants as well. Both improved their situation, but a further exchange would deteriorate their situation. Until here it is correct, because it is trivial.
However this kind of logic, a trade is going to happen if none of the traders will be worse off after the change, but at least one of them will be better off, applies indepedently from the initial situation. Even if A) has one thousand apples left, more than he can eat, he will be worth off if he give two apples for one banana to B) or giving away some apples to C). Following the Pareto logic it can't be proved in a "scientific" way that the initial situation should be changed, for instance by social transfers.
If we follow this logic to its utmost consequences, it can't be proved "scientifically" that the general wealth is improved if a raper is impeded to rape a woman or one country is impeded to conquer another or to impede someone to have slaves because we don't know if the loses of utility of the raper, conqueror, master is not greater than the gain of utilitiy of th raped woman, the conquered nation or the slave.
The problem is, that normal people have no intention to make criminals happy.
Criminals must be put in jail.
From a purely logical point of view the pareto nonsense is illogical. It doesn't make any sense to define the optimal trade abstracting from the initial situation. Following this logic it is not possible to say whether the general utility improved or decreased when Mussolini conquered Greece and Ethiopia. But once conquered and reduced to slavery, once the initial situation is established, they can reach a Pareto Optimum. This is mad.
As we already said, the problem is not Pareto. There are millions on lunatics on earth, this is a psychiatric problem. The problem is, that this nonsense is part of the official canon of economics.
Pareto didn't understood how market economies work. The question whether the robber is unhappy if we put him in jail is irrelevant. The point is, that the personal interest of the robber doesn't agree with the general interest. Market economies are an economic order, where the only way to improve ones personal situation is to improve the situation of others as well, see homo oeconomicus.
El caso Pareto es de hecho un asunto del cual deberían ocuparse los ministerios responsables para la educación pública en los respectivos países. Tiene poco sentido de utilizar el dinero de los tributarios para enseñar conceptos de carácter abiertamente fascista y que no tienen ningún valor explicativo.
Actually il Manuale di Economia Politica is not about economics, it is more about philosophy, although at a low level.
| Un medesimo concetto può esprimersi in varie lingue; e nella stessa lingua, può esprimersi in vari modi. Una stessa contesa che pochi secoli fa avrebbe preso forma teologica, oggi prenderebbe forma socialista. Quando si sente dire nel gergo moderno che una legge è « largamente umana », occorre tradurre e dire che favorisce gli infigardi e le birbe, a scapito degli attivi e degli onesti. Chi volesse esprimere che un uomo a lui pare degno di biasimo, usando il linguaggio dei secoli di mèzzo, direbbe che è un eretico scomunicato; usando il linguaggio dei giacobini sul finire del secolo XVIII, che è un aristocratico; usando il linguaggio dei giacobini moderni, che è un reazionario. Sono questi semplicemente modi diversi di esprimere la stessa cosa.Più generalmente, si può osservare che, nella società, un fenomeno, che rimane sostanzialmente lo stesso, assume col volgere del tempo forme diverse e spesso assai differenti; ossia si ha la permanenza di uno stesso fenomeno sotto varie forme. | The same concept can be explained in different languages and in the same language in different ways. A debate that some centuries ago would have taken a theological form would nowadays taken a socialist form. If it is said in the jargon of nowadays that a measure is "very human" it must be translated to get the real meaning: it helps the lazybones and the cunning at charge of the industrious and the honest. If someone wanted to express that a certain man needs to be reprimanded he would have said centuries ago that he is a heinous heretic; in the language of the modern jacobins he would say that he is reactionary. These are only different ways to say the same thing. In general we can observe that in society a phenomenon that sustantially remains the same appears in different forms throughout history and very often takes even really different forms. We have therefore the same phenomenon under different forms. |
The somehow "associative" way of thinking makes it difficult to interprete the texts of Vilfredo Pareto. Perhaps he wanted to say that some fanatics followed the preceeding ones.
Where he gots the idea that the socialists concepts and the theologian concepts are the same thing in different forms is hard to understand. Perhaps they are equally fanatic, but the concepts are very different. We don't know either what he understands by "forma socialista" and we don't know about which theologian he is talking about nor to what concepts he refers to. Very in general, anything more is not possible because the terms used by Vilfredo Pareto are very vague, we can say that theologians assume that human condition depends on God, socialists believe that the human condition depends on economic structures depending and changeable by mankind. That's actually the opposite and not at all "un fenomeno, che rimane sostanzialmente lo stesso".
That both defend their respective concept in a sometimes fanatic way, is a completely other story. Actually Il Manuale di Economia is nothing else than several hundred pages of pure meaningless polemic.
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Pareto himself describe the aim of his studies correctly. He underlines that his studies are of no practical use. They are irrelevant and can therefore without any lose deleted from the academic curricula.
His excursions to the world of social Darvinism reveal that he didn't understand how market economies work. In market economies competitors are not physically eliminated, but the government maintains the intensity of competition high enough to guarantee the efficiency of the market. Without competitors who controll power, market economies won't work.
