PARETO, VILFREDO. - Economist, of a Genoese family, b. 15 July 1848 in Paris, where his father Raffaele was in exile following the Genoese uprisings of 1834, d. at Céligny on 20 Aug. 1923. He graduated in engineering from the Polytechnic of Turin in 1869. He served as director of the mines at S. Giovanni Valdarno, where he was led to examine economic problems after reading Pantaleoni’s treatise on pure economics. Abandoning business, he accepted in 1891 the chair of political economy at the University of Lausanne. He left teaching in 1907 and retired to his villa at Céligny on Lake Geneva.
His name is chiefly associated with the theory of economic equilibrium, already conceived by Walras but developed by him in its full generality. In the economic universe there are obstacles that limit the freedom of individual action, and the equilibrium configuration is reached when the movements desired by the subject—what P. calls “willed by tastes”—are impeded by the obstacles. The equilibrium configuration thus arises from the clash between tastes and obstacles, and the condition that the movements desired by tastes are impeded by obstacles (or, what amounts to the same thing, that those compatible with obstacles are not willed by tastes) represents the general condition of economic equilibrium. Since obstacles generally represent the limitation of means, i.e., of human resources—so that what is possessed, consumed, employed, or saved by one subject or by the same subject for a given purpose is subtracted from all other subjects and all other purposes—it follows that the system of obstacles binds together, in its entirety, all the movements of all persons present in the market. Conclusion: economic phenomena are not linked by simple cause-and-effect relations but by relations of mutual dependence.
This conclusion explains the profound reason for the difficulties encountered in economic governance, for just as a measure implemented in one sector may provoke indirect, unforeseen, and undesired reactions in other sectors, so too a measure intended to achieve a goal of social justice may in practice become an instrument and source of new injustice. It constitutes a condemnation of economic dirigisme. No human mind is capable of substituting itself for the market in determining the reciprocal positions of individuals, i.e., of bringing about those adjustments that occur in the market through the fluctuation of prices. The common view is inclined to see the monetary instrument as the determining cause of the phenomenon: the above schema demonstrates the futility of this conception. Equilibrium arises from the clash between tastes and obstacles, i.e., from the primitive elements at play; prices measure, they do not create, the tension of the system.
Economic drama is thus reduced to its essential foundations: human needs and the means to satisfy them. It is but one aspect of human drama, in which the activity directed toward satisfying material needs interferes with the higher activity that unfolds in the spheres of politics, art, culture, and religion. It is then understandable how, having reached this point, P. was led to break down the barriers that confined the scene within the framework of material interests, in order to investigate the reasons for human conduct under the most general hypotheses. The theory of economic equilibrium thus leads to the theory of social equilibrium. It is expounded in the Trattato di sociologia, his last great work.
Parenzo, diocese of — Triumphal arch of the *Fondaco* (1473).
Bishopric (mid-6th cent.), with columns and capitels of Proconnesian marble and rich mosaics, now surviving in the apses, he erected the present basilica in the rhythms of Ravenna’s architecture. In the apse...
permeated also by the concept of mutual dependence. Historical materialism had attempted to reduce every human phenomenon to the common denominator of the economic fact, characterizing religion, politics, and art as superstructures, epiphenomena. By recognizing the full autonomy of spiritual needs and highlighting the mutual dependencies that exist among them and with economic categories, P., while remaining outside Christian thought, appears as a restorer of moral values, which are the foundation of our civilization.
P. was also an innovator in the field of statistics, and his “income curve,” in which the ordinate measures the number (density of frequencies) of incomes whose amount equals the abscissa, constituted one of his first major discoveries. By demonstrating the invariance of this curve in space and time—within the limits of Western civilization’s experience—he paved the way for inductive economic research based on statistics, which later became widely diffused and today constitutes one of the fundamental tools of economic analysis.
His principal works are: Cours d'économie politique (Lausanne 1897; Italian trans., Turin 1942); Les systèmes socialistes (Paris 1902); Manuale di economia politica (Milan 1906); Trattato di sociologia (Florence 1917; 2nd ed., ibid. 1923); Fatti e teorie (ibid. 1920); Trasformazione della democrazia (Milan 1921).