Pareto on the History of Economic Thought as an Aspect of Experimental Economics

The reasons for studying the history of economic thought are diverse. The extreme range of reasons include suggestions that research in this field is: a way of passing time on an intellectual curiosity; an investment in human capital which contributes to a more profound understanding of modern economic theory; an activity of historical interest only, totally devoid of concern with the purely scientific merits of theories; or a subject for sociologists intent on understanding the culture of science and how this has influenced the evolution of scientific knowledge. Interestingly, Pareto had a well developed idea of the scientific reasons for undertaking histories of economic thought, which he saw as an aspect of “experimental economics”. This paper investigates how, and why, Pareto incorporated the history of economic thought as a central element of experimental economics. His approach to the history of economics is shown to be historical, albeit in a limited sense, and non-historical, in the sense that it provided data for the development of experimental hypotheses and theory pertaining to the sociological part of the economic phenomenon.Exegesis, experimental economics, history of economic thought, Pareto

A consumption-based direct tax for countries in transition from socialism

This paper suggests a consumption-based direct tax, referred to here as a simplified alternative tax or SAT, as an alternative to the standard income tax for reforming socialist economies (RSEs). The paper consists of seven sections. Section I serves as an introduction. Section II outlines some of the objectives of tax policy in RSEs and some of the constraints on the achievement of those objectives. Section III provides examples of the overwhelming complexity of the income tax. Section IV explains the basic mechanics of the SAT and contrasts the simplicity of the SAT with the complexity of the income tax. Section V describes the economic advantages of the SAT and section VI discusses some potential problems of the SAT. The final section concludes by stating that the SAT encourages saving and investment in a way that is economically neutral and avoids many of the administrative problems of an income tax.Environmental Economics&Policies,Economic Theory&Research,Public Sector Economics&Finance,Banks&Banking Reform,International Terrorism&Counterterrorism

Pareto’s 1920-21 Manuscript on Money and the Real Economy

In the 1896-97 Cours d’Économie Politique and the 1906 Manuale di Economia Politica, Vilfredo Pareto made no use of the ‘Fisherian’ type quantity theory equations of exchange that Walras developed in the 1874 edition of the Éléments d’Économie Politique Pure and completely ignored Walras’ more mature ‘Cambridge’ type encaisse desirée (demand for real cash balances) approach that Walras integrated within general equilibrium in the 1900 edition of his Éléments. This paper critically examines a fragmented manuscript that Pareto wrote in 1920-21, and which was first published in 2005, for the purpose of clarifying the reasons why he did not follow Walras in integrating monetary theory within general equilibrium. In many respects, the manuscript follows Walras more closely than Pareto’s major published works, but the substantive point is that Pareto was unable to introduce money within general equilibrium theory along the lines envisaged by Walras because he explicitly recognized the interdependence between money and the real economy and abandoned the quantity theory of money.

Economics in Relation to Sociology: Dualisms and Vilfredo Pareto's Pluralistic Methodology

Many economists remember the masters of Lausanne for their important contributions to general equilibrium and welfare economics, but Leon Walras and Vilfredo Pareto both pursued much broader social research agendas. Walras did this within the general framework of economics, by complementing his ‘pure economics’ with ‘social economics’. Pareto, in contrast, first isolated economic theory from the influence of other social phenomena and distinguished between the result of theoretical economics and the concrete economic phenomenon. He then developed a general theory of social equilibrium which, inter alia, provided for a synthetic reconciliation of economics with sociology to understand the concrete phenomenon. This paper investigates the relationship between Pareto’s economics and his sociology. Its main contribution is the clarification of the pluralistic character of his methodology. This is done by considering how dualistic distinctions became an important device for Pareto, with particular reference to Sheila Dow’s notion of dualism and Andrew Mearman’s categories of dualism. Pareto’s pluralistic approach is shown as a neo-positive blend of ‘temporary’ Cartesian and non-Cartesian elements, which is not consistent with Dow’s own Babylonian approach to economics. The paper also reveals the economic phenomena that Pareto considered were dominated by sociological influences and, therefore, not amenable to Cartesian analysis.economic equilibrium, pluralism, Vilfredo Pareto, social equilibrium

A Paretian Approach to Fiscal Decentralisation and Economic Growth: a Preliminary Investigation of the Australian Experience

Even though important analytical concepts named after Vilfredo Pareto were, and still are, employed in public finance theory, Pareto was actually a harsh critic of the Italian public finance tradition, especially the classic studies on public goods and the reliance on the benefit principle when analysing fiscal activity. Instead, he considered the primary feature of the fiscal phenomenon to be the redistribution of economic goods resulting from taxes, expenditure and debt, and suggested that this phenomenon was more amendable to sociological analysis than pure economic analysis. A largely overlooked aspect of Pareto’s Trattato di Sociologia Generale is the discussion of the relationship between social equilibrium and long period growth. This study is an exploratory ‘fiscal sociology’ that extends Pareto’s proposition on the relationship between economic growth and social equilibrium by developing a range of ‘economic’ and ‘sociological’ propositions on the long period relationship between fiscal decentralisation and economic growth. These propositions are investigated with reference to Australian fiscal federalism in the twentieth century.Economic Growth, Fiscal Decentralisation, Fiscal Sociology, Gino Borgatta, Vilfredo Pareto

Assessments of A. C. Pigou's Fellowship Theses

This study reports on the light that documents stored in the Archive Centre at King’s College Cambridge shed on A. C. Pigou’s fellowship theses. Particular consideration is given to Walter Raleigh’s and Brooke Foss Westcott’s assessments of Pigou’s first, and unsuccessful, fellowship thesis on Robert Browning as a Religious Teacher and to Alfred Marshall’s and Herbert Foxwell’s assessments of Pigou’s second, and successful, fellowship thesis on The Causes and Effects of Change in the Relative Values of Agricultural Produce in the United Kingdom during the last Fifty Years. The principal findings of the study are that: Pigou’s first thesis is more important to his subsequent and famous studies on wealth and welfare than is generally appreciated; and the assessors’ diverse reactions to his second thesis largely reflect their different views on the scope for economic theory to be used by scholars to shed light on economic history.

Dualistic distinctions and the development of pareyo's general theories of economic and social equilibrium.

This study examines the role of dualisms in Pareto's theoretical approach to economic and social equilibrium, with particular reference to the shift in his treatment of broad social phenomena as an aspect of applied economics to the subject of general social theory. It is suggested that dualisms associated with Pareto's recognition of ongoing interaction between subjective and objective social phenomena (or endogenous preferences in modem parlance) enabled the inductive-deductive-inductive sequence, utilised in the 1900 "Sunto di alcuni capitoli di un nuovo trattato di economia pura", to provide the foundation for sound general social theory in circumstances where theory deduced from a hypothetical postulate fails to derive resu1ts that accord with observed fact. One consequence of this new approach is an increased emphasis on the relativistic limits of social science and the study of welfare.

History of Economic Thought at the University of Western Australia: 1953 Compared to 2003

This brief paper contrasts the history of economic thought programs offered at the University of Western Australia in 1953 and 2003: an interval of fifty years. The study identifies lessons for current HET units from Merab Harris’ class of ’53, where HET was taught with general reference to economic history. The contrast is also used as a basis for identifying the advantages and disadvantages of teaching HET collectively, as a topic within a compulsory core economics unit as it was in 1953, or independently, as an optional but specialist unit as it was in 2003. The paper concludes with some personal views on the future of HET studies.