Crossing the Boundary of Economics and Sociology: The Case of Vilfredo Pareto

Aspers, Patrik, The American Journal of Economics and Sociology

PATRIK ASPERS [*]

ABSTRACT. The aim of the paper is to present the economic sociology of Vilfredo Pareto. We argue that Pareto represents a mode of thinking that has not been used in economic sociology and barely considered in the other branches of sociology. We reject the habitual bifurcation of Pareto into "the economist" and "the sociologist." Pareto stresses the non-logical parts of human life, and he provides empirical examples of this in his writing. He was occupied with the dynamics in society as a result mainly of non-logical actions. We show how one may speak of a distinctly Paretian economic sociology, which primarily has its origin in his theoretical discussions. We also show that Pareto conducted empirical studies drawing from his version of economic sociology. Included is finally a presentation, as well as a discussion of Pareto's idea of rentiers and speculators, which is followed up by a more general discussion of economic types in the market.

I

Introduction

TODAY'S ECONOMIC SOCIOLOGY seems to work along various philosophical, theoretical, and methodological tracks. Three of these can easily be located: network theory, cultural sociology, and organizational sociology (Swedberg 1997). This heterogeneity, of course, is not unusual in sociology. But when sociology is contrasted with economics, with its more homogenous foundation, this may be viewed as a problem.

That our picture of economics is reasonably homogenous is due to the works of Alfred Marshall (1842-1924), Leon Walras (1834--1910), and others who formed the neoclassical school of economics about 100 years ago. Contemporary economists, however, draw on these writers. In contrast, some economic sociologists seem to think that classical economics can be useful to study (see, for example, Aspers 1999, Swedberg 1998, 1987, Tilman 1997). A reason for studying classical economists and sociologists today is that the boundaries between the disciplines were not as sharp when they were institutionalized as they are today.

An example of a classical thinker is the Italian Vilfredo Pareto (1848--1923). Nevertheless, I have not found any attempts in the English literature, prior to this study, to thoroughly study Pareto as an economic sociologist. [1] Why are no studies undertaken in order to find out his potential contribution to economic sociology? It has been argued that Pareto made a 'clear" distinction between economics and sociology. [2] This means that one can argue that there is both Pareto the economist and Pareto the sociologist. However, his liberal political economy attitude, which tends to be less attractive to the sociologist, and his relation to fascism, may be other reasons for his neglect. [3] Finally, the fact that Pareto stressed the non-logical part of human life may have caused people not to study him. Are these reasons good reasons for not studying Pareto? [4] I think not, and I will try to show Pareto's contribution to our understanding of the economy in this paper.

In order to do this I first give a background to Pareto's thinking, and I discuss his ideas about the boundaries between economics and sociology. I then focus on Pareto's analysis of the level of aggregates, which is based upon his analysis of actions. This discussion leads to the central idea of Pareto that the different parts of society are interdependent. After looking at some of the more theoretical points, I present and discuss one of Pareto's main economic sociological insights: rentiers and speculators, the two types of capitalists that may have conflicting interests.

II

Pareto's Background and His Intellectual Legacy

VILFREDO PARETO WAS a trained engineer and his knowledge of mechanics comes through in his writing. Pareto's language is "objective," "positive," and colored with mechanical words, though he in substance shows more of a biological dimension. It is clear that much of his scientific method originates from the French mechanical-positive tradition. It is moreover clear that while his early training was influential, he gradually became aware of the necessity of a separate method for the social sciences (cf. Aron 1970, Parsons 1937/1949:181). Pareto's scientific thinking, however, is not an adoption of the mechanical thinking; it is better to stress its evolutionary and "biological" dimensions. Pareto, who started out with economics, became more and more convinced that society could only be grasped as a social system. This biologically grounded idea of social systems was later adopted in economic sociology. [5]

Pareto was contemporary with Alfred Marshall (1842--1924), and not much older than Emile Durkheim (1858--1917) and Max Weber (1864--1920). [6] Both Durkheim (1893/1984, cf. Parsons 1968, vol. 4:312--14) and Weber (1921--22/1972), though with different methods and to different degrees, tried to relate economic thinking and social thinking. Pareto started out his career in the social sciences as an economist, but moved towards sociology with an outspoken attempt to integrate the study of economic phenomena in a broader sociological framework. Only his Mind and Society (1915--16/1935) deals thoroughly with the synthesis of his economic and social thinking, and is therefore used as the main source of information in this paper.

Pareto's economic thinking was influenced by Walras, though the two scientists' ideas are far from identical. It is well known that Pareto was the first to make the distinction between cardinal and ordinal utility. He also presented the idea that one can handle the analysis of economic equilibrium with ordinal utility. Pareto's work on the foundation of what today is called welfare economics is another example of his impact on later generations. However, what most people know about his works is the so-called "Pareto-optimum" (Ekelund and Hebert 1990:439--41).

Pareto has obviously influenced neoclassical economics. But one should not from this fact draw the conclusion that Pareto himself is a mainstream neoclassical thinker, as some do (e.g., Dopfer 1994:126-30). Pareto shows a strong affinity with today's evolutionary economists. Neoclassical economics is rather static. Evolutionary economics has criticized this, and instead taken up the ideas developed by Schumpeter and stressed the idea of evolution, dynamics, and the role of the entrepreneur. (e.g., Nelson and Winter 1982, Hanusch et al. 1988, Magnusson et al. 1993, Hodgson 1993, Nelson 1994). As I see it Pareto's thinking is closer to evolutionary economics than what most of even the evolutionary economists seem to argue. [7] Below I will indicate how Pareto's thinking regarding undulation and on the economic types share many similarities to the ideas of business cycles and entrepreneurs in Schumpeter's writings. It is clear that their thinking is similar to Pareto's in many respects and that Schumpeter was a lso affected by Pareto (Swedberg 1991:15, 1935, Shionoya 1995/1997:173, 247-29, cf. Schumpeter 1951, Schumpeter 1954/1981:1160, Schumpeter 1991).

Despite the few appearances of Pareto in the evolutionary economic literature, he is more widely known in economics than in sociology. One reason is that he was comparatively old when he started to write on sociological issues, and consequently he had little time to attract students. [8] Pareto was not prone to mention the thinkers who influenced him, but Livingstone mentions Hegel, Marx, Mosca, Darwin, W. James, Newton, and Comte as influences (in Pareto 1915-16/1935 [ss]2142n), and to that one must add Nietzsche and Machiavelli. Furthermore, the openness to tendencies of human action that are not grounded in reason is close to David Hume's and Adam Smith's ideas of sentiments, which is a term also used by Pareto. [9] Pareto, however, goes even further on the irrational track, though not as far as Nietzsche did. [10] Pareto argues that some human activities are illogical and non-logical. This becomes an important aspect of Pareto's "economic sociology."

To economic sociology I will outline two analytical dimensions of his thinking--the substantial dimension and the formal dimension. This makes it possible to clarify how Pareto saw the boundary between economics and sociology. As will become clear he crossed this boundary; consequently, the separation into economics and sociology cannot be grounded in his writings.

III

Economics and Sociology: The Substantial Boundary

PARETO'S MOST INTERESTING ACHIEVEMENT from an economic sociological perspective is his integration of the economy in a broader social framework. Thus, Pareto does not only speak of an economic equilibrium, but of equilibrium of the social system, in which the economy plays a central role (Henderson 1937:17). The idea of a social system is the key to understanding how Pareto tried to cross the boundary between economics and sociology. He did not cross the boundary completely, I argue, until he published his major sociological work: Mind and Society. But even earlier in his Cours d' Economic Politique, one can find a scheme that gives information about his ideas of the different disciplines and how these are related to each other. Different parts, or spheres as he sometimes prefers to say, of societies are related and affect each other (1915--16/1935 [section]829, 1727, 2610n1). [11] In this way the idea of systems clearly gets a "biological" ground. So even if Pareto's language is strongly mechanical, the cont ent of his work is clearly not.

The relationship created by human beings through production and exchange of …

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Publication information: Article title: Crossing the Boundary of Economics and Sociology: The Case of Vilfredo Pareto. Contributors: Aspers, Patrik - Author. Journal title: The American Journal of Economics and Sociology. Volume: 60. Issue: 2 Publication date: April 2001. Page number: 519. © 1999 American Journal of Economics and Sociology, Inc. COPYRIGHT 2001 Gale Group.

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