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

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Abstract: The reasons for studying the history of economic thought are diverse. The extreme range of reasons includes 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 the development 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 very limited sense, and yet 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.

1 Introduction

The recent A Companion to the History of Economic Thought (Samuels, Biddle and Davis 2003) is a very useful resource for historians of economics, mainly because the second of its two parts is devoted entirely to historiography. (1) It critically considers Whig history, rational reconstruction, historical reconstruction, the sociology of knowledge, textual exegesis, biography and a range of other topics in historiography. A priori, scholars familiar with Pareto's work may have expected some discussion of his views on historiography to be included in this part of the book. In addition to being a major economic theorist, his enduring contribution to sociology primarily concerns the sociology of knowledge and he wrote, in some detail, on the purpose of histories of economics and the role of textual analysis when undertaking studies of theories that progress over long periods of time and those that do not. However, the part of A Companion to the History of Economic Thought that deals with historiography completely ignores Pareto on this subject. (2)

This is not intended as a criticism of A Companion to the History of Economic Thought. Rather, it highlights a simple fact: Pareto has had virtually no influence on the development of research methods in the history of economics. In this regard, I have been unable to identify any work on historiography that examines Pareto's rather unique and well-considered views on the relevance and methods of the history of economics. In some ways this is perplexing, because his work on textual analysis in the history of economics appears sophisticated, even by today's standards. Furthermore, intellectual historians have failed to investigate Pareto's views on the relevance of the history of economics to the development of theory concerning economic phenomena.

The purpose of this paper is to review and evaluate Pareto's position on treating the history of economics as an aspect of experimental economics. Emphasis is given to 'Economia sperimentale' (Pareto 1918 [1980]), as this is the Giornale degli Economisti article in which Pareto most clearly and unequivocally reflected on the relevance of the history of economics, and to the aspects of his Trattato di Sociologia Generale (Pareto 1916 [1935]) that provide the interpretive context for much of 'Economia sperimentale', especially the sociological basis for textual analysis in the history of economics. Consequently, only Pareto's 'mature' view on the history of economics is considered in this study.

Section 2 provides contextual information in a brief overview of Schumpeter's approach to progress in the history of economics and Stigler's principle of scientific exegesis. Section 3 commences by considering what Pareto meant by 'experimental economics' and, in this experimental context, highlighting his distinction between theories pertaining to the economic part of the economic phenomenon and theories pertaining to the sociological part of the economic phenomenon. …