Vincent J. Tarascio
During the nineteenth-century development of economics, there was an intellectual interregnum during which the procedures used by economists were vague, shifting and tentative. As economics developed, economists, as well as sociologists, felt the need to “rationalize” their aims and procedures. The result was methodological controversy among various schools of thought. The controversies involved such issues as ethical neutrality, the scope of economics and method and methodology in the social sciences and economics. All of these issues became embodied in what eventually was known as the “economic model of man”. It had its origins in classical economics, was refined by the neoclassical economists, and has become the paradigm of modern orthodox economics. Along the way, the model has had many critics, starting with Comte, the German Historical School, Marx, the American institutionalists, and others. But it was the critique of two philosophers, Benedetto Croce in 1901 and Martin Hollis in 1977, which gave us the greatest insights into the nature and limitations of the economic model of man, and these two writers will be discussed in the relevant parts of the chapter.
Pareto plays a central role in the controversy, first as a defender of the economic model of man, and later as one who replaced that model with his own more general model. The purpose of this chapter is to examine the nature of the economic model of man and Pareto’s contribution in dealing with the problem of interpersonal interaction, which the standard model ignores. I begin with Croce and an elaboration of his critique of the economic model of man, then I go on to present Pareto’s contribution to the subject in a utility theory framework, and finally I introduce Hollis’s more recent discussion and critique of models of man and compare his models with Pareto’s. It will be shown that Pareto’s contribution was pathbreaking and consistent with new directions in the biological and physical sciences today.