Vilfredo Pareto


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The following article is from The Great Soviet Encyclopedia (1979). It might be outdated or ideologically biased.

Pareto, Vilfredo

 

Born July 15, 1848, in Paris; died Aug. 20, 1923, in Céligny, near Geneva. Italian economist and sociologist.

A representative of the mathematical school in bourgeois political economy, Pareto studied mathematics and engineering at the University of Turin and worked as an engineer for the Italian railroads; later he taught economic logic. From 1893 to 1906 he was a professor of political economy at the University of Lausanne.

Pareto rejected monistic theories of causation in the social sciences, asserting that sociology and political economy explain the functional interdependence of equivalent social phenomena. He viewed society as a system that, like a mechanical system, is in equilibrium as a result of the mutually restraining and antagonistic interests of various strata and classes. He believed that social development is determined by people’s actions, which may be either logical (goal-oriented) or nonlogical (unconscious). Nonlogical actions are based on a combination of what Pareto called residues, that is, instincts, desires, and interests present in man since time immemorial. As a creature of faith and feeling, man is also accorded a need for a logical or, more accurately, pseudological, ex post facto justification for his irrational conduct. Therefore, each nonlogical act also contains variable interpretations of the residues. These interpretations, which Pareto called derivations, explain and at the same time conceal the residues. As they spread among the masses, these derivations may, in Pareto’s opinion, reach the level of ideologies, religious teachings, and philosophic theories.

Combinations of residues and derivations define a particular social process, while their uneven distribution among people contributes to social inequality and social antagonisms. This artificial, unscientific scheme lay at the root of Pareto’s explanation of the mechanism of social life. Creative force, struggle, and change by the small elite with the aid of coercion are, in Pareto’s opinion, the moving forces and the law of society.

Pareto believed that political economy should study the mechanism that establishes the balance between peoples’ needs and the limited means for their satisfaction. He considered mathematical analysis a necessity in the study of this balance. He strove to provide a theoretical explanation for the concept of the interdependence of all economic factors, including prices. Pareto sought to refine the theory of general economic equilibrium advanced by L. Walras. In distinction to the latter, he examined a number of equilibrium conditions over time and also allowed the coefficients of the production function to vary with production output. Pareto’s law on the distribution of incomes has become widely known. Pareto also studied problems related to economic crises, rents, money, and interest rates.

Pareto was hostile to Marxism and the revolutionary movement. His rejection likewise of the ideals of bourgeois democracy was later seized upon by the ideologists of Italian fascism, although Pareto himself was hostile to fascism.

WORKS

Oeuvres complètes, vols. 1–13. Geneva, 1964–70.
Cours d’économie politique, vols. 1–2. Lausanne-Paris, 1896–97.
Trattato di sociologia generale, vols. 1–2. Florence, 1916.

REFERENCES

Bliumin, I. G. Kritika burzhuaznoi politicheskoi ekonomii, vol. 1. Moscow, 1962.
Becker, H., and A. Boskoff. Sovremennaia sotsiologicheskaia teoriia. Moscow, 1961. (Translated from English.)
Seligman, B. Osnovnye techeniia sovremennoi ekonomicheskoi mysli. Moscow, 1968. (Translated from English.)
Roll, E. A History of Economic Thought, 3rd ed. Englewood Cliffs, [N. J.,] 1956.
Schumpeter, J. A. Ten Great Economists: From Marx to Keynes. New York, 1965.

I. S. DOBRONRAVOV and I. T. LASHCHINSKII

The Great Soviet Encyclopedia, 3rd Edition (1970-1979). © 2010 The Gale Group, Inc. All rights reserved.
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Referring to the population-political elite relation, Vilfredo Pareto said: "the population is divided in two strata, the inferior one, a stranger to the elite, and the superior one, the elite".
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It was discovered by a nineteenth-century Italian engineer, Vilfredo Pareto, to demonstrate an equilibrium point -- namely, that equilibrium is reached when the top 20 percent of the inputs generate 80 percent of the outputs, balanced by the bottom 80 percent of inputs generating 20 percent of the outputs.
Vilfredo Pareto's sense of social utility is also of a microeconomic nature.
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Vilfredo Pareto is the Italian economist responsible for the Pareto Principle, or the law of probability distribution commonly known as the 80:20 rule.
A chief proponent of the irrational nature of social action was Vilfredo Pareto, the Italian thinker who formulated the "80-20 principle." The principle states that 80% of any given outcome derives from 20% of the possible causes.
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The Italian economist Vilfredo Pareto derived what has become known as Pareto's law from his studies of income distribution in a number of countries at the turn of the 20th century.
The Pareto chart was named for Vilfredo Pareto, whose principles allow us to identify the few truly important cause factors.
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He also met Vilfredo Pareto and Leon Walras in Lausanne and Francis Y.