Pareto and pure economics: analyses subsequently accepted and others neglected

Aldo Montesano

International Review of Economics, 2024, vol. 71, issue 3, No 6, 537-552

Abstract: Abstract Pure economics, as presented by Pareto in the Manual of Political Economy, has only a scientific purpose to be evaluated according to the agreement with reality, takes into account only economic actions, and its object is the determination of equilibrium, represented by the compatibility of agents’ choices. The choices depend on the agents’ tastes (preferences), the obstacles (constraints) to which they are subject, and the conditions in which they operate. Pareto’s pure economics does not have the purpose of determining prices, it is therefore not a theory of value, since exchanges can have variable prices. Pareto distinguishes agents into three types: those without market power whose choice is obliged to belong to a pre-assigned path (constraint), agents with market power who impose to the first type agents a path, and agents who represent the socialist state. The two main contributions introduced by Pareto in pure economics and subsequently accepted are discussed. They are the adoption of the ordinal function of utility and the notion of Pareto optimum. The general equilibrium theory presented by Pareto does not consider only, or even principally, the competitive equilibrium, but also includes other market rules, such as monopolies, duopolies, cartels, and the collectivist economy. Particular importance is given by Pareto to production with big overheads, which determine a decreasing average cost. The analysis proposed by Pareto anticipates many results which were successively introduced in the economic literature.

Keywords: Pure economics; V. Pareto (search for similar items in EconPapers)
JEL-codes: B20 B31 B41 D50 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s12232-024-00462-x

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