Fiorenzo Mornati

When Italian economics "Was Second to None". Luigi Einaudi and the Turin School of Economics

Abstract The article is dedicated to the work of a group of economists that was an important expression of a fertile season of Italian economics, in the period from the mid-1890s to the end of 1930s, which developed around the figure of Luigi Einaudi, and earlier, around that of his master Cognetti de Martiis. This School expressed a range of thought of high value in the political and economic sphere. In the economic field, the School established a fertile relation between historical–empirical work and economic theory; in the political field it investigated the relation between freedom and economic order.

Economic Theories in Competition A New Narrative of the Debate on the General Economic Equilibrium Theory in the 1930s .

The paper deals with the debate on the General Economic Equilibrium in the 1930s in Vienna and at the London School of Economics and offers an interpretation of it different from that of the traditional narratives. It interprets the debate as a renewed confrontation between the two different classical methodological paths of research in GEE, the Paretian and the Walrasian ones. What emerges from this examination is a picture of different approaches and theories in competition, in particular on the issue of the relationship between theory and the real world. This was the fundamental issue at stake. Herein lies also the interest in those distant controversies for the current debate in economics.

An analytical-epistemological reconstruction of the genesis of pareto’sManuale di economia politica

Due to our lack of sources, we only know the essential stages of the long and winding path that leads Pareto from the theory of the final degree of utility to the theory of choice, which is the foundation of hisManuale di Economia Politica. We can still put forward the interpretation that his passage from one theory to the other was guided by the need, always deeply felt by Pareto, to give his theoretical line of reasoning foundations that were consistent with reality. Actually Pareto sees in the (for him) factual indifference curves not only the realistic foundation for the new exposition of pure economic theory, but also the guide to renewed empirical researches directed at giving quantitative bases to that theory.

A Multifaceted Liberalism and a Positive Methodology

This chapter will deal with Pareto’s wide-ranging intellectual interests during the Tuscan period, characterised by his early adoption of a liberal ideological outlook. The first section will examine the political liberalism of the young Pareto, with its clear orientation towards the ideas of John Stuart Mill, including his brief but intense alliance with political activism in favour of legislation on proportional representation, of freedom of religion (Sect. 5.2) and of the emancipation of women (Sect. 5.3). This is followed in Sect. 5.4 by an initial overview of Pareto’s early economic liberalism, which he recognised as ideological in character notwithstanding the clear evidence of the disastrous consequences of state intervention in the economy revealed by economic history. Lastly, in Sects. 5.5, 5.6, and 5.7 we highlight his ongoing interest in methodological questions which can be traced back to his university years, where his wholesale endorsement of John Stuart Mill’s positivistic approach was complemented by ideas borrowed from the Franco-Belgian economist and advocate of free trade Gustave de Molinari, with whom Pareto maintained close ties, also of friendship, between the late 1880s and the mid-1890s.

Twenty Years in Industry Management

The most familiar facet of Pareto’s biography prior to his period in Lausanne is the 20 years he spent at the helm of a major metallurgical group in Tuscany, one of the most important entities in the nascent Italian iron industry. Hence, after a brief description, in Sect. 4.1 of the chapter, of his short-lived and turbulent involvement with a railway company, in Sect. 4.2 a detailed reconstruction is provided of the intense eight-year period he spent in the management of the ironworks at San Giovanni Valdarno. Among the aspects examined will be his stance of constructive criticism with regard to the fundamentals of corporate finance, his attempts to resuscitate the business through technological modernisation and through the implementation of an aggressive commercial strategy, and his complex but caring relations with the workforce, which amply account for the disenchantment he later demonstrated towards humanitarian ideas.