My Dinner With Vilfredo Pareto

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Niccolo and Donkey
My Dinner With Vilfredo Pareto

Taki's Magazine

Scott Locklin

March 28, 2011


My list of historical personages I’d invite to a dinner party doesn’t include any of the obvious choices. Who really wants to eat dinner with Genghis Khan or Julius Caesar? They’d probably make beetle brows at each other and have atrocious table manners. These sort of lists often include famed politicians. I have no idea why: Your average pork-belly trader has more interesting things to say than a politician from any era. I’ve also worked with famous scientists and don’t consider them suitable dinner guests. While a few are OK, most of them smell funny, talk to their shoes, and eat with their mouths open. My hypothetical historical dinner party would be long on gentlemen—deep thinkers who were admirable as men. Admirable men are not presently in fashion: Only famous ones are, so a lot of my historical dinner-party companions are on the obscure side. High on my list would be Vilfredo Pareto (1848-1923).

Vilfredo Pareto was arguably the greatest economist of the 1800s and possibly the greatest social scientist of all time. He was one of the first to suggest applying the cold hand of mathematics to what was previously a liberal art rather than a mathematical science. His work is still considered controversial today, despite the fact that it is self-evidently true, mostly because the average modern economist or sociologist is more an ideological fashion victim than an applied mathematician.

Pareto was born to Genoese nobility in Paris during the revolution of 1848 . His training was in classics, physics, and engineering, so his approach to the soft sciences was more rigorous than most. Not only did he make immortal contributions to economics, but his theories of elites were enormously influential in sociology back when it still had some hope of becoming a hard science rather than the incoherent booby hatch it is today.

Like most academic types then and now, Pareto started out a sort of liberal socialist. Then he got sick of trying to save others. To paraphrase what he said of his transformation, he had once wanted to protect the underdogs but later became contemptuous of their infirmity. Pareto also explicitly realized the socialist or democratic revolutionaries were just another would-be elite trying to replace the natural elite rather than friends to the common man as they postured themselves. This was a common transformation in his day. You can read a similar evolution in Jack London’s “Martin Eden,” as London fell under the spell of thinkers such as Herbert Spencer (and, probably, Pareto).

Pareto had a sharp pen, which he turned against anti-Semitism during the Dreyfus affair, the Italian royal family’s corruptions, Marxists (his books apparently gave Lenin hives), oligarchs, and later against democrats and socialists. Pareto also wielded a sharp sword and was a crack shot with a pistol. In a time when an insult could lead to a duel and premature death, he was able to defend his words and honor with his skill at arms.

Here is a Pareto quote I often think of when paleocons bemoan the end of the old American order:

Any elite which is not prepared to join in battle to defend its position is in full decadence, and all that is left to it is to give way to another elite having the virile qualities it lacks.…The knife of the guillotine was being sharpened in the shadows when, at the end of the eighteenth century, the ruling classes in France were engrossed in developing their “sensibility.” This idle and frivolous society, living like a parasite off the country, discoursed at its elegant supper parties of delivering the world from superstition and of crushing l’Infâme, all unsuspecting that it was itself going to be crushed.

Pareto’s best-known student was Mussolini while he was in Swiss exile as a Marxist agitator. (Yes, Mussolini used to be a Marxist.) Pareto was such an influence on the future Il Duce, Mussolini made him a Senator of Rome when he came to power. Pareto, ever the independent-minded sourpuss, denounced Mussolini’s censorship of the university system anyway. Much ink has been spent defending Pareto from the charge of being a fascist. Whatever his feelings toward Mussolini’s big ideas, Pareto had the good graces to drop dead in 1923, long before the fascists got up to much mischief. At the time, plenty of respectable men were Mussolini fans. Such modern demigods as Winston Churchill and FDR were singing Mussolini’s praises well into the 1930s. Anyone in the 21st century who dismisses Pareto on the grounds that he might have very briefly been a Mussolini fan is a tittering ninny who should be laughed to scorn—especially if he thinks FDR and Churchill were good guys.

Once he turned elitist, Pareto changed his lifestyle completely, surrounding himself with art and Angora cats in a Swiss villa where he devoted himself to beauty, pleasure, mathematics, and the destruction of the liberal ideology he had supported so vociferously in previous years. He had one of the greatest collections of wine and liqueur in Europe and lived the lifestyle of a highborn aesthete. After D’Annunzio’s triumphant march on Fiume , Pareto became a Fiuman citizen.

As for his art, Pareto realized something that economists still haven’t fully absorbed: “Utility”—the way people value things—is irrational and discontinuous and only appears otherwise when many people’s utility functions are added together. Economists still teach otherwise, despite the obvious observation that individual utility functions look like steps rather than funky-smooth exponential thingies. To give a pedestrian example, my “utility function” for a can of peas might be a dollar, but my utility function for a truckload of cans of peas is basically zero. What would I do with a truckload of canned peas? I’m a scientist, not a pea salesman. Modern economists insist that I become an autistic utility-optimizing economic ding-dong who would value the truckload of canned peas as much as a grocer would. Pareto knew that sort of thinking was bonkers. People are not utility-optimizing, hyper-rational autistic robots: only economists are. Pareto’s idea that people are not completely rational is now a bleeding-edge research field known as “ behavioral economics .” Ultimately, this “new” field of economic research consists of mere footnotes to one of Pareto’s essays.

Pareto also noticed how income and property were distributed inequitably and realized this distribution had the force of natural law for ability as well as economic distribution of wealth. This idea is useful in all kinds of other fields. The same distributions which govern wealth and ability are found in all sorts of natural and artificial structures, and it is a field of intense research today, as Pareto’s ideas are discovered by new generations of scientists. His ideas about power-law distributions pervade some of the most interesting areas of research in physics, statistics, and network theory today.

Above, far above the prejudices and passions of men soar the laws of nature. Eternal and immutable, they are the expression of the creative power they represent what is, what must be, what otherwise could not be. Man can come to understand them: he is incapable of changing them.

Pareto’s ideas eventually inspired much of Benoit Mandelbrot’s work on fractal geometry as applied to economics. In addition to sharing his views on socialism and Gabriele D’Annunzio’s general awesomeness, I have ended up devoting a significant fraction of my creative energies to mathematical ideas which Pareto pioneered. He was brilliant, bad-assed, bloody-minded, and a connoisseur of both crazy ladies and fine wines: How could you not want such a man at your historical dinner party?
Team Zissou

If this doesn't bring weikel over to Salo nothing will.

President Camacho
Good shit...

"Utility functions" are for fags and are one of the most irritating parts of modern microeconomic orthodoxy.

Overrated as an economist.

Menger and Bohm-Bawerk were way better.

Except he wasn't the one to realize it. He helped to solidify this fallacy by mathematizing economics and helping to bring utility functions to fruition. Menger did work on the subjective theory of value which demolishes all the flawed concepts that Pareto and Walras were pushing.
Bob Dylan Roof

Pareto was also a social philosopher. His concepts of Residue and Derivation are fruitful analytical tools.

This point cannot be overstated.