Arguments in Applied Economics

In 1905, in the Manuale di economia politica (where the proportion of the text dedicated to applied economics is much smaller compared to the Cours d’économie politique, with 30% as compared to 80%), Pareto noted that since “the phenomena studied in pure economics diverge from real-world phenomena … it would be a vain and unreasonable ambition to expect to interpret the latter by reference only to the theories of pure economics”, adding that, in general, “increasingly, the economic system tends to be managed in accordance with the interests of the social classes which dominate the government”. Such considerations helped to open the way towards the wide-ranging and innovative form of sociology which we will examine in Chap. 5 ; nonetheless, we consider it worthwhile to give an outline here of the practical features of the economic system which attracted the attention of Pareto the applied economist, even if they can be fully understood only from the perspective of Pareto’s very particular brand of sociology. These arguments constitute a development of themes he had already explored in greater or lesser depth, including the theory of international commerce, income distribution, economic crises, the demographic issue, progressive taxation and social welfare. However, there are also a number of new areas such as the notion of the maximum of collective ophelimity in sociology, an outline of the sociological conception of savings, the statistical study of the relationship between economic and social systems, the management of public debt, the possible cooperative management of the Italian railways and strikes.