On measurement and continuity in neoclassical economics: The Pareto-Cassel controversy, 1899-1902

This paper explores the controversy over the use of mathematics in economics happened between 1899 and 1902 involving Vilfredo Pareto, Gustav Cassel, Knut Wicksell, and Gaetano Scorza, with Maffeo Pantaleoni playing the role of intermediary. It begins by recapping the content of Pareto’s early articles and his book Cours d’Économie Politique (1896-97), where he lays out his method of successive approximations, the mutual interdependence of economic phenomena, and Leibniz’s principle of continuity. After that, Cassel’s criticism of formalization in economics is presented, as firstly set forth in his Grundrisse einer elementaren preislehre (1899) and further developed in later works. Cassel’s own simplified system of equations for determining prices through the concept of scarcity is introduced. The next section covers a set of unpublished letters between Pareto, Pantaleoni, and Cassel sitting at the National Library of Sweden. These documents reveal significant aspects of academic life in Europe at the time, as well as the correspondents’ interests on pure theory. The last section reviews the reception of Cassel’s Grundriss by Wicksell, Scorza, and Pareto. A few appointments on the history of mathematics are included to indicate how the rift among the mentioned economists echoed the influence of French and German traditions in infinitesimal analysis and algebra.