Economic thought and institutional change in france and italy

Riccardo Soliani Editor Economic Thought and Institutional Change in France and Italy, 1789–1914 A Comparative Study Economic Thought and Institutional Change in France and Italy, 1789–1914 Riccardo Soliani Editor Economic Thought and Institutional Change in France and Italy, 1789–1914 A Comparative Study 123 Editor Riccardo Soliani Department of Political Science University of Genoa Genoa Italy ISBN 978-3-319-25353-4 DOI 10.1007/978-3-319-25354-1 ISBN 978-3-319-25354-1 (eBook) Library of Congress Control Number: 2016950865 © Springer International Publishing AG 2017 This work is subject to copyright All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed The use of general descriptive names, registered names, trademarks, service marks, etc in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made Printed on acid-free paper This Springer imprint is published by Springer Nature The registered company is Springer International Publishing AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland Preface The book you are about to read examines the relations between economic thought, proposals of reform of political institutions and civil society in the Italian and French tradition during the “long” nineteenth century, from the ascent to power of Napoleone Bonaparte to the eve of the First World War In Italy, this time span covers the long process of setting the foundations for the Italian state (Risorgimento, with the considerable French support provided to Italy during this process), its subsequent rise on the international stage leading up to the role played by the state in the Great War 1914–1918 At the same time, in France, we have the long-lasting post-revolutionary struggle of republican, progressive social forces against the conservative monarchism, with the ascent of the bourgeoisie in the era of Louis-Philippe and Napoleon III, the dramatic events that accompanied the war against Prussia and the birth of the Third Republic Together with the institutional establishment, or evolution, of the two States, we have the budding development of economic thought: namely, liberalism, socialism, industrial utopia, egalitarianism in France; and, in Italy, considerations on the link between liberalism, public administration and republicanism, and the evolution of the Catholic social doctrine Italian Liberalism developed alongside the pursuit of independence and the establishment of the new State At the same time, the nineteenth century marks the rise of Socialism in Italy, from the humanitarian solidarity of the republican instances to the birth of organized groups of workers following the unity and the end of the State of the Church When Rome became capital of Italy (1870–71), the Catholic Church exerted a strong opposition to the new State, as expressed in the official decree Non expedit, which prohibited Catholics from participating in political life However, the Church continued to be deeply involved in civil society through the provision of education and social care in favour of the poor Popular claims for equity and justice were addressed through the gradual establishment of the new Catholic social doctrine, which would give rise to Catholic Corporatism In France, the first half of the period sees the transition from monarchy to republic We have the monarchy censitaire of Louis XVIII and Charles X during the Restauration, which «restored» public finances, and the July constitutional monarchy between 1830 and 1848, with its policy aimed at economic development, v vi Preface transport infrastructure and education (railways, schools) and colonial expansion; however the public balance remained in surplus for most of the period The transition to the Second Republic (1848) places Paris at the centre of European revolutionary forces, followed by the Second Empire (1852), with its financial prosperity owing to the fast growth of the economy, when the utopian thought of Saint-Simon seems definitely closer to being achieved, as proved by de Lesseps’ realization of the Suez Canal, and the signature of the free trade agreement with the UK (1860), important result of the liberalism of Louis-Napoléon An institutional change of paramount importance is the Constitution of the Third Republic of 1875, established sans éclat : the very peculiar case of a Republican Constitution written by an assembly with a monarchist majority, following the revolution of 1871, repressed by Thiers, and the catastrophic war against Prussia The Republic will last and grow as a major regional power, with vast colonial domains French society is becoming more democratic, secular, educated and egalitarian, and the great bourgeoisie of finance and industry is now republican The mission of Saint-Simon, i.e., the successful outcome of a French Revolution, is finally achieved with the help of Gambetta, who understands the position and interests of the emerging middle class and is able to obtain the consensus of farmers and peasants From 1876, workers’ organizations are reinstated, after the repression of the Commune There are very few of these outside of Paris; however, in the country, workers and artisans mostly support republicans and radicals Ten years later, these organizations would become widespread and juxtaposed to the moderate majority The book expounds several key points of the processes just mentioned The first section examines the issues of identity, justice and liberty, which were prominent both in the establishment of the Italian state and in the complex institutional evolution of France, from monarchy to republic At the same time, they lie at the root of the debate on Italian and French political economy Italian and French authors involved in the Risorgimento and in the mid-century social turmoils are discussed Romagnosi was the inspiration for generations of Italian politicians and economists, amongst whom Cattaneo, who coupled political action with intellectual reflection on the national identity of Italy and on the influence of the public administration on growth and social justice An alternative perspective is given in the paper on slavery, which denies human identity, justice and liberty The five papers of the second section are devoted to the relationship between political and economic freedom and its effect on equity A few classical Italian and French authors who discuss these issues, and their reception in Italy and France, are at the core of the papers Economic freedom and equity are examined in Sismondi, a francophone author who spent an important period of his life in Tuscany, and one paper deals with the reception of List in Italy and France for the purposes of free trade, protectionism and social fairness The section provides fresh insight, which even puts a new perspective on the reflections of well-known scholars, like Jean-Baptiste Say, according to whom economic freedom and social justice are strictly connected, and Pellegrino Rossi, his successor as professor of political economy in Paris The last paper highlights the relationship between the Preface vii aforementioned concepts from the point of view of the pursuit of social equity through the reforms propounded during the unification of Italy The intellectual and political conflict between the social vision of Liberalism and Socialism in some of their various forms is the main topic of the four papers of the third section, in which different streams of Socialism are discussed Particular reference is made to Saint-Simon and his followers An alternative approach to the French utopian socialism is examined in a paper that modifies the interpretation provided by Sombart and Durkheim Finally, the almost unknown economic thought of a group of prominent French intellectuals between the end of the nineteenth century and the First World War is examined, highlighting the link between the attitude towards economy and the political choices of Halévy, Alain and Maurois Genoa, Italy Riccardo Soliani Contents Part I Fighting for Identity, Justice and Liberty Economics and “Civilization” in Gian Domenico Romagnosi Edoardo Ciech and Riccardo Soliani Carlo Cattaneo (1801–1869), Lombard Philosopher and Economist, Liberal Beyond Federalism Enrico Ivaldi, Riccardo Soliani and Andrea Repetto 37 Liberty, Labour and Human Rights: Institutional Change and the Intellectual Debate on Slavery in France from Condorcet to the Mid-19th Century Simona Pisanelli Part II 51 Economic Freedom, Free Trade and Equity Whose Sismondi? Which Italy? The Reception Italy Gave Sismondi’s Economic Thought Letizia Pagliai 77 A Comparative Analysis of the Relationship Between Friedrich List and French and Italian Culture Stefano Spalletti 99 J.-B Say: Political Economy and Social Justice 115 Riccardo Soliani Pellegrino Rossi: A New Approach to Liberalism 129 Joël-Thomas Ravix Part III Liberalism and Its Alternatives in Various Declinations From the People to the Industrialists: Saint-Simon and the Eclipse of Sovereignty 149 Simona Gregori ix x Contents Institutions and Development in Saint-Simonian Political Economy 167 Abdallah Zouache An Economic Philosophy for the Republic: Elie Halévy, Alain, André Maurois 177 Ludovic Frobert Economics and Sociology Meet Socialism: Sombart, Durkheim and Pareto 199 Vitantonio Gioia Part I Fighting for Identity, Justice and Liberty Economics and Sociology Meet Socialism … 207 Their visions, based on an incorrect approach to the analysis of the present and of the past, generally start from the assumption that economic and social injustice were “due to error”, which humanity could have corrected through an improved knowledge of the world However, Sombart points out, the attempt to transform the world cannot be the result of the use of an all-powerful “reason”, which by virtue of its “historic unveiling”, can assure the triumph over the irrationalities and mistakes of history (Sombart 1909 pp 31–40) The transformation of “the present state of things” implies a radical change in the “balance of power” between the classes, which is rooted in the transformation of systems of production On the other hand, the pressure of the socialist movement has already determined profound changes in the economic structure of society and in its institutional environment Its political initiatives helped to overcome “absolutism and industrial feudalism”, which characterized the previous labor relationships, by developing a kind of “industrial constitutionalism”, leading to more mature and less conflictual relationships between the social classes (Sombart 1900, pp 86–87) This has produced significant effects on the economic and social plane In the economy, higher increases in productivity levels occurred This determined an extraordinary growth of social wealth and intense advances in the sciences and in their technical applications On the social plane, this has allowed the construction of original models of community (Gemeinschaften), within a changed cultural environment, capable of promoting many significant reforms in the institutional framework (Sombart 1909, pp 279–287) Durkheim, too, starts from the distinction between the features of “modern socialism” and those of pre-modern socialism or communism In his opinion, it is simply a “historic mistake” to consider modern socialism as “new varieties of ancient communism”, neglecting what in the modern socialism is highly distinctive and “substantial” (Durkheim 1958, p 143) In fact, this “alleged identity” is constructed for ideological reasons by the “orthodox economists”, who, with this expedient, can easily condemn the “alleged” irrationality of socialism, in its attempt to apply to “more complex societies an economic organization inspired by the simplest and most inferior types of society” (Durkheim 1996, p 247) In Durkheim’s opinion, the analysis of socialism must get rid of any prejudice, because “what we want to know, is not our particular doctrine, but what constitutes the objective fact that develops under our eyes, and that is called socialism; only under these conditions will we be able to judge it, foreseeing what it will or should become” (Durkheim 1996, p 239) Besides, he adds, it should not be overlooked that the analysis of socialism offers some original points of view, designed to explain some important features of the industrial society that it “manifests and … expresses in … its own way” and which are generally neglected by the economists (Durkheim 1958, p 8; see also pp 10–17: on this see, Giddens 2009, p 173) Pareto’s position, in this regard, appears less consistent He oscillates between admiration for the rigor and the political attitudes of the representatives of socialism, a kind of recurring “obsession” towards it and the attempt to consider socialism only with reference to the issue of the distribution of the wealth, finding its roots not in history, but in human nature and in its invariant motives As a consequence, 208 V Gioia Pareto applies the “category of socialism” to such a broad and heterogeneous series of phenomena, that it is impossible to bring it to a single interpretation “Socialism” is used in order to indicate the emergence—through the growing role of the state— of all that is opposed to the spontaneous evolution of the market and a sound economic policy Moreover, it is used in order to interpret aspects of the Italian political development of the time, or to focus on the dynamics of the struggle between elites and the birth of a “bourgeois socialism”, or, finally, in order to catalog the social consequences determined by the prevalence of non-rational motives in human actions Let’s start from Pareto’s definition of socialism, proposed with minor variations in all his writings: The name of socialism usually indicates many schools or sets having in common the same features: the aspiration to completely renew our society, by changing especially the system of ownership, and mostly that of the family, increasing the power of the State, and diminishing individual freedom, always with the intention of favoring the poor (Pareto 1974, p 376) On this basis, he distinguishes among the various “protective systems-socialists”: the “metaphysical or a priori systems” (Pareto 1974, p 391), the “religious and mystical systems” (Pareto 1974, p 395), the “historical or experimental socialist systems” (Pareto 1974, p 398) Pareto’s attempt is to build a sort of general catalog of the socialist models, with reference to the social contexts in which they emerged However, Sistemi Socialisti is a heterogeneous and, in many ways, confusing and repetitive work, in which Pareto does not make consistent use of his own categorization (Busino 1987, pp 25–26) However, a constant emerges in Pareto’s reflection on socialism: the tendency to attribute such phenomena to ahistorical motives, rooted in invariant traits of “human nature” Of course, Pareto does not ignore the peculiarities of “modern socialism”, but he tries to build a general form of “socialism”, which “has in common the same features”: the aspiration to radically change income distribution (Pareto 1966b, p 41) It is true—he says—that “modern socialism stems from the need to give a scientific form to humanitarian aspiration”, but it is also true that this does not modify its prevalent vocation and its general character: “in our age reference to science has become fashionable, as was once the reference to religion” (Pareto 1987, p 182) It follows that the “scientific systems” (including Marxism) start from the idea of “making use of observation, experience, logic” in order to achieve “the happiness of men on this earth,” but in the end “reason often gives way to feelings, which could also include religious feelings”(Pareto 1987, p 334) In any case, “we must not be misled by the great progress of Marxism … largely due to an irrational enthusiasm, which falls into the category of religious feelings, rather than to that of a scientific persuasion” (Pareto 1987, pp 335–336) Socialism’s success does not depend on “the logical value that its theories may inherently have”, but on Economics and Sociology Meet Socialism … 209 the ability to inspire shared behaviors in the proletariat, according to psychological mechanisms related to religion: at this moment, socialism seems to be the religious form best suited to the environment of the workers of big firms; wherever it arises, the socialist religion appears and recruits members in proportion to the growth of the industry Socialism facilitates the organization of the elites, arising from the lower classes and is, in our time, one of the best tools for the education of these classes (Pareto 1987, p 175) Given its practical purposes, socialism is exclusively seen as a struggle for the redistribution of social wealth in favor of the poor Pareto’s position is well known: it is unrealistic to think that we can significantly change, in the long run, income distribution in favor of the poor Pareto, starting from what is known as “Pareto’s Law”, points out that the distribution of social wealth is “the result of all the forces acting on society, i.e of the qualities and defects of the men who compose society and of the external circumstances, the environment in which they find themselves” (Pareto 1961, par 1008, p 401) In any social organization, the income curve tends around “a position of equilibrium” and if you move away from it, by means of the adoption of redistributive policies not consistent with “natural” market dynamics there are “automatic forces” that can lead the income curve back (Pareto 1961, par 1008, p 401) It is no coincidence then, he adds, that if we compare our society with others (even the most archaic ones), or if we evaluate the distribution structure of different stages of growth of capitalist society, we can see that “the distribution curve varies … very little from age to age” (Pareto 1987, p 129) Consequently, political interventions aimed at changing the distribution are useless, because “after a short time inequalities, which were destroyed, are reproduced in the same terms” (Pareto 1961, par 1009, p 401) In addition, these interventions will produce irrelevant effects on the living conditions of the poor (considering their high number), but impoverishing society, at least in the medium term, because it would discourage investments, lowering the growth of wealth (Pareto 1961, par 967, p 365, Pareto 1987, p 384, cf on this also, Pareto 1966a, p 38) In this sense, Pareto continues, “Modern socialism is … much more scientific than that of ancient communism”, because, having understood that the changes of the distribution depend much more on human nature than on the economic organization of society, it tries to modify the “very nature of man” (Pareto 1961, par 1012, p 404) However, human nature does not adapt—contrary to what they think—to the socialist desire, virtually showing a substantial invariance throughout history Moreover, as history shows, changes in the income structure cannot be pursued through measures of economic policies or by “attributing to the collectivity the ownership of the land and that of the capital.” (Pareto 1961, par 1009, p 401) 210 V Gioia Competitive Capitalism, Monopolistic Capitalism and Socialism It is certainly true, as stated by the authors we are considering, that the Marxist authors’ analysis of monopolistic capitalism was distorted by the idea of the “necessary” transition to socialism Obviously, the aspiration for a desirable state of things cannot be considered a “scientific hypothesis”, able to lead to acceptable predictions Moreover, if such an aspiration is surreptitiously passed off as a scientific hypothesis, it inevitably produces selection of facts or interpretive perspectives aimed at solely justifying its analytical consistency On the other hand, a “prediction” of such a kind cannot be supported by justifiable scientific procedures, given the number and complexity of the variables involved This does not depend only on the fact that, as Durkheim pointed out, “science does not advance very fast” and that “it takes time, a long time” before its results can become “practically usable” (Durkheim 1996, pp 87–88), but it depends on the fact that in the social sciences—as emphasized by Sombart and Pareto—one cannot imagine any “historical necessity” (Sombart) to conceal the reference to the free choices of social actors, on the basis of an alleged “social law” which neglects the complexity of the object being analyzed (Pareto 1987, p 149) This is not the place to assess whether this depended on the legacy of Karl Marx or whether it was, instead, the result of the need to update the analysis of capitalism, in order to define an appropriate political strategy for the socialist movement of the time Of course, the fact remains that the Marxist theorists tend to overlap the two terms of the discourse, making them indistinguishable and accentuating the limits already present in Marx’s methodology However, it should be noted that this shared critical view shows two different attitudes in Sombart and Pareto on the one hand, and in Durkheim, on the other Let’s start with Sombart and Pareto It seems surprising to see that the limits for which they reproach Marxist theorists, are present to a much greater degree in their general reflections on the development of contemporary capitalism As a matter of fact, “socialism” remains a significant point of orientation in their analysis Moreover it is—so to speak—supplemented by another central reference: that of competitive capitalism, regarded as the sole desirable model of capitalism So, while the Marxists with their reference to socialism, introduced elements which were logically incompatible with the scientific discourse, Sombart and Pareto, with their double reference to the categories of socialism and competitive capitalism, create a more rigid system of interpretation, which twists the relationship between theories and economic facts As we will see, the scientific consequences of this approach are not insignificant Sombart, as we mentioned, shows two different interpretative perspectives concerning the relationship between capitalism and socialism The distinction Economics and Sociology Meet Socialism … 211 between the two phases seems to emerge sharply between 1911 and 1913.3 In Sozialismus und soziale Bewegung Sombart had insisted on the inevitability of socialism, regarded as a progressive outcome that could allow a greater development of productive forces and a more equitable social organization, guided by the needs of human emancipation From 1910 onwards, the interpretive perspectives of Sombart, in this regard, change significantly He reaffirms that, given the character of monopolistic capitalism, socialism continues to be an inevitable outcome of capitalistic growth However, he now sees socialism as an economic and social organization moving in continuity with monopolistic capitalism From this point of view, socialism cannot radically modify the relationship between means and ends characterizing capitalism: the former, like the latter, will continue to see the world of things and the growth of material wealth as the ends of social activity and man as a means As is well known, Sombart distinguishes three stages in the development of modern capitalism: Frühkapitalismus (early capitalism), Hochkapitalismus (high capitalism) and Spätkapitalismus (late capitalism) The world of early capitalism was inhabited by “a natural man, man as God made him, man who did not stand on his head or run on all fours (as is the case today in economic activities)” (Sombart 1915, p 13) Within it, man was “the measure of all things—mensura omnium rerum homo” (Sombart 1915, p 13), and economic activity, given the centrality of human needs, was characterized by the presence of shared inner limits At this stage, the entrepreneur was a socially progressive figure, with “intellectual elasticity, mental energy, and intensity and constancy of will” (Sombart 1915, p 53) He carried out his economic activities within the context of a “sounding board of duties”, “based on rigorous self-discipline” (Sombart 1978, p 145, see also: p 124) The entrepreneur of early capitalism builds new social relationships, free from the constraints of the past, safeguarding the social cohesion of the communities in which he acts (Sombart 1915, p 165) By contrast, the entrepreneurs of the advanced capitalist are slaves of the “Moloch” of the “indefinite expansion of their firms”, indifferent to human needs and to the cohesion of their communities: “speed and yet more speed … is the cry of the age It rushes onward in one mad race” (Sombart 1915, p 181), projecting economic activity “into infinity” (Sombart 1915, p 173) It is a dehumanizing process that crushes “all the higher instincts of heart and mind” (Sombart 1915, p 181), opening pathways, leading to the construction of an “unnatural environment” This “mad race” dramatically increases the economic and social imbalances (Sombart 1978, p 133) State intervention becomes essential both for supporting the planning requirements of the great combines, and for alleviating the effects of the “social question” It is clear, however, that social problems cannot be solved without a radical change The different attitude is already clear in the following works: Die Juden und das Wirtschaftsleben (1911), Der Bourgeois: Zur Geistesgeschichte des modern Wirtschaftsmenschen (1913) On this see: Gioia 2015, pp 11–32 212 V Gioia in the structure of the economic system From this point of view, theorists such as Schmoller and Wagner, who believe that state intervention could have a decisive role in solving or at least alleviating the social effects of economic imbalances, are certainly wrong Their error is even more serious, since it is accompanied by the illusion that state intervention can ensure both an increased level of welfare for the lower classes, and a more harmonious social development (Schmoller 1998, pp 67– 74; on Wagner see: Gioia 2012, esp p 311 ff) However, given the endogenous mechanisms of the capitalist economy, such a possibility does not exist Is it possible to imagine a credible solution to the problems of human emancipation in a socialist organization? According to Sombart, while it is true that the socialist perspective proves to be closer and more realistic, considering the structure of monopolistic capitalism, it is equally true that it will represent a sort of “natural evolution” of capitalism, improving the “administrative” management of its production system In the last chapter of Der modern Kapitalismus Sombart insists on the substantial equivalence between monopolistic capitalism and socialism: “stabilized and planned capitalism” is indistinguishable from “technicalized and rationalized socialism” (Sombart 1978, p 859; on this see: Chaloupek 1996, pp 165–166, Hagemann-Landesmann 1996, pp 179–204) Pareto, within a different scientific approach, moves along the same line According to him, competitive capitalism is a rational and progressive production “system”, due to its capability to awake the individual energies, pursuing the highest possible level of wealth However, he points out, this model of competitive capitalism is a sort of utopia: “no country has been governed under a complete system of economic freedom The main cause for this lies in the fact that economic freedom cannot promise any privileges to its followers, or attract with the lure of filthy lucre: it offers justice and well-being for the greatest number, and that is too little Due to this, it is outside reality” (Pareto 1961, pp 197–198) In particular, the current economic system, as it appears, does not have at the center of its interests “free competition and … the respect for individual property” (Pareto 1974, p 384) It is characterized more and more by attempts to evade the rules of free competition and by an abnormal expansion of state intervention in the economy (Pareto 1974, p 384), moving towards a hybrid system which he calls “bourgeois socialism.” This “bourgeois socialism” (which especially characterizes the Italian economic and political situation) differs “from the real one … only since it aims at favoring the rich instead of intending to raise the fortunes of the poor So he who, by defending the present governments, believes he is defending the freedom of the individual, is wrong…” (Pareto 1974, p 384) According to Pareto, this advance of socialism in contemporary society seems to escape many observers, who continue to have in mind its classic model In the current situation, the model of socialism that is emerging is different from that imagined by the Marxists However, it determines radical changes in the production structure and in income distribution, by distorting the “natural” dynamics of the economy It is no coincidence that he recalls, in this regard, the discussions he had with Maffeo Pantaleoni, who questioned whether “the elements that are currently Economics and Sociology Meet Socialism … 213 operating most in the formation of this” society were leading to “a collectivist regime in the near future”, or if they would give life to a “more individualistic and liberal regime” (Pantaleoni 1963, I, p 255) Contrary to Pareto, Pantaleoni does not believe that every form of “progressive income tax or inheritance tax”, or every form of state intervention should be regarded as a creeping “conquest of public powers” by the socialists (Pantaleoni 1963, I, p 250) In his opinion, they cannot be considered “manifestations of collectivism” and the same applies to all the forms of economic and professional associations, arising in contemporary economies: “coalitions of common interest, temporary or permanent associations, made by capitalists, or by workers, are … products and fruits of individualism” (Pantaleoni 1963 I, p 261) On the other hand, he continues: The whole industrial and commercial world is divided into groups fighting each other, and the formation of every union is immediately opposed by a number of others: among consumers—in the form of consumer cooperatives—and among producers, whose raw materials, capital, or labor are required by what has been created And in the struggle of all against all, the one cancels out the other’s preponderance, and this leads to compromises (Pantaleoni 1963, I, p 250) Pareto does not consider such a view acceptable, going precisely in the direction of those who see economic, political and social changes as signs of the irrevocable approach of socialism As a result, he points out: Professor Pantaleoni in a recent work denies that socialism is going to win, I have argued that its victory was very probable and almost inevitable The two opinions seem contradictory but they are not: Pantaleoni turns his mind to the subjective phenomenon; I see the objective one Basically, we agree (Pareto 1980, pp 186–187) Pareto’s conclusions are, once again, marked by an a-historical interpretation of the economy This emerges in comparison with Pantaleoni’s analysis In fact, Pantaleoni points out that the historical evolution of the economy does not justify the idea of “any symptom, leading to a future end of competition in its modern form”, since we see not only that “collectivism … is far from being dangerous”, but also that if it wants to achieve “its most noble purposes” it has to use “that system of individualism which it condemns” (Pantaleoni 1963, I, pp 267–269) The liberal Pantaleoni reflects on the structure of the contemporary economy, focusing on the permanence and effectiveness of its endogenous mechanisms So, while he sees the historical transformations of capitalism of his time, by emphasizing its original features with reference to the past, Pareto considers every change as a consequence of “economic distortions”, assessing the new phenomena as a move away from his ideal model of economy: an inevitable approach to socialism In this regard, the analytical effects of Pareto’s vision are very interesting The new economic phenomena are determined neither by the endogenous mechanisms of the system, nor by competition They represent the outcomes of the progressive prevalence of extra-economic variables, which more and more affect the dynamics of the economy and the behavior of economic agents The latter are ready to move away from the “rational” and beneficial path (to the whole society) typical of 214 V Gioia competitive capitalism, in pursuit of their personal advantage The convergence between popular aspirations and the behavior of middle-class politicians leads to the adoption of economic policies that distort the spontaneous dynamism of the market, moving away from “rational” capitalism: It is far from impossible that a transaction and an agreement can be accomplished between this bourgeois socialism and the popular one, under the auspices of politicians It is being realized; and the day may not be far off when we will see the huge destruction of wealth that will be its consequence The fault therefore lies not in the system, but in the intervention of the state, arbitrarily changing the distribution of wealth (Pareto 1966a, p 38) It is also interesting to see that while Pantaleoni analyzes the changes in the institutional framework as the effect of capitalistic development, trying to show its harmony with the dynamics of the contemporary economy, Pareto seems incapable of making this kind of inquiry So, he does not perceive the significant changes which were underway in the context of modern liberalism in France, Belgium, Italy, Germany, leading to the first model of welfare state He explicitly considers, therefore, every institutional reform as a sort of Trojan horse of socialism and a betrayal of liberalism: So, gentlemen, to the followers of the old liberal side, (since there is a new one that has the name but not the substance), we cannot deny that the cause of liberty is losing ground in Europe and we can also foresee that despite the efforts of our side, we will be subjected to other restrictions by the government But does this mean we should bedeck ourselves to remain inert, letting a kind of fatalism overwhelm us? And who knows if the liberals’ resistance may not prevent the evil, at least it may help to cripple it (Pareto 1980, p 75) In this regard, it is sufficient to remember the bitter evaluation of the philosopher Silvio Spaventa, who, critically reflecting on the limits of such liberalism, dwelled on the “abstract” and de-historicised concept of liberty which it implied That liberalism,—he pointed out—pervaded by a “scrupulous, obscure desire to defend the freedom of the individual at all costs, which ends up by showing itself indifferent toward precisely that freedom” (see: Tessitore 1963, p 19 ff) It leads to an unacceptable doctrinarism which produces a “strange confusion of ideas and words, as if we should consider liberal the Russian government, which leaves its railway in private hands, and authoritarian the Belgian government, which on behalf of the State rules the majority of the railways of that country” (Spaventa 1910, p 43) Incidentally, it is useful to evaluate whether this particular vision of the relationship between advanced capitalism and socialism was solely determined by the pessimism that pervades Sombart’s approach (at least from a certain period onwards) or by the anti-socialist obsession of the “aristocrat Pareto” A quick look at the literature of the time tells us that the vision we reconstructed was widespread among sociologists and economists who dealt with the issue of the direction of the long-term development of capitalism Max Weber, for instance, points out that “the utmost degree of rationality of economic action … implies the condition of the larger liberty of the market” (Weber 1968, p 104) The growing presence of monopolies “both those imposed and economically irrational, and those voluntary and economically rational (i.e oriented on the basis of market possibilities)” Economics and Sociology Meet Socialism … 215 (Weber 1968 I, p 104), changes the structure of the market and its mechanisms substantially Economic planning is required both by the particular competitive struggle of the great firms, and by the increasing pressure of the social environment (Weber 1968 I, p 353) In short, and regardless of how you want to define the contemporary economic system, it is clear—Weber concludes—that the contemporary economy is moving towards a sort of “bureaucratic socialism” (Weber 1968, p 303 ff) We find similar conclusions in Schumpeter’s analysis: “if the competitive economy is broken up by the growth of great combines, as is increasingly the case today in all countries, then this must increasingly become the internal concern of one and the same economic body”, gradually decreasing the pressure of the market on firms and making the role of the single entrepreneur irrelevant, typical of competitive capitalism “The difference thus created is great enough to serve as the watershed between two epochs in the social history of capitalism” (Schumpeter 2008a, p 67) In Schumpeter’s opinion, socialism, considered “a huge and all-embracing bureaucratic apparatus”, seems an inevitable outcome of the contemporary economy, further exacerbating the tendencies emerging from the working of the hegemonic role of great combines (Schumpeter 2008b, p 206) A dissonant voice, in this regard, is found in Emile Durkheim, who starts from a double premise: the expansion of the tasks of the state is a necessary evolution of the capitalist economy and some issues emphasized by socialist theorists have great relevance for understanding the limits of contemporary society (Barbano 1982, pp 91–92) According to Durkheim, social analysts cannot neglect: the non-marginal role of economic crises and the “social question” in the dynamics of contemporary capitalism; the need to understand the way the capitalist evolution can overcome those anomic forms created by the functioning of the economy, which call into question the social equilibrium As far as the first aspect is concerned, it is clear that the economic imbalances (with the further deterioration of the “social question”) are not episodic aspects in the current economic system If these phenomena cannot be read as a “memento mori” of capital, one cannot even trust in a solution ensured by the market’s automatic mechanisms, for the simple reason that it was these very mechanisms that generated the questions we are called to solve (Aymard 1962, pp 215–236) In this sense, Durkheim argues: if you look at the relationship between economy and society, you can easily understand that in a social system “economic functions cannot harmoniously concur, remaining in a state of balance”, simply by supposing the “natural” convergence of economic interests (Durkheim 1958, p 197); the economic interest, as egoistic and “unlimited” need, does not imply—by its nature—internal regulatory mechanisms It encourages people to act according 216 V Gioia to their own fulfillment, regardless of the social effects it may cause Moreover, the idea of “unlimited need contradicts itself”, because a “need is defined by the goal it aims at, and if unlimited has no goal—since there is no limit” (Durkheim 1958, p 197) Political economy, rightly highlighting the centrality of individuals’ economic interests, builds its explanatory models with reference to the category of homo oeconomicus The significant element of the homo oeconomicus lies not in the fact that it is a “not-real being” or an “abstract” one, since all entities of the mind are not real, but in the fact that it cannot have a social character and it is a—historical in nature For this reason, the homo oeconomicus category does not allow for the construction of appropriate models of interpretation of social relations within a historical system (Durkheim 1996, p 95) How can homo oeconomicus be considered a natural key for the building of a social equilibrium that is beyond his horizon? From the scientific point of view, “this concept of the individual, which is presumed to contain in itself all knowledge”, is not “logically” compatible, given its features, with the social universe that it is called on to make comprehensible The fact is, Durkheim continues, that “in order to simplify things, economists have artificially impoverished” this category They not only have made all the circumstances of time, place and nation abstract, creating the image of the abstract type of man in general, but in this same ideal type, they have neglected all that did not concern the strictly individual lives, a process of abstraction that has left in their hands the sad portrait of the selfish as such (Durkheim 1996, p 95) From the practical point of view, it is evident that such a category cannot establish pathways that can build the correct relationships between the economy and society The reference to economic automatism appears, once again, as a serious evasion of the problems set by the social organization In fact, while in “normal times” the economy works “silently” and social actors not realize the impact of the economic dynamics on society and on its balance (Durkheim 1958, pp 18–19), in times of crisis, the social actors perceive the effects of economic imbalances on society through the emergence of dysfunctions and degenerations in social relationships, or through the birth of anomic forms of individual behavior Now, Durkheim notes, when the socialists want to introduce forms of social regulation, they not intend to question either the “spontaneity” of economic activities, or the role of individuals Indeed, their idea is that if economic interests are “the substance of common life, they must be organized socially” (Durkheim 1958, p 196) In other words, they expect to override the “naïve” idea of the economists, who “refuse” to subject economic interests “to any collective control and believe they can be arranged and harmonized without prior reorganization” (Durkheim 1958, p 196) Moreover, Economics and Sociology Meet Socialism … 217 if everything social is economic, the economic domain must include the social, and, on the other hand, what is social could not, without contradiction, be regarded and treated as a private thing Economists cannot escape this objection by maintaining there is nothing basic which is truly collective, that a society is only a sum of individuals juxtaposed, and that social interests are the sum of individual interests (Durkheim 1958, p 196) It is clear—Durkheim over-optimistically concludes—that the economists’ conception “is irreconcilable with the facts” and for this reason “no longer has many defenders” (Durkheim 1958, p 196) On the other hand, in the socialist view, assuming that the necessity of a closer coordination between the social and economic dimension logically prevails, after the social organization of the industrial system we will be able to “secure the maximum production possible”, according to the pursuit of the highest possible level of individual satisfaction (Durkheim 1958, p 196) This view, therefore, does not imply any rigid form of control on economic activities, it presupposes—if anything—the spread of cultural and ethical values in the pursuit of acceptable forms of social equilibrium (Durkheim 1958, p 197 ff; Durkheim 1962, p 387 ff., Barbano 1982, pp 91–92, Giddens 2009, pp 175–177; Múgica Martinena 2005, esp p 120 ff) Conclusions According to Rudolf Hilferding, the assessment of the theories of Marx and Marxist scholars presents a recurring problem, since intra et extra moenia one tends to erroneously identify Marxism as a “scientific” system and as a “theory of the laws of social evolution”, with socialism, as a “result of the tendencies developing and combining in the society as the producer of goods” (Hilferding 2011, p 6) The overlapping between these two levels of discourse generally distorts the reading of the analytical contribution of Marxist theorists, producing a dual effect: on one hand, the limits of the political movement are blamed on theoretical Marxism and, on the other hand, the theoretical limits of Marxism are used as a key for interpreting and criticizing the evolution of the socialist movement An attitude of this kind is not used with reference to economists who—despite the monopolistic transformation of capitalism—continue to re-propose the model of competitive capitalism as an analytical key for interpreting the contemporary economy It is evident, Durkheim points out, that beyond the differences between them, socialism and political economy seem to share the same ideological approach to reality It is also evident that such an approach deeply pervades all their analysis The laissez faire and the “ideal type” of competitive capitalism, adopted by political economy, is not much different compared to the aims of Marxist theorists: “When economists advocate ‘laissez faire’, demanding to reduce to nothing the influence of the state, in order to free the competition from all restraints, they are not pursuing their claims on an adequate scientific knowledge base They move, like the socialists who advocate the advent of socialism” on an ideological ground Their purpose is “not to observe reality, but to create a more or less desirable ideal” 218 V Gioia (Durkheim 1996, 94–95, cf also Durkheim 1958, p 7), by selecting only those factual relationships able to confirm the “rationality” of that ideal.4 Such reflections did not modify the scholars’ different attitude towards the Marxist theorists (but also toward the theorists of the economic crisis and business cycles of that period) compared to their view of mainstream economists Obviously, no one would imagine the possibility of not carefully considering the theoretical contributions of Pareto and other economists because of their ideological vision As a matter of fact, it is supposed—sometimes in too superficial way (Gioia 2002, esp p 229 ff)—that their models of scientific explanation are only marginally hindered, believing that the logic of the arguments and the rigor of the procedures safeguard both their logical acceptability and their explicative capability With the Marxist authors all this has never been considered The prevalence of this attitude (which has been a-critically accepted) is particularly significant in the interesting situation of the period we are examining It was a period of intense transformation of the capitalist economy, characterized by increasing state intervention in the economy (as Sombart, Pareto and Durkheim admit) These economic changes were foreseen by Marx, starting from the study of the laws of competition (Marx 1970, I,1, p 294; I, 2, esp cap 10, p ff; III, 3, pp 267–293) On this basis, Marxist theorists extensively and profoundly analyze the original structure of contemporary capitalism Eduard Bernstein, Heinrich Cunow, Conrad Schmidt, Karl Kautsky, Tugan-Baranowskij, Rudolf Hilferding, Rosa Luxemburg, Lenin, etc.5—to name only those that constituted a landmark in the international debate, neglecting the very long list of studies on the same subject by authors from the countries where the spread of socialism was very intense (Italy, France, etc.)—created an impressive production on this issue, launching interesting large-scale debates Their contributions highlight facts and phenomena of the capitalism of their time: they analyzed, apart from their aspiration to socialism, what capitalism was, and not what socialism could accomplish These studies were not taken into account This was not because their scientific value was dubious, since they were impregnated with “ought to be” Probably, we are closer to the truth if we consider that the major obstacle was the fact that in the same period mainstream economics was exclusively engaged with the theory of general economic equilibrium It was only in the 1930s that economics It is, at the end, an interpretation shared also by Vilfredo Pareto, who has to admit (as occurred to Cairnes and others) that the laissez faire is not scientifically provable and cannot therefore be a solid ground for scientific explanations: Pareto (1961), par 68, p 38, Cairnes 1873, pp 232–264 On this, see also: Keynes 1991, esp p 31 ff) Interesting reconstructions of these debates on the future of capitalism and the Zusammenbruchstheorie in Colletti and Napoleoni (1970), Rosdolsky (1970), esp p 513 ff., Fetscher 1979, pp 235–274, Salvadori 1979, pp 275–314 Economics and Sociology Meet Socialism … 219 “discovered” economic dynamics and imperfect competition.6 Another thing that seems relevant is that, while the Marxist theorists, in the wake of Marx, tried to reconstruct the endogenous mechanisms leading to the monopolistic stage of the capitalist economy, mainstream economists, apart from the inner rigor of their models, adopted hypotheses ad hoc (“human nature” or interference from politics, or extra-economic factors, etc.) in order to explain the rise of monopolistic capitalism, generally regarded as the result of “distortions” of the economic system, determined by exogenous factors Probably, a careful reflection on those Marxist studies would firstly have allowed a bridge to be built between economics and historical reality or, as Durkheim stressed, it would have corroborated the “critical thinking” towards the economic system and towards its limits On the other hand, such “critical thinking” should characterize any social analyst In this sense, I agree with Michael Rose who some years ago wrote: any spread of Marxism with “evangelical fervor” is scientifically inconceivable but equally inconceivable is “the dismissal, en bloc, of Marxism as a rigid (and alien) ideology” (Rose 1982, p 11) References Aymard G (1962) Durkheim et la science économique Presses Universitaires de France, Paris Backhaus J (1996) Werner Sombart (1863–1941) Social Scientist, vv Metropolis-Verlag, Marburg Barbano F (1982) Introduzione a Durkheim (1982), pp 11–170 Bernstein E (1968 [1899]) I presupposti del socialismo e i compiti della socialdemocrazia Laterza, Bari, p Brocke B von (1996) Werner Sombart 1863–1941 Capitalism—Socialism, (Backhaus 1996), I, pp 19–102 Busino G (1987) Introduzione to Pareto, pp 9–52 Cairnes JE (1873) Political economy and laissez faire, in id., Essay in Political Economy MacMillan and co, London, pp 232–264 Chamberlin EH (1939 [1933]) Theory of monopolistic competition Harvard University Press, Harvard Cole GDH (1968) Storia del Pensiero socialista La Seconda Internazionale 1889–1914, III, Laterza, Bari Chaloupek G (1996) Long term economic trends in the light of Werner Sombart’s concept of Spätkapitalismus (Backhaus 1996), II, pp 163–178 Colletti L, Napoleoni C (1970) Il futuro del capitalismo Crollo o sviluppo? Laterza, Bari Deane P (1981) Idee e problemi dell’economia moderna Laterza, Bari Durkheim É (1958) Socialism and Saint-Simon Routledge and Kegan Paul Ltd., London Durkheim É (1962) La divisione del lavoro sociale Edizioni di Comunità, Milano Durkheim É (1969) Le regole del metodo sociologico Edizioni Comunità, Milano A profound re-exanimation of competition has been brilliantly proposed in (Robinson 1972 [1933]) in two works by Joan Robinson, who published her Economics of Imperfect Competition and by Edward H Chamberlin, with his Theory of Monopolistic Competition (Chamberlin 1939) On this, see: Schumpeter 1990, III, pp 1410–1413 and Deane 1981, pp 203 ff 220 V Gioia Durkheim É (1982) Il Socialismo Franco Angeli, Milano Durkheim É (1996) La scienza sociale e l’azione Filloux (ed.) 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Springer International Publishing AG 2017 R Soliani (ed.), Economic Thought and Institutional Change in France and Italy, 1789–1914, DOI 10.1007/978-3-319-25354-1_1 E Ciech and R Soliani economics... are dominated by “the individual instinct, which tends to absorb everything in itself, thus sacrificing the utility and rights of others” In the manifestation of this instinct lies the “driving force”