Show Less

Vilfredo Pareto and the Birth of Modern Microeconomics

Luigino Bruni

There has been a recent resurgence of interest in the work of Vilfredo Pareto, one of the founders of modern economics. This book reconstructs the genesis and significance of Pareto’s theory of choice which is Pareto’s greatest contribution to economic science and which was used by John Hicks, amongst others, to develop microeconomics.
Buy Book in Print
Show Summary Details
You do not have access to this content

Chapter 6: A Unitarian Reading of Pareto’s Paradoxes in the Theory of Choice, and of Its (Mis)Interpretations

Luigino Bruni


1 HICKS’S READING OF PARETO The analysis of the previous chapters now allows us to deal with the methodological questions presented in the Introduction. These questions are central both to this book and to the various interpretations of Pareto’s economics made in the twentieth century. In 1900 Pareto proved that traditional economic analysis could stand on weaker theoretical assumptions than was thought. This is the basic (technical) result needed to establish the ordinalist position. By showing that the assumption of cardinality of the utility function could be eliminated without any theoretical loss, Pareto showed that economics stood on firmer empirical foundations. It is the (philosophical) claim which has led not only to Hicks’s and Allen’s ordinalism, but also to Samuelson’s operationalism, a philosophy which inspired his theory of revealed preferences.1 John Hicks, in his famous article on the theory of value written with Allen (1934), and in other later works, is credited with having spread the ordinalist approach among economists. The core of the ordinalist position is (1) the substitution of an index of preference satisfaction for the old psychophysical, and (2) the proposition that, for the sake of consumer theory, we do not need to assume that the utility function is cardinal. The substitution of the obsolete and useless concept of decreasing marginal utility with the decreasing marginal rate of substitution was the main analytical tool for this ‘revolution’. The first point is used by Hicks to make a statement about economic explanations: in explaining market behaviour the ordinalist...

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information

or login to access all content.