Antonio De Viti de Marco was born in Lecce on 30 September 1858, the son of Raffaele De Viti who, having been adopted by his godmother, the Marquise Costanza De Marco, inherited the title and added de Marco to his family name.
He graduated in law at the University of Rome in 1881, and immediately began his academic career. He first lectured at the University of Naples, and then taught Political Economy at the Universities of Camerino and Macerata, and, finally, Public Finance in Pavia.
In 1887-88, he obtained a Chair of Public Finance at the University of Rome, which he held until 1931, when he retired at the age of 73, refusing to take the oath of allegiance to the Fascist government. He was responsible for the spread of marginalism in Italy for his role as co-owner and co-director of the Giornale degli economisti. From the beginning, he worked as an intense and passionate writer and publisher in order to promote liberalism. In the years 1901-22, as a member of the Italian Parliament, he struggled to achieve his dream of reshaping Italian political institutions towards a liberal democracy. With the advent of the Fascist regime, he retired from politics and returned to his scientific work. He died in Rome on 1 December 1943.The first scientific interest of De Viti concerned money and banking, and lasted throughout his life. In fact, his first theoretical book on the topic is an essay on money (De Viti 1885), followed by articles on specific topics in the Giornale degli economisti, and then by the long article on banking (De Viti 1898), which was expanded and revised later (see De Viti 1934a). De Viti (1885) contains an exposition of the quantity theory of money, based on a definition of money that includes only the metals. The Devitian theory rests on a clear separation between money and credit, based on the distinction between the functions of medium of exchange and unit of account. Therefore, the banking principle adjusts the volume of fiduciary media, while movements in the pricelevel are determined by changes in the amount of money based on the quantity theory.
His analysis covers the open economy and therefore also international adjustments, and the business cycle. In this analysis, however, money and credit are not considered as a major cause of crises, but are only important in the propagation of the business cycle. Since his approach to banking is closely linked to his idea of money, he believes that the payment function is the true function of banks. Bank loans are considered as a means to develop the payment system, and based on the real-bills doctrine, the solvency of banks does not depend on deposits, but on the quality of portfolios. Overall, his contribution to the theory of money and banking exhibits a certain eclecticism because of his extreme version of metallism, but does not display a high amount of originality. However, there are some original ideas, from the role played by the imperfect information in the dynamics of the business cycle to some elements that prefigure the new monetary economics according to which monetary theory depends on the institutional framework.However, the main interest of De Viti concerned public finance. Actually, he is generally regarded as the most eminent scholar of the early Italian tradition, in which marginalism was used to define the optimum allocation of public expenditures among alternative uses. In Il carattere teorico dell’economia finanziaria (De Viti 1888), he proposed a scientific explanation of the activity of the state based on marginal analysis, like the Austrian Emil Sax. In addition, this pioneering study can be interpreted as a reaction to the previous Italian scienza delle finanze in order to foster the scientific approach. De Viti refused the organicist conception of the state, namely, he did not consider the state as a sentient being, and his approach has been explicitly based on the assumption that government intervention has not only economic effects, but is also fundamentally economic in nature. He then proposed the same explanatory principles used in economics, in particular the idea that the economic agents exhibit a maximizing behaviour, even though he was aware that, in public economics, political problems are also involved.
For these reasons, De Viti’s contribution is conventionally regarded as the origin of the Italian tradition in public finance theory, understood as a coherent and comprehensive structure, based on marginal utility.He considered polar cases of the state basing on political assumptions regarding the behaviour of the dominant class: (1) monopolistic state, where a social class exerts power in its exclusive interest; and (2) cooperative state, where, as in a cooperative enterprise, everybody participates, directly or through appointed agents, in their collective interests. It was only in the 1888 book that De Viti hinted at a third polar case, where the power, absolute but paternalistic, is managed in order to promote the welfare of all consumers. However, he was interested in the cooperative state only, which he thought to be very similar to modern states, apart from more or less important deviations due to political elements. In fact, he considered that historically the cooperative state represented a point of arrival and political equilibrium. His doctrine is based on the idea of public needs intended as a mere premise of fact: the economic activity of the state provides for the satisfaction of public needs in terms of the production of public services. Thus, his approach is based on the productive aspect of public activity, as far as the state is not anything but the public, organized for the production of certain goods as in a cooperative enterprise.
With time, he softened his position vis-a-vis the opportunity to use marginal analysis in the general theory of public finance. At any rate, since the very beginning, in the cooperative state the crucial principle is the cost pricing. However, in his subsequent work from I primi principι dell’economia finanziaria (De Viti 1928) to Principι di economia finanziaria (De Viti 1934b), he enlarged the scope and range of the material considered, from the economic and political theory of proportional and progressive taxation to the shifting and incidence of taxation and the theory of public debt; from the double taxation of savings to the theory of tariffs and the fiscal theory of custom duties.
For example, as regards De Viti’s seminal work on the effects of taxation, its original characters are both the Paretian idea of market interdependence, and the necessity of considering the expenditure of the tax income. As regards the theorem of the double taxation of savings (J.S. Mill, I. Fisher and L. Einaudi), he argued that no double taxation occurs because the new tax is the counterpart of new public services, at least in the limit of the cooperative state, in which public services are true productive factors. As regards the different effects of debt and extraordinary taxation, he has built on the Ricardian model. He specified the assumptions of the model and extended it to agents without capital income (workers and professionals). In contrast to Ricardo, he reached the conclusion that, for the community, public debt is more efficient than an extraordinary tax, but arrived at the Ricardian conclusion that the burden cannot be shifted to future generations. The work on public debt by the Italian scholars in the first half of the twentieth century (including Benvenuto Griziotti’s approach) has been largely a development of the De Vitian analysis.Amedeo Fossati
See also:
Money and banking (III); Public economics (III).