The Milanese School

The “School of Milan”, as Voltaire called it at the time of Beccaria’s visit to Paris in the mid-1760s, gives an opportunity to examine political economy during the time span from the mercantilist to the “classical” era.

Pietro Verri was born in Milan into a noble family. During a short military career through the 1750s, he developed a lifelong friendship with Henry Lloyd, the Welsh officer who has some place in the history of economic thought for his work on money and as an early mathematical economist. Verri soon became convinced that political economy had to be at the centre of all serious social and political interests. He never conceived, though, of political economy as a separate scientific subject, but as part of a more elaborate and multi-level scientific enterprise, which largely parallels what Genovesi called “economia civile”.

Pietro Verri

The Italian school of economists was active, at the time, in close coincidence with a turning point concerning practical or policy issues, including, in particular, the sig­nificance to be attributed to monetary and financial phenomena and magnitudes vis­a-vis real magnitudes, and the advantages (over the disadvantages) of free trade. Four points emerge from Verri’s scientific work: (1) the question of money, including the link between money supply and growth; (2) free trade, especially in staple food (whether this should be admitted and defended or should be conceived as inimical to the interests of the state); (3) pain and pleasure, scientifically considered, with a view to the definition and measure of happiness and public happiness in particular; (4) developing quantitative tools to analyse the economy and draw policy conclusions.

Among the early works of Pietro Verri we find the Meditazionisulla felicitd (Reflections on Happiness) of 1763. As far as economics is concerned, the main contribution of Verri comes forth with the Meditazioni sulla economia politica in 1771: an English edition was published (Verri 1986 [1993]) by Kelley edited by Peter Groenewegen.

Verri’s Meditazioni sulla felicita - usually classified as a philosophical pamphlet - spells out the foundational pieces of his approach to civil life and he argues that the excess of desires over and above possibilities or “power” is a measure of unhappiness. The search for happiness in the form of the removal of unhappiness is a core issue in Pietro Verri’s political philosophy. He appears from the start as one of the leading representatives of eighteenth-century eudemonistic views.

The great object of happiness - Verri argues - can be pursued in two ways. Happiness consists in the reduction of the difference between the two elements of desires and power; achieving such a reduction can be effected by acting upon either one or the other of the two elements. It can be said, therefore, that, the object of happiness being reduced to a difference, it can be conquered either by “addition” or by “subtraction”: addition of power or subtraction of desires. Verri declares, in a typical utilitarian vein, addition to be superior. An addition in the form of the enlargement of power provides the main route to happiness as compared with a check on desires. He however lays a special emphasis upon creativity rather than mere enjoyment of what is already in our possession as a condition for happiness. Therefore, sheer enjoyment is to be distinguished from creative enjoyment or the pleasure to make and create. Virtuous, Verri states, is every useful act. His definition of utility is that of a disposition to perform good acts: “‘utilita’ e ‘attitu- dine a far del bene’”.

All the above also sets the stage for Verri’s main book on political economy. Through the 40 sections of the Meditazioni sulla economia politica of 1771, Pietro Verri lays great stress on creativity as the source and origin of the formation of wealth and the real object of the science of political economy.

In a country made rich through industry machines and tools are perfected to such a degree that the workman in a single day will produce an article which in a less industrious nation would take several days to make; such are the resources available to a country which has grown rich through its industry, resources that are lacking in a country whose riches have come spontane­ously from the land. (Verri 1986: 44)

Of course (Verri 1986, s. I: 4), “Need or, in other words, the sensation of pain is the goad used by nature to arouse man from the indolent state of stagnation in which he would otherwise languish....

Verri is also generally noted for his theory of price (see Porta and Scazzieri 2002). Verri’s theory can be summarized in the well-known proposition that “[i]f the number of sellers increases (other things being equal), plenty will increase and the price will fall; if the number of buyers increases (again, other things being equal), so will the want grow and the price increase. Thus the price is deduced from the number of sellers in comparison to the number of buyers”. In Verri’s own words, “the price of things will be in direct pro­portion to the number of buyers and in inverse proportion to the number of sellers” (Verri 1986, s. IV: 17-18, original emphasis). Verri tried to give a mathematical treatment of his formula also with the aid of the mathematician Paolo Frisi, who was a member of the Pugni Academy. The so-called sixth edition of Verri’s Meditazioni (now in vol. II.2 of the National Edition of his works) has especial significance, not only as it reflects Verri’s reaction to the annotations of his authoritative opponent Gian Rinaldo Carli, but also as it includes a series of notes on the theory of price by the mathematician Paolo Frisi, besides an abstract of Henry Lloyd’s 1771 book on the theory of money.

Concerning social and political order, it is only natural that some of the most typical features of his experience as a practical reformer should surface.

Let any man be free to practise his business wherever he chooses. Let the legislator permit sellers in every category to multiply, and in a very short time he will see competition and the desire for a better life reawaken creative capacities and quicken the hands of his people; he will witness a refinement of all the arts, a fall in price levels and the spread of plenty everywhere in the wake of competition its inseparable companion. (Verri 1986, s. VII: 26)

Verri’s political economy comes at a stage when the economic discipline is transformed from a theory on possessive acquisitiveness, based on commerce in a zero-sum game (mercantilism), to one of productivity, based on primary production and on circula­tion (physiocracy), to approach, as a further step, a line of thinking based on creativity, founded on learning and on human and social capital: the novelty of the last approach is the unusually larger space given to the analysis of the motivations to action and to institutions.

The Italian school, of course, worked in parallel with the physiocratic school. At the same time those authors, belonging to the Italian School, overcome the limitations of physiocracy, as we have seen above. While they follow physiocracy on free trade (with some qualifications), they do not confine positive economic productivity to the produce of agriculture only. It is the result of a special sense of sociality which puts the emphasis on productive relations as a source of creativity.

Cesare Beccaria

Among the main followers of Verri, Cesare Beccaria must be singled out. He is by far the best known figure of the Italian Enlightenment. Schumpeter dubs him “the Italian Adam Smith”, which appears at face value to be an appreciation of the economist. However, Beccaria is very often not perceived as an economist, but as a jurist. He is also sometimes considered as a moral philosopher of a utilitarian breed, as Bentham would later acknowledge. His immense reputation is almost entirely due to the pamphlet Dei delitti e dellepene (Of Crimes and Punishments), which appeared in 1764. The pamphlet was widely read and highly praised in the climate of enthusiasm for the Lumieres, even if the application of its principles (against torture and the death penalty) would come to suffer considerable restraint, particularly later in the century, as a number of the children of the Lumieres started (under the French lead) to indulge in the practice of revolutions.

Cesare Beccaria, ten years Verri’s junior, had made his first significant contributions (published in Il Caffe) as a mathematical economist on the theory of smuggling. His Tentativo analitico sui contrabbandi, originally appeared in Il Caffe in 1764, is a remark­able piece of mathematical economics (see Theocharis 1961). The idea that Beccaria’s original attraction was to the economic discipline is not only proven by his early works, but is also the substance of his 1764 pamphlet, which must therefore be rated as an eco­nomic work. Beccaria was still in his twenties when he acquired a superior worldwide reputation and his celebrated pamphlet on crimes and punishment became an explosive success. An extraordinarily brilliant mind, combined with a distinctly lazy and ineffec­tive character, he was himself surprised by his own success. Invited in great honour to Paris, the centre of the world, he completely bungled the announcement he could have given about the nature and quality of the research going on within the Accademia dei Pugni, or the “School of Milan”. That famous negative episode shocked the French philosophes and caused a serious rift with Verri. The mark left on history is still there to be seen and it has to be reckoned among the factors that have made it difficult, thus far, to give full justice to the Italian Enlightenment. As just hinted, it is only recently that Beccaria has been appreciated as the economist that he actually was (see Audegean 2010; Bruni and Porta 2014; Porta and Scazzieri 2014). However, it should be noted that such appreciation was anticipated by Franco Venturi, who had argued that Beccaria was among those who saw in political economy the key factor of the political thought of the Lumieres (Venturi 1969: 449).

Beccaria’s pamphlet is entirely a product of the Accademia and it is an economic pam­phlet, more precisely a contribution to the economics of law. The gist of the contribu­tion of the Milanese school goes towards paving the way for Adam Smith’s conception, whereby political economy is considered as “a branch of the science of a statesman or legislator”.

A professorship of “Scienze Camerali” or “Kameralwissenschaft”, meaning political economy through German-speaking Europe, was created for Beccaria in Milan (to Verri’s dismay) in 1769. Beccaria moreover, very much like Verri, was also a consult­ant administrator and a member of the local Economic Council (“Supremo Consiglio di Economia”) since 1771. Both Beccaria and Verri contributed a number of reports, or “Consulte”, within the council, giving advice to the government. There is no doubt that Pietro was the founder, leader and intelligence of the group, and the real mentor behind Beccaria, but in the public imagination he stood, and still stays, behind the first rank, while lazy Beccaria (shamefully, to Verri’s mind) was in the limelight.

Beccaria also left a volume of Lezioni, his lectures in Milan at the Scuole Palatine. He never published them, however; they were only first published in Milan in the Custodi Collection in 1804. They are now being prepared for publishing in a critical edition in volume III of the National Edition of Beccaria’s works.