The nineteenth and twentieth centuries
The age of marginalism
During the first part of the nineteenth century the civil economy tradition is continued by Giandomenico Romagnosi (1761—1835) and, more notably, by his pupil Carlo Cattaneo (1801—69).
Cattaneo, in particular, enjoys a strong world reputation as a classical author in the field of federal studies, but he is almost totally ignored in his capacity as an economist. At the same time the German-born Historical School, or Kathedersozialismus, conquers Italy and it first triggers the mid-nineteenth century reaction of Francesco Ferrara (1810—1900). Later, in the final decades of the century, a much larger reaction would ensue with the rise of marginalism. Maffeo Pantaleoni and Vilfredo Pareto are the outstanding authors of Italian marginalism, along with Enrico Barone and Antonio De Viti De Marco. Schumpeter (1954: 855) rightly extols the achievements of the Italian marginalists. “The most benevolent observer” — he writes — “could not have paid any compliments to Italian economics in the early 1870s; the most malevolent observer could not have denied that it was second to none by 1914.” Though the first part of the phrase endorses a malevolent commonplace, the second part is acceptable.Core marginalism
Marginalism as a research program initially came to Italy through the works of W.S.Jevons and of Leon Walras, rather than Carl Menger, just to mention the founding fathers. Jevons's influence spread first and Pantaleoni (1857—1924) in his early years (differently from Pareto, to whom he was otherwise very close) found Jevons clearer compared to Walras. Pantaleoni was less mathematically inclined and he was able to combine, to some extent, Jevons with Marshall. It was only later that general equilibrium theory established itself as a leading influence on Italian economists, especially with Pareto (1848—1924) and his pupil Enrico Barone (1859—1924).
Both Jevons and Walras were rather promptly translated into Italian in the Biblioteca dell'economista, the series of texts of great economists launched by Ferrara in the mid-nineteenth century. Pantaleoni was the economist who first introduced in Italy the neoclassical approach, gradually turning into the mainstream after a considerable lapse of time. His book of Principles (1889) was influential and had an English translation before the turn of the century. Nevertheless, particularly compared to Pareto, his influence was mostly national. At the same time his work was not exclusively confined to economics, a distinctive character of the Italian tradition. Pantaleoni treated a number of themes typical of the formative stages of the Italian tradition, and came to develop a special kind of marginalism. Particularly in his treatment of economic dynamics he was far from the determinism and restrictive use of the economic principle prevailing elsewhere.
Pareto, no doubt, is the most important economist of the whole of the Italian economic tradition. He gave fundamental contributions to the construction of economic theory. His influence was strong in Italy (although his chair was in Lausanne, as the successor to Walras) but it was by no means limited to Italy. Gradually, also through the influence of a number of non-Italian economists (notably J.R. Hicks), his influence grew worldwide. At the same time his contributions are not limited to economics, though this happened in a way different from Pantaleoni. Pareto had strong views on economics as a positivistic science. At the same time economics was to stay confined to the analysis of rational actions. Irrationality was to be the domain of sociology, to which discipline also he gave first rate contributions. Moreover his work on political theory, on the circulation of the elites, is also well-known.
Dynamic analysis
Even during the marginalist era, dynamic analysis continued to be one of the preferred themes in the Italian tradition — despite the fact that (under the influence of the general equilibrium brand), a static approach became prevalent in principle.
It is well-known that Schumpeter was the main critic of the approach dominated by the Kreislauf or the circular flow. No wonder that Schumpeter was widely read in Italy. Such authors as Luigi Amoroso, Giulio La Volpe, Marco Fanno, and above all Giovanni Demaria (1899—1998) gave significant contributions to dynamic analysis even if they did not abandon general equilibrium as their basic approach. This is true in particular of Demaria, who made dynamics the core issue of his research.Socialism
Generally speaking, nineteenth century economics saw the triumph of value analysis, under the influence of Marx's labor-value on one side and of marginalism's utility-value in the opposite camp. Italy is different in that value analysis never was in the limelight at any stage, not even among Marx's followers. The best examples are Achille Loria and Antonio Graziadei's critical analysis of value. Piero Sraffa (1898—1983), among the greatest Italian economists of all time, is the outstanding scholar in the field. Sraffa became famous as the greatest critic of marginalism: he later revealed himself as the upholder of a surplus (rather than surplus value) approach to political economy, a theory of production and distribution of a clear Marxian inspiration. Sraffa is at the center of intense debate. Due also to his scanty publications and hermetic language, his economics still is insufficiently understood, while a lot is emerging from his remarkable unpublished writings, now under scrutiny by researchers. He remained an Italian citizen, but he spent most of his life (from 1927) at the University of Cambridge, where he was among the associates ofJ.M. Keynes. His work marked the origin of the so-called Anglo-Italian branch of the postwar Cambridge school of economics.
On the feasibility of a socialist economy Italy staged a debate which produced a famous article by Barone, who in 1908 published an essay on the application of the marginalist approach to a socialist economy. Even in the marginalist camp we should note that the emphasis on value theory faded away, as Pareto was uniquely interested in a theory of price which could support the analysis of rational choice based on preferences, and had soon abandoned any cardinalist pretences concerning utility.
Other features of the Italian style
An interesting strand of political economy in Italy, in line with the focus on policy and institutions, is given by the contributions on public economics. Political economy in Italy — as generally noted and analyzed in particular by James M. Buchanan — developed a special line of thought named Scienza delle finanze — a line of analysis on the economics of public choice. It should be mentioned that the very first contribution by Pantaleoni, bearing the signs of a marginalist approach, was precisely an article on the economic principles of public choice. The main figures among the founders of Scienza delle finanze were Antonio De Viti De Marco (1858—1943) and Francesco Saverio Nitti. Concerning the theory of public goods the early Italian contributions by De Marco and Ugo Mazzola are widely acknowledged.
During the so-called “years of high theory,” “In Italy” — Schumpeter wrote (1954, 1157) — “scientific economics continued to move at... a high level, both within and without the Pareto school until the war. Barring war effects, there was no break and neither was there one after the fall of the regime.” Among the main figures we mention Costantino Bresciani Turroni, Umberto Ricci, Pasquale Jannaccone, Gustavo Del Vecchio, and Giorgio Mortara. We add in particular the case of Luigi Einaudi (1874—1961), a typical independent scholar and mentor of many economists during that period, extending well into the post-war period. His Lezioni di Politica Sociale (1949) is an outstanding example of the teachings of the Italian school inspired by principles of liberalism and emphasis on the civilizing aspects of competitive markets. His opposition to the Keynesian doctrines was in line with the adverse judgment met by Keynes's economic philosophy all over the world. Italian economists would come to better terms with the Keynesian revolution with the younger generation including Ferdinando di Fenizio, Paolo Sylos Labini, Giorgio Fua, Federico Caffe, Siro Lombardini, Pasquale Saraceno, Sergio Steve, Luigi Pasinetti, and Giacomo Becattini.
An important influence came also from Franco Modigliani (1918—2003), one of the founding fathers (together with Paul Samuelson) of the so-called “neoclassical synthesis,” who had left Italy before the war and ended up as one of the most important figures at MIT. He became a US citizen after the war and he died in Cambridge, Mass., in 2003. He is the only Nobel Prize winner for economics of Italian origin. All the economists above were crucial in transforming Italian economic thought during the post-war period. They all share, in different ways, significant allegiance to liberal principles. Among them Paolo Sylos Labini (1920—2005), Pasinetti (b. 1930), and Modigliani should be singled out for their special worldwide reputation. In particular Pasinetti is prominent among the above-mentioned Anglo-Italian school originally at Cambridge, UK.
In the post-war period Italian economics has in part kept aloof from the temptations of “economic imperialism,” common in certain quarters of the economic profession worldwide. The term was coined by George Stigler and it refers to the extension of the economic reasoning, based on “economic man,” to the whole range of social and political sciences. An analogous kind of approach was the ambition of Marx's historical materialism from the midnineteenth century onwards. Marx's ambition was, however, based on a different kind of economic philosophy, identifying the economic principle with the analysis of the technical conditions of production prevailing at different stages of history. It is curious to find that same ambition turning up today under the new dress of quasi-libertarian principles. It becomes today the last word of a kind of “popular libertarianism,” well signaled by the surge of political economics, a school of economics which has its main center of research in Italy at Bocconi University. With respect to our treatment of the Italian tradition, the line of research of political economics is sometimes criticized as reflecting a strategy of forced internationalization, leading perhaps to dispute the value of any national tradition as such.
At the same time the Italian tradition continues today in particular through the current revival of civil economy and its conception of the market. Contrary to political economics, Italian civil economists conceive of internationalization as a meeting point of the diverse traditions, which are enabled to communicate and enrich economic discourse through their varied approaches. Self-styled Libertarians, Chicago-boys, supporters of public choice, and general equilibrium theorists are present in the Italian context, a considerable number of economists share socially- oriented views and can be ascribed to the large stream of neo-Keynesians. Especially among the young, there is a split between the Bocconi-boys and the rest of the country. The former are almost as aggressively anti-Keynesian as the bloggers of NoisefromAmerika. They are also rather fierce supporters of the European strategy of austerity. Other groups argue in favor of rigorous reform but shun austerity.
Some would argue that Mario Monti, the leading economist and President of Bocconi, has recently put to test (as Prime Minister of Italy) the political credentials of the line of political economics upheld at Bocconi. But a vigorous reaction to the “excesses” of political economics is still far from appearing in the public arena.