Benedetto Croce

Historical Materialism and the Economics of Karl Marx

CHAPTER VI. On teh Economic Principle:
Two Letters to Professor V. Pareto


Esteemed Friend,

On reading the little paper, which you were courteous enough to send me, on how to state the problem of pure economics,(1) I at once felt a desire to discuss the subject with you. Other occupations have obliged me to defer the satisfaction of this wish until now; and this has been fortunate. The extracts from your hew and still unpublished treatise on pure economics, which came out in the March number of this Review,(2) have obliged me to abandon in part the scheme of thought which I had in mind; for I saw from them that you had modified some of those points in your thesis, which seemed to me most open to dispute.

I have on several occasions heard something like a feeling of distaste expressed for the endless discussions about value and the economic principle which absorb the energies of economic science. It is said that if this splitting of hairs over the scholastic accuracy of its principle were abandoned, the science might throw light on historical and practical questions which concern the welfare of human society. Apparently you have not allowed yourself to be alarmed by the threatened distaste of readers; nor indeed am I. Can we silence the doubts which disturb us? Could we have assurance whilst silencing these doubts that we were not endangering just those practical issues which the majority have at heart? Issues which we ourselves have at heart since we are certainly not able, like the monks of old, to free ourselves from interest in the affairs of the age. May not science be, as Leibniz said, quo magis speculative, magis practica? We must then go our way, and endeavour to satisfy our doubts, with all the caution and self-criticism of which we are capable; since they cannot be suppressed. On the other hand we should endeavour also not to offer our solutions to the public except when our knowledge, – wide if it may be so (yet necessarily imperfect) – of the literature on the subject, gives us some confidence that we are not repeating things already stated. Unless indeed, other considerations make us think it opportune to repeat and to impress things which have been stated, but without sufficient emphasis.

The new school of economic thought, of which you are such a worthy representative, has a merit of no small significance. It has reacted against the anti-scientific tendencies of the historical and empirical schools, and has restored the concept of a science of pure economics. This means indeed nothing more than a science which is science; the word pure, unless tautologous, is an explanation added for those who are ignorant or unmindful of what a science is. Economics is neither history nor discussion of practical issues: it is a science possessing its own principle, which is indeed called the economic principle.

But, as I had occasion to remark at another time,(3) I do not consider that this principle whose fundamental character is asserted, has hitherto been grasped in its individuality, nor conveniently defined in relation to other groups of facts, that is to the principles of other sciences. Of those conceptions of it which seem to me erroneous, the chief ones can he reduced to four which I will call the mechanical, the hedonistic, the technological and the egoistic.

You have now rejected the first two, because you think that mechanical and hedonistic considerations belong to metaphysics and psychology. But I acknowledge that I am dissatisfied with your method of arriving at this praiseworthy rejection.

You no longer say, indeed, as in your previous essay: 'L'economie pure ntest pas seulement semblable a la mechanique: c'est, a proprement parlor, un genre de mechanique.' But you still say that 'Pure economics employs the same methods as rational mechanics, and has many points of contact with this science.' although you do not pause over the mechanical considerations, it is not from a clear conviction that a datum in economics, as such, is quite different from a datum in mechanics; but merely because it seems to you convenient to omit such considerations, of which you do not deny, but rather admit, the possibility.

Now I on the contrary, say decisively that the data of economics is not that of mechanics, or that there is no transition from the mechanical aspect of a fact to the economic aspect; and that the very possibility of the mechanical point of view is excluded, not as a thing which may or may not be abstracted from, but as a contradiction in terms, which it is needful to shun.

Do you wish for the simplest and clearest proof of the non-mechanical nature of the economic principle? Note, then, that in the data of economics a quality appears which is on the contrary repugnant to that of mechanics. To an economic fact words can be applied which express approval or disapproval. Man behaves economically well or ill, with gain or loss, suitably or unsuitably: he behaves, in short, economically or uneconomically. A fact in economics is, therefore, capable of appraisement (positive or negative); whilst a fact in mechanics is a mere fact, to which praise or blame can only be attached metaphorically.

It seems to me that on this point we ought easily to be agreed. To ascertain it, it is sufficient to appeal to internal observation. This shows us the fundamental distinction between the mechanical and the teleological, between mere fact and value. If I am not mistaken, you assign to metaphysics the problem of reducing the teleological to the mechanical, value to mere fact. But observe that metaphysics cannot get rid of the distinction; and will only labour, with greater or less good luck, at its old business of reconciling opposites, or of deriving two contraries from one unity.

I foresee what may be advanced against this assertion of the non-mechanical nature of the economic principle. It may be said: What is not mechanical, is not measurable; and economic values, on the contrary, are measured. Although hitherto the unit of measurement has not been found, it is yet a fact that we distinguish very readily larger and smaller,greater and least values and construct scales of values. This suffices to establish the measurability and hence the essentially mechanical nature of economic value. Look at the economic man, who has before him a series of possible actions a, b, c, d, e, f,...; which have for him a decreasing value, indicated by the numbers 10, 9, 8, 7, 6... just because he measures value, he decides on the action a = 10, and not on c = 8 or f = 6.

And there is no fault in the deduction granted the existence of the scale of values, which we have just illustrated by an example. Granted the existence: but, supposing this to be an illusion of ours? If the man in the example, instead of being the homo oeconomicus were the homo utopicus or heterocosmicus, not to be found even in imaginative constructions?

This is precisely my opinion. The supposed scale of values is an absurdity. When the homo oeconomicus in the given example, selects a, all the other actions (b, c, d, e, f,...) are not for him values smaller than a; they are merely non-a; they are what he rejects; they are non-values.

If then the homo oeconomicus could not have a, he would be acting under different conditions: under conditions without a. Change the conditions and the economic action – as is well known – changes also. And let us suppose that the conditions are such that, for the individual acting, b represents the action selected by him; and c, d, e, f,... those which he omits to do, and which are all non-b, i.e. have no value.

If the conditions change again and it is supposed that the individual decides on c, and then on d, and then on e, and so on. These different economic actions, each arising under particular conditions, are incommensurable amongst themselves. They are different; but each is perfectly adapted to the given conditions, and can only be judged in reference to these conditions.

But then what are these numbers, 10, 9, 8, 7, 6...? They are symbols, symbols of what? What is the reality beneath the numerical symbol? The reality is the alteration in the actual conditions; and these numbers show a succession of changes: neither more nor less than is indicated by the alphabetic series, for which they are substituted.

The absurdity involved in the notion of greater or smaller values is, in short, the assumption that an individual may be at the same moment under different conditions. The homo oeconomicus is not at the same moment in a, b, c, d, e, f... but when he is in b, he is no longer in a; when he is in c he is no longer in b. He has before him only one action, approved by him; this action rules out all the others which are infinite, and which for him are only actions not preferred (non-values).

Certainly physical objects form part of the data of economics; and these, just because they are physical, are measurable. But economics does not consider physical things and objects, but actions. The physical object is merely the brute matter of an economic act: in measuring it we remain in the physical world, we do not pass over to that of economics, or else, when measured, the economic fact has become volatile. You say that 'political economy only concerns itself with choices, which fall on things that are variable in quantity and capable of measurement'; but pardon me, dear friend, you would be much perplexed if you had to justify this wholly arbitrary limitation; and if you had to show that the attribute measurabilility influences in any way the attribute of belonging to economics.

I think that I have explained, shortly, but adequately for a wise man like yourself, the reasons why the mechanical conception of the economic principle is untenable. If calculations and measurements come into problems that are called economic they do so just in so far as these are not problems in pure economics.

This non-mechanical datum, which is an economic datum, you call choice. And this is all right But to choose means to choose consciously. A choice made unconsciously, is either not a choice or not unconscious. You speak of the unconscious actions of man; but these cannot be the actions of the man in so far as he is man but movements of man in so far as he is also animal. They are instinctive movements; and instinct is not choice except metaphorically. Hence the examples you bring forward of dogs, of cats, of sparrows, of rats, and of asses from Buridano, are not facts of choice; and hence are not economic facts. You consider animal economics as an unfruitful science, which exhausts itself in descriptions. Look more closely and you will see that this science does not exist. An economics of the animals, understood in the sense of the naturalists, has not been written, not because it is not worth while, but because it is impossible to write it. Whence could it be obtained unless from books such as the Roman de Renart and the Animali parlanti?

This analysis ought to lead us to conceive of an economic datum as an act of man; i.e. as a fact of human activity.

And from this recognition is inferred in its turn the true criticism of the hedonistic conception of the economic principle. You say that 'the equations of pure economics express merely the fact of a choice, and can be drawn up independently of the ideas of pleasure and pain,' but you admit at the same time that the fact of the choice 'can be expressed equally well as a fact of pleasure.'

It is true that every case of economic choice is at the same time, a case of feeling: of agreeable feeling if the economic choice is rightly made, of disagreeable feeling, if it is ill made. Man's activity develops itself in the human mind, not under a pneumatic bell, and an activity which develops rightly, brings as its reflex, a feeling of pleasure, that which develops badly, one of displeasure. What is economically useful, is, at the same time pleasurable.

But this judgment cannot be converted. The pleasurable is not always economically useful. The mistake in the hedonist theory consists in making this conversion. Pleasure may appear unaccompanied by man's activity, or may be accompanied by a human activity which is not economic. Herein lies the fundamental distinction between pleasure and choice. A choice, is in the concrete, inseparable from the feeling of pleasure and displeasure; but this feeling is separable from choice, and may in fact exist independently of it.

If psychology be understood (as it is usually understood) as the science of psychical mechanism, economics is not a psychological science; this Herr van Ehrenfels fails to grasp. I do not know whether you have read the two volumes hitherto published on the System des Werttheorie.(4) After devoting some hundred pages to psychological disquisitions – which I do not mean to discuss here – he wishes, finally, to prove that his definitions of value remain sound, from whatever theory of psychology you start. He does this as he asserts (§ 87), not because he is doubtful of himself, but to safeguard his economic conclusions, which are so important for the practical problems of life, from unjustified attacks based on the standpoints of schools of psychology other than his own, the method of the barrister, who composes an apparent conclusion, and makes several demands that are connected therewith subordinately. It is true that there is no need for economists to spend their time on details of theoretical psychology; so true that Professor Ehrenfels might spare us his: but is it not true that economics remains the same whatever psychological theory is accepted. The unity of science means that a modification at one point is never without some reaction on the others; and the reaction is greatest when it is a question of the way of conceiving two facts, distinct but inseparable, like the economic and the psychical fact.

An economic datum is not then a hedonistic datum, nor, in general, a mechanical datum. But as the fact of man's activity, it still remains to determine whether it is a fact of knowledge or of will: whether it is theoretical or practical.

You, who conceive it as choice, can have no doubt that it is a fact of practical activity, i.e. of will. This is also my own conclusion. To choose something can only mean to will it.

But you somewhat obscure the conclusion now indicated when you speak of logical and illogical actions, and place actions properly economic amongst the former. Logical and illogical bring us back to theoretical activity. A logical or illogical action is a common way of speaking; but it is not a way of speaking exactly or accurately. The logical work of thought is quite distinct from the action of the will. To reason is not to will.

Nor is to will to reason; but the will presupposes thought and hence logic. He who does not think, cannot even will. I mean by willing, what is known to us by the evidence of our consciousness; not Schopenhauer's metaphysical will.

In knowledge, in so far as it is a necessary presupposition of economic action, is found, if not a justification, an explanation of your phrases about logical and illogical actions. Economic actions are always (we say so, at any rate) logical actions, i.e. preceded by logical acts. But it is necessary to distinguish carefully the two stages: the phenomenon and its presupposition, since from lack of distinction between the two stages has arisen the erroneous conception of the economic principle as a technological fact. I have criticised at length in other essays this confusion between technical and economic, and I may be allowed to refer both to what I have written in my review of Stammler's book Wirthschaft and Recht, and to the more exact analyses in my recent memorandum on the Estetica. Stammler maintains precisely that the economic principle can be nothing but a technical concept. I would advise anyone who wishes to see at a glance, the difference between the technical and the economic to consider carefully in what a technical error and in what an economic error respectively consist. A technical error is ignorance of the laws of the material on which we wish to work: for instance the belief that it is possible to put very heavy beams of iron on a delicate wall, without the latter falling into ruins. An economic error is the not aiming directly at one's own object; to wish this and that, i.e. not really to wish either this or that. A technical error is an error of knowledge: an economic error is an error of will. He who makes a technical mistake will be called, if the mistake is a stupid one, an ignoramus; he who makes an economic mistake, is a man who does not know how to behave in life: a weak and inconclusive person. And, as is well known and proverbial, people can be learned without being men (practical or complete).

Thus an economic fact is a fact of practical activity. Have we attained our object in this definition? Not yet. The definition is still incomplete and to complete it we must not only cross another expanse of sea, but avoid another rock: viz. that of the conception of economic data as egoistic data.

This error arises as follows: if an economic fact is a practical activity, it is still necessary to say how this activity is distinguished from moral activity. But moral activity is defined as altruistic; then, it is inferred, economic data will be egoistic. Into this mistake has fallen, amongst others, our able Professor Pantaleoni, in his Principe d'economia pura, and in other writings.

The egoistic is not something merely different from a moral fact; it is the antithesis of it; it is the immoral. In this way, by making the economic principle equivalent to an egoistic fact, instead of distinguishing economics from morality, we should be subordinating the former to the latter, or rather should deny it any right to exist, recognising it as something merely negative, as a deviation from moral activity.

A datum in economics is quite different. It does not form an antithesis to a moral datum; but is in the peaceable relation of condition to conditioned. It is the general condition which makes the rise of ethical activity possible. In the concrete, every action (volition) of man is either moral or immoral, since no actions are morally indifferent. But both the moral and the immoral are economic actions; which means that the economic action, taken by itself, is neither moral nor immoral. Strength of character, for example, is needed both by the honest man and by the cheat.

It seems to me that you approach gropingly to this conception of the economic principle, as relating to practical actions, which taken in the abstract, are neither moral nor immoral; when at one point in your last essay, you exclude from economic consideration choices, which have an altruistic motive; and further on, exclude also those which are immoral. Now, since choices are necessarily either altruistic or egoistic, either moral or immoral, you have no way of escaping from the difficulty except the one which 1 suggest; to regard economics as concerned with practical activity in so far as it is (abstractly) emptied of all content, moral or immoral.

I might enlarge further on this distinction and show how it has an analogy in the sphere of theoretical activity, where the relation of economics to ethics is repeated in the relation of aesthetics to logic. And I might point out the reason why scientific and aesthetic productions cannot be subjects of economic science, i.e. are not economic products. The reason given, in this connection, by Professor Ehrenfels, is, to say the least of it, curious: he remarks that: 'the relations of value upon which the data of logic and aesthetics rest, are so simple that they do not demand a special economic theory.' It should not be difficult to see that logical and aesthetic values are theoretical and not practical values, whereas economic value is a practical value, and that it is impossible to unite an economics of the theoretical as such. When, some years ago, the lamented Mazzola sent me the introduction in which he had discussed Economics and Art, I had occasion to write to him and afterwards to say to him by word of mouth, that much more fundamental relations might be discovered between the two groups of phenomena; and he urged me to expound my observations and inquiries. This I have done in the essay on Estetica, referred to above. I am sorry to be obliged to refer so many times in writing to you and to the public. But here the need for brevity and clearness constrains me.

This, then, is a rapid statement of how I arrive at the definition of the data of economics, which I should like to see at the beginning of every economic treatise. The data of economics are the practical activities of men in so far as they are considered as such, independent of any moral or immoral determination.

Granted this definition, and it will be seen also that the concept of utility, or of value or of ofelimity, is nothing but the economic action itself, in so far as it is rightly managed, i.e. in so far as it is really economic. In the same way as the true is thinking activity itself, and the good is moral activity itself.

And to speak of things (physical objects) as having or not having value, will appear simply a metaphorical usage to express those causes which we think efficacious to produce the effects which we desire, and which are therefore our ends. A is worth b, the value of a is b, does not mean (the economists of the new school knew it well) a = b nor even as is said a > b; but that a has value for us, and b has not. And value – as you know – exists only at the moment of exchange, i.e. of choice.

To connect with these general propositions the different problems which are said to belong to economic science, is the task of the writer of a special treatise on economics. It is your task, esteemed friend, if after having studied these general propositions, they seem to you acceptable. To me it seems that they alone are able to safeguard the independence of economics, not only as distinct from History and Practice but as distinct from Mechanics, Psychology, Theory of Knowledge, and Ethics.

Naples, 15th May 1900.(5)


Esteemed Friend,

Our disagreement concerning the nature of economic data has two chief sources: disagreement on a question of method and disagreement on a question of postulates. I acknowledge that one object of my first letter was to obtain from you such explanations as might set clearly in relief our disagreement on the two points indicated. – To reduce controversies to their simplest terms, to expose ultimate oppositions, is, you will agree, an approach to truth. I will explain briefly the two points at issue. In regard to that of method, although I agree with you in upholding the claims of a procedure that is logical, abstract and scientific, as compared with one that is historical (or synthetic, as you say), I cannot in addition allow that the former procedure involves something of the nature of an arbitrary choice, or that it can be worked out equally well in either of two ways. You talk of cutting away a slice from a concrete phenomenon, and examining this by itself; but I inquire how you manage to cut away that slice? for it is no question here of a piece of bread or of cheese into which we can actually put the knife, but of a series of representations which we have in our consciousness, and into which we can insert nothing except the light of our mental analysis. In order to cut off your slice you would thus have to carry out a logical analysis; i.e. to do at the outset what you propose to do subsequently. Your cutting off of the slice is indeed an answer to the problem of the quid in which an economic fact consists. You assume the existence of a test to distinguish what you take for the subject of your exposition from what you leave aside. But the test or guiding concept must be supplied by the very nature of the theory, and must be in conformity with it.

Would it for instance be in conformity with the nature of the thing, to cut away, as you wish to do, only that group of economic facts which relates to objects capable of measurement? What intrinsic connection is there between this merely accidental attribute, measurability, of the objects which enter into an economic action, and the economic action itself? Does measurability lead to a modification in the economic fact by changing its nature, i.e. by gong rise to another fact? If so, you must prove it. I, for my part, cannot see that an economic action changes its nature whether it relates to a sack of potatoes, or consists in an exchange of protestations of affection!

In your reply you refer to the need of avoiding waste of time over matters that are too simple, for which 'it is not worth while to set in motion the great machine of mathematical reasoning.' But this need relates to the pedagogy of the professional chair or of the book, not to the science in itself, which alone we are now discussing. It is quite evident that anybody who speaks or writes lays more stress on those portions which he thinks harder for his hearers and readers to grasp, or more useful to be told. But he who thinks, i.e. speaks with himself, pays attention to all portions without preferences and without omissions. We are now concerned with thought, that is with the growth of science; not with the manner of communicating it. And in thought, we cannot admit arbitrary judgments.

Nor need we be turned aside by an analogy with the classes of facts, made by zoology and other natural sciences. The classifications of zoology and botany are not scientific operations, but merely views in perspective; and, considered in relation to really scientific knowledge, they are arbitrary. He who investigates the nature of economic data, does not, however, aim at putting together, in perspective and roughly, groups of economic cases, as the zoologist or the botanist do, mutilating and manipulating the inexhaustible, infinite varieties of living creatures.

Upon the confusion between a science and the exposition of a science is based also the belief that we can follow different paths in order to arrive at a demonstration of the same truth. Unless in your case, since you are a mathematician, it arose from a false analogy with calculation. Now, calculation is not a science, because it does not give us the reasons of things; and hence mathematical logic is logic in a manner of speaking, a variety of formal logic, and has nothing to do with scientific or inventive logic.

When we pass to the question of the postulates, you will certainly be surprised if I tell you that the disagreement between us consists in your wish to introduce a metaphysical postulate into economic science; whereas 1 wish here to rule out every metaphysical postulate and to confine myself entirely to the analysis of the given facts. The accusation of being metaphysical will seem to you the last that could ever be brought against you. Your implied metaphysical postulate is, however, this; that the facts of man's activity are of the same nature as physical facts; that in the one case as in the other we can only observe regularity and deduce consequences therefrom, without ever penetrating into the inner nature of the facts; that these facts are all alike phenomena (meaning that they would presuppose a noumena, which evades us, and of which they are manifestations). Hence whereas I have called my essay ' On the economic principle,' yours is entitled 'On the economic phenomenon.'

How could you defend this postulate of yours except by a metaphysical monism; for example that of Spencer? But, whilst Spencer was anti-metaphysical and positivist in words, I claim the necessity of being so in deeds; and hence I cannot accept either his metaphysics or his monism, and I hold to experience. This testifies to me the fundamental distinction between external and internal, between physical and mental, between mechanics and teleology, between passivity and activity, and secondary distinctions involved in this fundamental one. What metaphysics unites philosophy distinguishes (and joins together); the abstract contemplation of unity is the death of philosophy. Let us confine ourselves to the distinction between physical and mental. Whilst the external facts of nature, admitted by empirical physical science, are always phenomena, since their source is by definition outside themselves, the internal facts or activities of man, cannot be called phenomena, since they are their own source.

By this appeal to experience and by this rejection of all metaphysical intrusion, I place myself in a position to meet the objection which you bring forward to my conception of economic data. You think that the ambiguity of the term value comes from this, that it denotes a very complex fact, a collection of facts included under a single word. For me, on the contrary, the difficulty in it arises from its denoting a very simple fact, a summum genus, i.e. the fact of the very activity of man. Activity is value. For us nothing is valuable except what is an effort of imagination, of thought, of will, of our activity in any of its forms. As Kant said that there was nothing in the universe that could be called good except the good will; so, if we generalise, it may be said that there is nothing in the universe that is valuable, except the value of human activity. Of value as of activity you cannot demand a so-called genetic definition. The simple and the original is genetically indefinable. Value is observed immediately in ourselves, in our consciousness.(6)

This observation shows us also that the summum genus 'value,' or 'mental activity' gives place to irreducible forms, which are in the first instance those of theoretical activity and practical activity, of theoretical values and practical values. But what does practical mean? – you now ask me. I believe that I have already answered by explaining that the theoretical is everything which is a work of contemplation, and the practical everything that is the work of will. Is will an obscure term? We may rather call the terms light, warmth and so on, obscure; not that of will. What will is, I know well. I find myself face to face with it throughout my life as a man. Even in writing this letter, today, in a room in an inn and in shaking off the laziness of country life, I have willed; and if I have delayed the answer for two months, it is because I have been so feeble as not to know how to will.

You see from this that the question raised by me, whether by choice you meant conscious or unconscious choice, is not a careless question. It is equivalent to this other one; whether the economic fact is or is not a fact of will. 'This does not alter the fact of the choice,' you say. But indeed it does alter it! If we speak of conscious choice, we have before us a mental fact, if of unconscious choice, a natural fact; and the laws of the former are not those of the latter. I welcome your discovery that economic fact is the fact of choice; but I am forced to mean by choice, voluntary choice. Otherwise we should end by talking not only of the choices of a man who is asleep (when he moves from side to side) but of those of animals, and why not? of plants and why not again? at minerals; passing rapidly along the steep slope down which my friend Professor C. Trivero has slipped in his recently published Teoria dei lisogni, for which may he be forgiven!(7)

When I defined economic data as 'the practical activities of man, in so far as they are considered as such, independently of any moral or immoral determination,' I did not make an arbitrary judgment, which might authorise others to do likewise, in a science which does not tolerate arbitrary judgments; but I merely distinguished further within the species practical activity, two sub.species or grades: pure practical activity, (economic), and moral practical activity, (ethical); will that is merely economic, and moral will. There is ambiguity in your reproach that when I speak of approval or disapproval as aroused by economic activity, I am considering the matter from a synthetic instead of an analytic point of view, and that approval or disapproval are extraneous factors. I did not however speak (and I believed that I had explained myself clearly), of moral, intellectual or esthetic approval or disapproval. No, I said, and I repeat, that a judgment of approval or reprobation was necessarily bound up with economic activity: but a merely ECONOMIC judgment of approval or reprobation. 'By saying that Rhenish wine is useful to me, has a value for me, is ofelimo to me, I mean only to say that I like it; and I do not see how this simplest of relations can be well or ill-managed. You will forgive me if in this sentence of yours I have italicised the words by saying. Here is the point. Certainly the mere saying does not give rise to an internal judgment of economic approval or disapproval. It will give rise to a grammatical or linguistic, i.e. aesthetic, approval or disapproval, according to whether the saying is clear or confused, well or ill expressed. But it is no question of saying: it is a question of doing, i.e. of the action willed carried out by the movement that is willed, of a choice of movement. And do you think that the acquisition and consumption of a bottle of Rhenish wine involves no judgment of approval or disapproval? If I am very rich, if my aim in life is to obtain momentary sensual pleasures, and I know that Rhenish wine will secure me one of them, I buy and drink Rhenish wine and approve my act. I am satisfied with myself. But if I do not wish to indulge in gluttony, and if my money is all devoted to other purposes, for which 1 wish as preferable, and if, in spite of this, yielding to the temptation of the moment, I buy and drink Rhenish wine, I have put myself into contradiction with myself, and the sensual pleasure will be followed by a judgment of disapproval, by a legitimate and fitting ECONOMIC REMORSE.

To prove to you how, in all this, I omit every moral consideration, I will give you another example: that of a knave who thinks it ofelimo to himself to murder a man in order to rob him of a sum of money. At the moment of assassination, and although remaining a knave at heart, he yields to an emotion of fear or to a pathological feeling of compassion, and does not kill the man. Note carefully the terms of the hypothesis. The knave will call himself an ass and an imbecile, and will feel remorse for his contradictory and inconclusive conduct; but not indeed a moral remorse (of that he is, by hypothesis, incapable), but, precisely, a remorse that is merely economic.

It seems to me that there is another confusion, easy to dispel, in your counter criticism to my criticism of the scale of values (economic) you say that 'there is no need for one person to find himself at the same moment under different conditions; it is enough that he can picture to himself these different conditions.' Can you in truth picture yourself being at the same moment under different conditions? Fancy has its laws; and does not allow the imagination of what is unimaginable. You can easily say that you picture it to yourself: words are docile; but, to picture it in reality, is, pardon me, another matter altogether. You will not succeed in it any more than I. Ask me to imagine a lion with the head of a donkey, and I will comply at once; but ask me to imagine a lion standing at the same moment in two different places, and I cannot succeed. I will picture to myself, if you like, two similar lions, two exactly alike, but not the same in two different positions. Fancy reconstructs reality, but possible reality, not the impossible or what is contradictory. Thus my demonstration of the absurdity of the scale of values applies both to actual and to possible reality. Nay, in discussing science in the abstract it was framed precisely on the mere consideration of the possible.

I do not know whether I have answered all your objections, but I have endeavoured to answer all those which seem to me fundamental. A dispute, in which questions of method and of principle are at stake need not be carried on pedantically into minute details; we must depend to some extent on the assistance of the readers, who, putting themselves mentally in the position of the two disputants, work out for themselves the final application. I wish merely to add that it is my strongest conviction that the reaction against metaphysics (a farsighted reaction in that it has freed scientific procedure from admixture with the arbitrary judgments of feeling and belief) has been pushed forward by many so far as to destroy science itself. The mathematicians who have a quick feeling for scientific procedure, have done much for economic science by reviving in it the dignity of abstract analysis, darkened and overwhelmed by the mass of anecdotes of the historical school. But, as it happens, they have also introduced into it the prejudice of their profession, and, being themselves students of the general conditions of the physical world, the particular prejudice that mathematics can take up in relation to economics which is the science of man, of a form of the conscious activity of man the same attitude which it rightly takes up in relation to the empirical natural sciences.

From what I have now stated you will easily discover exactly how far we are in agreement in the establishment of the principles of Economies and how far we disagree. If my new observations should assist in further reducing the extent of the disagreement, I shall indeed be glad.

Perugia, 20th October, 1900.(8)


1. Comment se pose le problème de l'economie pure. Paper read in December 1898 to the Societé Stella.

2. Giornale degli economisti, March 1900, pp. 216-235.

3. Rivista di sociolgia, III. no. vi., pp. 746 8, see Materialismio Storico, pp. 193-208.

4. DR CHRISTIAN V. EHRENFELS (Professor at Prague University): System der Werttheorie, vol. I, Allgemeine Werttheorie, Psychologie des Begehrens, Leipzig, Reisland, 1897; vol. II. Grundzüge einer Ethik, the same, 1898.

5. PARETO answered this letter in the same journal, Giornale degli economisti. August. 1900, pp. 110-162.

6. I have before me Professor A. GRAZIADEI'S article Intorno alla teoria edonistica del valore. (In Riforma Sociale, September 15th, 1900); in which A. fails to see how the purist theory of value dovetails in with the doctrines of Psychophysics and Psychology. I can well believe it! Psychophysics and Psychologist are natural sciences and cannot throw light on economic fact which is mental and of value. I may be allowed to point out, that, even three years ago, I gave a warning against the confusion of economics with psychology. (See in this volume pp. 72-75 ) He who appeals to psychology (naturalistic) in order to understand economic fact, will always meet with the delusion, opportunely shown up by Graziadei. I have stated the reasons owing to which economics cannot dwell where the psychologists and hedonists say; now Graziedei has questioned the doorkeepers (Fechner, Wundt, etc.), and has learnt that it does not dwell there. Well and good!

7. CAMILLO TRIVERO, La teoria dei bisogni, Turin, Bocca, 1900, pp. 198. Trivero means by need 'the condition of a being, either conscious or unconscious (man, animal, plant, thing), in which it cannot remain': so that it can be said 'that all needs are ultimately condensed into the supreme need or end of being or becoming.' Need for him is hence actual reality itself. But since, on the other hand, he declares that he does not wish to solve nor even to consider the philosophical problem, it is hard to understand what a theory of needs (i.e. of reality) can be, and for what reason he goes back to such generalities.

It is true that Trivero believes that, by going back to the general concept of need, he can establish the parent theory on which rest the particular doctrines of needs; and amongst them economics, which concerns itself with economic needs. If there are species he says we ought to determine of what genus they are species. But he will allow me to remark that the genus to look for is, as logic teaches, the proximal genus. To jump to such a great distance as to reality or to fact, would only lead to the noble discovery: that economic needs are part of reality, are a group of facts.

And what he does is to mace an equally valuable discovery: that the true theory of history is the theory of needs, which, granted his definition of needs, is as much as to say that history is history of reality and the theory of it is the theory.

I have then no objection to make to the meaning which Trivero wishes to give to the word need; but I must assert that, having given it this meaning, he has not afterwards constructed the theory of anything, nor thrown light on any special group of facts.

For real economic theory his book is quite useless. Economists do not recognise the needs of things and plants and animals, but only human needs, or those of man in so far as he is homo oeconomicus and hence a conscious being. I too believe that it is right to work out philosophically the principle of economics; but in order to do this, Trivero should have studied economic science. He declares that 'he does not want to hold fast to anyone's petticoats.' This statement is superfluous if it means that each individual ought to base his own scientific convictions on reason and not on authority. It is dangerous if it signifies, on the contrary, an intention to spare himself the trouble of studying other people's books, and of reconstructing everything from the beginning by his own personal efforts and by the aid of general culture alone. The result obtained being far from satisfactory should deter the author (who will not grumble at my plain speaking), from returning to this unfruitful method in the future.

8. PARETO answers this second letter in the Giornale degli economisti, February, 1901, pp. 131-138.