VILFREDO PARETO


From Vilfredo Pareto, The Mind and Society, ed. ArthurLivingston trans. Andrew Bongiomo (New York: Harcourt, Brace &Co., 1935), Vols. III and IV, Sections 2026 - 2029 and Sections 2233- 2236.


2026. Social elites and their circulation. [1] Suppose webegin by giving a theoretical definition of the thing we are dealingWith, making it as exact as possible, and then go on to see whatpractical consideration we can replace it with to get a firstapproximation. Let us for the moment completely disregardconsiderations as to the good or bad, useful or harmful, praiseworthyor reprehensible character of the various traits in individuals, andconfine ourselves to degrees--to whether, in other words, the traitin a given case be slight, average, intense, or more exactly, to theindex that may be assigned to each individual with reference to thedegree, or intensity, in him of the trait in question.

2027. Let us assume that in every branch of human activity eachindividual is given an index which stands as a sign of his capacity,very much the way grades are given in the various subjects inexaminations in school. The highest type of lawyer, for instance,will be given 10. The man who does not get a client will be given1--reserving zero for the man who is an out-and-out idiot. To the manwho has made his millions--honestly or dishonestly as the case maybe--we will give 10. To the man who has earned his thousands we willgive 6; to such as just manage to keep out of the poor-house, 1,keeping zero for those who get in. To the woman "in politics," suchas the Aspasia of Pericles, the Maintenon of Louis XIV, the Pompadourof Louis XV, who has managed to infatuate a man of power and play apart in the man's career, we shall give some higher number, such as 8or 9; to the strumpet who merely satisfies the senses of such a manand exerts no influence on public affairs, we shall give zero. To aclever rascal who knows how to fool people and still keep clear ofthe penitentiary, we shall give 8, 9, or 10, according to the numberof geese he has plucked and the amount of money he has been able toget out of them. To the sneak-thief who snatches a piece of silverfrom a restaurant table and runs away into the arms of a policeman,we shall give 1. To a poet like Carducci we shall give 8 or 9according to our tastes; to a scribbler who puts people to rout withhis sonnets we shall give zero. For chess-players we can get veryprecise indices, noting what matches, and how many, they have won.And so on for all the branches of human activity.

2028. We are speaking, remember, of an actual, not a potential,state. If at an English examination a pupil says: "I could knowEnglish very well if I chose to; I do not know any because I havenever seen fit to learn," the examiner replies: "I am not interestedin your alibi. The grade for what you know is zero." If, similarly,someone says: "So-and-so does not steal, not because he couldn't, butbecause he is a gentleman," we reply: "Very well, we admire him forhis self-control, but his grade as a thief is zero."

2029. There are people who worship Napoleon Bonaparte as a god.There are people who hate him as the lowest of criminals. Which areright? We do not choose to solve that question in connexion with aquite different matter. Whether Napoleon was a good man or a bad man,he was certainly not an idiot, nor a man of little account, asmillions of others are. He had exceptional qualities, and that isenough for us to give him a high ranking, though without prejudice ofany sort to questions that might be raised as to the ethics of hisqualities or their social utility.


2233. The facts just mentioned put us in the way of making a moregeneral classification in which the preceding classification would beincluded and to which we shall have frequent occasion to refer inexplaining social phenomena hereafter (Ss 2313f). [2] Suppose we putin one category, which we may call S, individuals whose incomes areessentially variable and depend upon the person's wide-awakeness indiscovering sources of gain. In that group, generally speaking anddisregarding exceptions, will be found those promoters ofenterprise--those entrepreneurs--whom we were considering some pagesback; and with them will be stockholders in industrial and commercialcorporations (but not bondholders, who will more fittingly be placedin our group next following). Then will come owners of real estate incities where building speculation is rife; and also landowners--on asimilar condition that there be speculation in the lands about them;and then stock-exchange speculators and bankers who make money ongovernmental, industrial, and commercial loans. We might further addall persons depending upon such people--lawyers, engineers,politicians, working-people, clerks--and deriving advantage fromtheir operations. In a word, we are putting together all persons whodirectly or indirectly speculate and in one way or another manage toincrease their incomes by ingeniously taking advantage ofcircumstances.

2234. And let us put into another category, which we may call R,persons who have fixed or virtually fixed incomes not depending toany great extent on ingenious combinations that may be conceived byan active mind. In this category, roughly, will be found persons whohave savings and have deposited them in savings-banks or investedthem in life-annuities; then people living on incomes from governmentbonds, certificates of the funded debt, corporation bonds, or othersecurities with fixed interest-rates; then owners of real estate andlands in places where there is no speculation; then farmers,working-people, clerks, depending upon such persons and in no waydepending upon speculators. In a word, we so group together here allpersons who neither directly nor indirectly depend on speculation andwho have incomes that are fixed, or virtually fixed, or at least arebut slightly variable. [3]

2235. Just to be rid of the inconvenience of using mere letters ofthe alphabet, suppose we use the term "speculators" for members ofcategory S and the French term rentiers for members ofcategory R. [4] Now we can repeat of the two groups of persons moreor less what we said above (S 2231) of mere owners of savings andentrepreneurs, and we shall find analogous conflicts, economicand social, between them. In the speculator group Class I residuespredominate, in the rentier group, Class II residues. Thatthat should be the case is readily understandable. A person ofpronounced capacity for economic combinations is not satisfied with afixed income, often a very small one. He wants to earn more, and ifhe finds a favourable opportunity, he moves into the S category. Thetwo groups perform functions of differing utility in society. The Sgroup is primarily responsible for change, for economic and socialprogress. The R group, instead, is a powerful element in stability,and in many cases counteracts the dangers attending the adventurouscapers of the S's. A society in which R's almost exclusivelypredominate remains stationary and, as it were, crystallized. Asociety in which S's predominate lacks stability, lives in a state ofshaky equilibrium that may be upset by a slight accident from withinor from without.

Members of the R group must not be mistaken for "conservatives,"nor members of the S group for "progressives," innovators,revolutionaries (Ss 226, 228 - 44). They may have points in commonwith such, but there is no identity. There are evolutions,revolutions, innovations, that the R's support, especially movementstending to restore to the ruling classes certain residues ofgroup-persistence that had been banished by the S's. A revolution maybe made against the S's--a revolution of that type founded the RomanEmpire, and such, to some extent, was the revolution known as theProtestant Reformation. Then too, for the very reason that sentimentsof group-persistence are dominant in them, the R's may be so blindedby sentiment as to act against their own interests. They readilyallow themselves to be duped by anyone who takes them on the side ofsentiment, and time and time again they have been the artisans oftheir own ruin (S 1873). If the old feudal lords, who were endowedwith R traits in a very conspicuous degree, had not allowedthemselves to be swept off their feet by a sum of sentiments in whichreligious enthusiasm was only one element, they would have seen atonce that the Crusades were to be their ruin. In the eighteenthcentury, had the French nobility living on income, and that part ofthe French bourgeoisie which was in the same situation, not succumbedto the lure of humanitarian sentiments, they would not have preparedthe ground for the Revolution that was to be their undoing. Not a fewamong the victims of the guillotine had for long years beencontinually, patiently, artfully grinding the blade that was to cutoff their heads. In our day those among the R's who are known as"intellectuals" are following in the footprints of the French noblesof the eighteenth century and are working with all their might toencompass the ruin of their own class (S 2254).

Nor are the categories R and S to be confused with groupings thatmight be made according to economic occupation (Ss 1726-27). Thereagain we find points of contact, but not full coincidence. A retailmerchant often belongs to the R group, and a wholesale merchant too,but the wholesaler will more likely belong to the S group. Sometimesone same enterprise may change in character. An individual of the Stype founds an industry as a result of fortunate speculations. Whenit yields or seems to be yielding a good return, he changes it into acorporation, retires from business, and passes over into the R group.A large number of stockholders in the new concern are also R's--theones who bought stock when they thought they were buying a surething. If they are not mistaken, the business changes in character,moving over from the S type to the R type. But in many cases the bestspeculation the founder ever made was in changing his business to acorporation. It is soon in jeopardy, with the R's standing in line topay for the broken crockery. There is no better business in thisworld than the business of fleecing the lambs--of exploiting theinexperience, the ingenuousness, the passions, of the R's. In oursocieties the fortunes of many many wealthy individuals have no otherfoundations. [5]

2236. The differing relative proportions in which S types and Rtypes are combined in the governing class correspond to differingtypes of civilization; and such proportions are among the principaltraits that have to be considered in social heterogeneity. [6] Goingback, for instance, to the protectionist cycle examined above (Ss2209 f.), we may say that in modern democratic countries industrialprotection increases the proportion of S's in the governing class.That increase in turn serves to intensify protection, and the processwould go on indefinitely if counter-forces did not come into play tocheck it (S 2221).


NOTES


1. Kolabinska, La circulation des elites en France, p.5:"The outstanding idea in the term 'elite' is 'superiority.' That isthe only one I keep. I disregard secondary connotations ofappreciation or as to the utility of such superiority. I am notinterested here in what is desirable. I am making a simple study ofwhat is. In a broad sense I mean by the elite in a societypeople who possess in marked degree qualities of intelligence,character, skill, capacity, of whatever kind. . . . On the other handI entirely avoid any sort of judgment on the merits and utility ofsuch classes." [The phrase "circulation of elites" is wellestablished in Continental literature. Pareto himself renders it inItalian as "circulation of the Elite (selected, chosen, ruling,"better") classes." It is a cumbersome phrase and not very exact, andI see no reason for preferring it to the more natural and, in mostconnexions, the more exact, English phrase, class circulation.--A.L.]

2. The classification in question was first suggested in my"Rentiers et speculateurs," in Independence, May 1,1911.

3. Monographs along the lines of Le Play's would be of great usein determining the character of the persons belonging in our S group,and those belonging to our R group. Here is one such, contributed byPrezzolini: La Francia e I francesi dew secolo XX osservati da unitalrano. I know it as quoted by E. Cesari in the Vitaitaliana, Oct. 15, 1917, pp. 367 - 70. The person in question isa well-known member of the French parliament--we suppress the propername: for us here, he is not a person but just a type. The figuresgiven by Prezzolini are those publicly declared by the memberhimself, Monsieur X. X's fixed income yields a total of 17,500francs, of which 15,000 are salary as a member of the parliament and2,500 interest on his wife's dowry. Only the latter sum belongs incategory R--the salary belongs rather in category S, because to getsuch a thing one must have the ability and the good fortune to beelected. X's expense-account shows a total of 64,200 francs, dividedas follows: household expenses, 33,800; office expenses 22,550;expenses for his election district (avowable expenses), 7,850. Thereought, therefore, to be a deficit of 45,700 francs; but the deficitis not only covered but changes into a surplus in view of thefollowing revenues: contributions to newspapers and otherpublications, 12,500 francs; honorarium as general agent of theA.B.C. Company, 21,000 francs; commissions on sales, 7,500. In thisconnexion, Prezzolini notes that X, reporting on the war budget,enters 100,000 francs for supplies delivered to himself, as generalagent of the A.B.C. Company: that gives X his "sales commissions."Finally, because of the influence that he enjoys, our member, X,receives a stipend of 18,000 francs from a newspaper. In all, theserevenues, which clearly belong in the category S, yield a total of50,000 francs. Prezzolini adds that the member in question is not theonly one, nor the least, of his species. He is just a better-knownand an honester type.

4. It might be well to repeat that our use of such terms is notbased on their ordinary senses, nor upon their etymologies. We are touse them strictly in the sense defined in Ss 2233-34, and the readermust refer to those definitions whenever he encounters them in theremainder of this volume. [I keep the term "speculator." Englishordinarily analyzes the matter embraced under Pareto's term,especially in slang. Pareto's "speculator" is our "hustler," "man ofpep," "wide-awake individual," "livewire," and so on.--A. L.]

5. Many people conclude that such facts are enough to condemn oursocial organization, and hold it responsible for most of the painsfrom which we suffer. Others think that they can defend our presentorder only by denying the facts or minimizing their significance.Both are right from the ethical standpoint (Ss 2162, 2262), wrongfrom the standpoint of social utility experimentally considered (S2115). Obviously, if it be posited as an axiom that men ought,whatever happens, to observe certain rules, those who do not observethem necessarily stand condemned. Trying to put such a reasoning intological form, one gets as its premise some proposition of the typementioned in Ss 1886, 1896-97. If one goes on to say that theorganization so condemned is in the main injurious to society, onemust logically fall back on some premise that confuses morality andutility (Ss 1495, 1903-98). On the other hand, if premises of thosetypes are granted and one would, notwithstanding, still defend orapprove the organization of our societies, there is nothing left butto deny the facts or say they are not significant. The experimentalapproach is altogether different. Anyone accepting it grants noaxioms independent of experience, and therefore finds it necessary todiscuss the premises of the reasonings mentioned. On so doing onesoon perceives that it is a question of two phenomena that do indeedhave points in common, but are in no sense identical (S 2001), andthat in every particular case experience has to be called in todecide whether one is dealing with a point of contact or a point ofdivergence. An instant's reflection is enough to see that if oneaccepts certain conclusions one adopts by that fact the premises towhich they are indissolubly bound. But the power of sentiment and theinfluence of habitual manners of reasoning are such that peopledisregard the force of logic entirely and establish conclusionswithout reference to the premises or, at the very best, accept thepremises as axioms not subject to discussion. Another effect of suchpower and such influence will be that in spite of the warnings wehave given and over and over again repeated, there will always besomeone to carry the import of the remarks that he is here reading onthe R's and S's beyond the limits we have so strictly specified,interpreting all that we have been saying against one of those groupsas implying that the influence of the group is, on the whole, harmfulto society and the group itself "condemnable"; and all that we havebeen saying in its favour as a proof that the influence of the groupis, in general, beneficial to society and the group itself worthy ofpraise. We have neither the means nor the least desire to prevent thefabrication of such interpretations. We are satisfied withrecognizing them as one variety of our derivations (S 1419, I-b).

6. As usual, one may raise the query: "If this social phenomenonis of such great moment, how comes it that people have not remarkedit hitherto?" The answer, again as usual, is that people have indeednoticed it, but have proceeded to cover it over again with a cloak ofderivations. The substratum underlying anti-Semitism is a movementagainst speculators. It is said that the Semite is more of aspeculator than the "Aryan" and the Jew is therefore taken asrepresenting the whole class. Consider the case of department-storesand bazaars in Europe. They are the targets, especially in Germany,of the anti-Semites. It is true that many such stores are owned byJews, but plenty of others are owned by Christians, and in eitherevent are equally harmful to the small retailer, whom theanti-Semites would protect--anti-Semite in this case meaning"anti-speculator" and nothing more. The same may be said of financialsyndicates and other characteristic forms of speculations. Socialistspick their quarrel with "capitalists," and theoretically it is a goodthing that for once the "capitalist" is not confused with the"speculator"; but practically, the mobs that follow Socialistleadership have never grasped head or tail of Marx's pretty theoriesas to "surplus value", they are inspired solely by an instinctiveimpulse to take for themselves at least a part of the money that isgoing to "speculators." Theorists, too, when dealing with"capitalism" in history, confuse it, to some extent at least, with"speculator" rule. Finally, if anyone is inclined to go farther backin history, he may find ample traces of remarks and doctrines thatreflect the conflict between speculators and the rest of the public.In the case of Athens the people in the Piraeus are at outs with thefarmers, and Plato (De legibus, IV, 705) would place hisrepublic far from the sea to keep it safe front the influence ofspeculators. In that he is a predecessor of the anti-Semites of ourtime. Speculators may be found at work in all periods of history.Various the ways in which their influence manifests itself, variousthe names that are applied to it, various the derivations that itprovokes; but the substance is ever the same.

 


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