chapter  4
11 Pages

Vilfredo Pareto and the concept of instrumental rationality

Vilfredo Pareto’s Manual of Political Economy (first edition in Italian 1906, second in French 1909) presented “the first complete formal exposi-

tion of the rational mechanics of homo oeconomicus” (Ingrao and Israel 1990: 131). In that sense it marks the ultimate step of the marginalist

movement that aimed to build a new science of economics by focusing

exclusively on the exchange of scarce resources through market mecha-

nisms. In the lineage including Jevons-Walras-Edgeworth-Marshall-

Fisher-Pareto, the latter makes the decisive theoretical advance that shaped

the development of neoclassical demand theory for the first half of the

twentieth century. As with real life, the evolution of concepts and ideas is

never linear. This implies the existence of another distinct lineage going

from Cournot, to Léon Walras and Pareto. As it is impossible to under-

stand Pareto without reading Walras it is impossible to understand Walras’

theoretical innovations without first understanding Cournot. Yet, from our

point of view, Cournot and Walras shared the same concept of rationality

with the English marginalists, that of maximization under constraint.