ABSTRACT
Pareto (1894) is sometimes `credited' with an early formulation of the illfated Hicks (1939) and Kaldor (1939) principles of hypothetical compensation. Thus Schumpeter (1949: 163) referred to Pareto as `the patron saint of the ``New Welfare Economics'' '; and, in his in¯uential survey of Pareto's achievements, John Chipman (1976: 92±3) asserted that `¼ Pareto's argument contains the essence of the New Welfare Economics launched by Hicks forty-®ve years later'. However, in the cited paper, Pareto argued to the contrary, that in the formulation of economic policy compensation should be a consideration only if it is to be carried out. Pareto's views on compensation were developed in just two paragraphs of his 1894 article. Later statements in his `Mathematical Theory of International Trade' (1895), in the Cours (1896±1897: Volume II, Sections 721±3) and in the Manuel (1909: Chapter 6 and Sections 89±129 of the Appendix) added little; and Pareto's correspondence with Walras about the 1894 article (Walras, 1965: Volume II, 605±12) added nothing. Our purpose is to brie¯y document this claim.
