The Italian Tradition

  Arms of the House of Savoy

This may look odd. Italian economists don't usually figure very prominently in histories of economic thought.  Most people would probably only be able to name the giants Vilfredo Pareto and Piero Sraffa (both of whom were emigrants, incidentally).  But Italy has had a very old and distinctive heritage in economics that is impossible to ignore.  

This distinctiveness emerged in the 18th Century, when Neapolitan economist, Ferdinando Galiani (1751) "broke off" from the main streams of Enlightenment economic thinking.  He joined in the general reaction against Mercantilist thought, but he did not follow the path of the French Physiocratic and Scottish schools.  Instead, Galiani initiated the two avenues which formed the "Italian tradition" in economics: the serious analysis of  government as an economic entity and a utility-based theory of natural value.  

For Galiani, the economy must be analyzed more juridically than pseudo-scientifically.  Government, he argued, is an important entity in any economy. It can, via its laws and fiscal policies, influence the economy and society for good and evil.  Theories of the "natural state" without a State were, for him, hopelessly abstract and dangerously naive.  The policy conclusions of the Physiocratic sect -- laissez-faire, laissez-passer -- were a consequence of their having excluded the State by assumption.   This line of reasoning was closer to the French Neo-Colbertistes and German Neo-Cameralists.

Galiani also argued that the  "cost" theories of value which the Physiocrats embraced were plain wrong. In his view, natural value arises from utility-based demand interacting with the scarcity of supply -- an argument already anticipated by another Italian, Bernardo Davanzati.  This idea was developed in parallel in France by men like Abbé Condillac, Jacques Turgot and others.  By the time of the Marginalist Revolution,  the Italians were not caught by surprise and contributed much to its early construction.  Indeed, the bulk of the Lausanne School came from Italy -- Vilfredo Pareto, Enrico Barone, Giovanni Antonelli, Pasquale Boninsegni, etc.  Some economists, such as Henry Schultz, preferred to call it simply the "Italian School".  The influential Neoclassical economist  Maffeo Pantaleoni,  the Italian "Marshallian", can be considered part of this group.

The economic theory of the State was a more distinctively Italian concern and passed through several stages. In its earliest stage, it was explicitly utilitarian.  Cesar Beccaria, and Pietro Verri  focused their analysis on the impact of the State and fiscal policy on the economy.  They viewed the state as an instrument to improve general social welfare (whether by engaging or disengaging from the economy; reshaping its laws and practices, etc.).  The Italians found in the notion of utility - or "happiness" -- a criteria by which to evaluate policy.  Specifically, they argued that social welfare was greatest when the society achieved the "greatest happiness of the greatest number", which was to become the formula of utilitarian social policy. 

However, the utilitarian perspective still held the state as a "benevolent despot".  In the 19th Century, beginning with the work of Francesco Ferrara, and following through Antonio de Viti de Marco, Ugo Mazzola, Luigi Einaudi and others (including, notably, Pareto, Barone and Pantaleoni), the State began being analyzed as an economic entity itself.  This involved examining the government as both a  "productive" agent (i.e. a producer of collective goods -- which are also inputs into private production) as well as an "optimizing" agent (i.e. a "revenue-maximizer").  They were particularly keen on analyzing  the impact of fiscal policy, notably tax incidence, in this context.  The Italian "fiscal science" continued on its distinctive path through the second half of the 20th Century. Buchanan credits the Italian fiscalists as the intellectual precursors to the "public choice" school.

The third distinctive strain of Italian economics has been the remarkable "Classical" Neo-Ricardian counter-revolution initiated in 1960 by Piero Sraffa.  Although most of the early action was at Cambridge,  the Neo-Ricardian school took root in Italy as Sraffa's Italian students, such as Pasinetti and Garegnani, returned home.  There it was not only tolerated but even attained a degree of respectability that seemed impossible anywhere else. 

Early Italian Economists

The Italian Enlightenment and Utilitarians

The Lausanne School Italians

The Italian Fiscalist School

Italian Neo-Ricardians

Other Distinctive Italians

Resources on the Italian Tradition

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