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Abstract
This paper is a reconstruction and a reconsideration of Achille Loria’s (1857–1943) economic and social thought, in particular his criticism of capitalism. Loria, a leader of the Italian and European economic science of his generation, was convinced that the true and most relevant conflict in the capitalistic society was that between rent and profit. Loria, following David Ricardo, considered this conflict much more radical than the profit-wages one, and therefore assigned to income redistribution a central place in his theory. Loria was an outstanding economist in the first part of his career (1780–1900), but underwent a sudden decline with the advent of the marginalist revolution, when his “classic” approach to political economy was considered obsolete and wrong. The paper claims that Loria’s system deserves to be reconsidered, and that his criticisms are particularly relevant in contemporary financial capitalism based again on rent seeking.
Keywords:
Acknowledgments
I thank the four anonymous referees, Lorna Gold for the English language revision and Paolo Santori for useful comments.
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes
1 It is worthwhile noting that a very small number of economists in the early 1900s focused on Loria’s topics and developed similar thoughts but did not connect them to his theory. The most important reference here is to Piero Sraffa and to his neo-Ricardian school.
2 Loria was born in the same year of Maffeo Pantaleoni, the leader of the Italian neo-classical economists of his time, with whom he was in strict and friendly correspondence at least till 1889.
3 Another sign of the reputation and the esteem given to the early Loria is offered by the young Augusto Mortara (that later became a very influential professor of Law), who in 1885, published I Doveri della proprietà fondiaria (Duties of Land Ownership) (Mortara Citation1885), where he not only discusses Loria’s Rendita fondiaria, but also publishes in his opening page a letter, which the then 27-years-old Achille Loria had sent him as a comment to the written work. It must be noted that in this letter of 1884, Loria exposes with extreme lucidity the thesis at which he will work on all his life: “Land ownership is the fundamental phenomena of economy, and that through the study of it political economy may enter in the deepest places of the social structure” (ix).
4 It easy to find an affinity between Loria and T. Veblen (both critical of financial capitalism, the leisure class, and of the subjective and hedonistic approach of the new economic science). To my present knowledge, there was no direct correspondence between the two.
5 One need only look at the archive of his books (Parisi and Borello Citation2003) to realise the numberless authors who, particularly during the last decades of the 1800s, sent him their books, brochures, extracts, often with added holographic dedications, many (I counted twenty) beginning with “to my master Achille Loria” and many others with similar expressions.
6 Luigi Cossa, one of the professors whom Loria considered his teachers, in his note Introduction to the Study of Political Economy, in 1892, defines Loria as “Inferior to no one for ingenuity, superior to all in originality as to many in doctrine” (527). Luigi Einaudi, in his memoirs, speaks of Loria as a “Singular economist”, but adds “Achille Loria had written books on ‘Population and the Social system’ and on the Analysis of Capitalistic Property (1889), which had fascinated young people. Those who had not lived between 1890 and 1900 cannot appreciate enough the weight those books had in setting mental study habits in that generation of economists” (Einaudi 1950). Einaudi attributed the decline of the ‘second’ Loria also to the enormous weight the negative judgement on him by Croce had had on young economists and scientists in Italy. On the diffusion of Loria’s readings in USA, cf. Ottaviano (1981).
7 A scientific fate (not academic) similar to that which happened to his fellow economist Maffeo Pantaleoni after having published his masterpiece in 1889 (Principii di economia pura). Pantaleoni too decided not to climb onto the wagon of the new science because he lacked technical-mathematic instruments, but, unlike Loria, he continued to think that true science was only one (that of Pareto).
8 In his Quaderno n. 28 (Gramsci Citation2014 [19129-35]) wrote: “Some of the worst aspects and bizarre mindset of a group of Italian intellectuals and then the national culture (inconsistency, lack of systematic critical spirit, negligence in the performance of scientific activity, absence of centralization of culture, softness and ethical indulgence in the field of cultural-scientific activity etc., not appropriately tackled and rigidly affected: so irresponsibility towards the formation of national culture), that can be described under the all including title of ‘lorianismo’”.
9 And then he continues: “In 1886, the same Mr. Loria published a book, La teoria economica della constituzione politica, in which he announced to his astounded contemporaries that Marx’s conception of history, so completely and purposefully misrepresented by him in 1883, was his own discovery. To be sure, the Marxian theory is reduced in this book to a rather Philistine level, and the historical illustrations and proofs abound in blunders which would never be tolerated in a fourth-form boy. But what does that matter? The discovery that political conditions and events are everywhere invariably explained by corresponding economic conditions was, as is herewith demonstrated, not made by Marx in 1845, but by Mr. Loria in 1886. At least he has happily convinced his countrymen of this, and, after his book appeared in French, also some Frenchmen, and can now pose in Italy as the author of a new epoch-making theory of history until the Italian Socialists find time to strip the illustrious Loria of his stolen peacock feathers. But this is just a sample or Mr. Loria’s style. He assures us that all Marx’s theories rest on conscious sophistry (un consaputo sofisma); that Marx did not stop at paralogisms even when he knew them to be paralogisms (sapendoli tali), etc. And after thus impressing the necessary upon his readers with a series of similar contemptible insinuations, so that they should regard Marx as an unprincipled upstart à la Loria who achieves his little effects by the same wretched humbug as our professor from Padua, he reveals an important secret to them, and thereby takes us back to the rate of profit”. The quotations of Engels come from: https://www.marxists.org/archive/marx/works/1894-c3/pref.htm. On Loria and Marxism we’ll say something more later on.
10 He was also the Italian correspondent of The Economic Journal from 1896 till the end of his life. When he died he was “the oldest surviving foreign correspondent of the Royal Economic Society” (Einaudi 1946, 147).
11 Loria, already retired, read and commented to Graziani Value and Capital by J. Hicks, The Theory of Imperfect Competition by J. Robinson, and many other important economics books of the late 30s (see Allocati 1990).
12 In his first work, Property rent and its natural elision (1880), Loria cites, as precursor to his theory of rent, the Lezioni di economia civile by Antonio Genovesi (Naples, 1765–67), indicating him, among many authors listed (Fuoco, Filangeri, Carey….), as “the one who is closest to a real solution” (729). But beyond the explicit citations of classic Italian economists, Loria belongs to the classic Italian tradition mainly for his anti-feudal battle against great land properties and rents, that was the main cultural battle of Genovesi, Filangieri, Dragonetti, Verri and all the reformers in the Italian Illuminismo.
13 Furthermore, Loria deserves respect also for his ethical choices. From 1919 until his death (while hiding from the fascists in the region of Piemonte), he was senator of the Reign of Italy, and during the fascism he did not adhere to the regime, staying very far from it – not staining his career’s end by the grave moral crimes of Pantaleoni (who explicitly supported fascism, and espoused anti-semitic ideology).
14 Loria writes in 1901: “The proposal I formulated in outlining La costituzione economica odierna [has] been pronounced by me since 1877 in front of professors of the University of Bologna and has been rethought for the past 22 years” (1901, 263).
15 In 1903, he begun director of the Laboratorio Cognetti de Martiis (Department of Political Economy) in Turin. The 30 years that Loria spent in Turin is a story of frustration and decline: he will continue to have few disciples (among those the political scientist Robert Michels), to teach (not having ever loved classes much) and to busy himself with academic commitments and ceremonies, but it was already an expression of an “old” way of understanding academy and economics.
16 We should not exclude – although it cannot be proved (yet) for lack of documents – that the controversial and unexplainable article on “aviation” (about which I will say something in the conclusion) and similia could have been ironically written by Loria, almost so as signs of getting rid of the community of Italian economists from which he had felt refuted and excluded.
17 Among the very few studies on Loria (together with the ones quoted in this paper) see Faucci and Perri (2003) and Frezza and Parisi (2005).
18 The works of Loria that I analyse in this paper have been translated in English only in abridged editions of the original Italian and French books. All English translations are mine.
19 Another Italian economist who had taken up and developed the theory of rent with traces of originality is Emilio Nazzani, whose Essay on political Economy (first edition is from 1873) was republished in 1905 with introduction and additions by Loria (which unfortunately were neither emphasized in the text).
20 Tying in his economic theory to the theory of population, Loria continues a significant strand of Italian tradition, where population analysis (in particular the topic of ‘optimal population’) was central to the thought of A. Genovesi, G. Ortes and A. Messedaglia (to these last two Loria dedicated specific studies, gathered in Loria 1904). Loria, in Le basi economiche della costituzione sociale (The Economic Bases of Social Constitution: 1902), takes up Ortes also in his theory of ideology (i.e. the use of culture and art for the creation of consensus and social order).
21 According to Loria economic development is also discouraged by the rent-seeking behaviors of the capitalist entrepreneurs who, with the aim of not boosting the demand for labour that would lead to an increase of wages and a consequent decrease of profits, restrict the accumulation of productive capital and instead invest their profits in various forms of “unproductive capital”. Here, in my opinion, Loria does not follow Ricardo. He does not think that high profits necessarily mean high investments (see Loria 1899, 402 and ff.). I thank the anonymous referee for this footnote.
22 This also seems to me to be a greatly current intuition: one of the main causes of the 2007–2012 crisis was due to the creation of a mega financial markets in which entrepreneurs invested their capital, including capital taken from production, as they were attracted by huge and easy gains offered by finance.
23 A constant and still contemporary phenomenon, when owners of great financial rents react with all the weapons in their possession against whatever proposal of serious taxation, and the structural reform (Tobin Tax or similar interventions), which remain, as do Loria’s proposals, in the ‘melancholic limbo of social utopias (Ibid, 83).
24 On Loria’s analysis of the cooperative movement, see Bruni (2012).
25 The book was published in its first version in 1886, with the title La teoria economica della costituzione politica (Economic Theory of the Political Constitution). Engels refers to this first edition of the book in his Preface to the third volume of Marx’s Capital (Marx Citation1998 [1867]).
26 As in the American and Australian colonies of his time, but also in the Tuscan lowlands Maremma, that are cited in his works as empirical evidence of the realism and relevance of his theory on free land: cf. Loria (1901).
27 For Loria, the ‘società limite’ (limit society) is not just the historical reference point for his theoretical analysis. It is more fundamentally an ideal-type, something similar to ‘The state of nature’ of the philosophers of the social contract, or the ‘Steady state’ by J.S. Mill. It is also utopia, an ideal society which history naturally and evolution wise tends towards – we can find here the influence of Comte and Spencer, but also of Darwin, Mill, Marx, but also of Campanella, Vico, and Italian Illuminismo, and of all the cultural climate of the time dominated by the idea of progress and increasing civilization of humanity).
28 Just in Italy (not to mention important reviews by Lexis, Seligman, Gide and others), Conigliani, Ricca Salerno, Ferraris, Graziani, Valenti, Leone, Rabbeno, Gobbi dedicated specific analyses to Loria’s work, of which we find mentions in the texts of Jannaccone, Alessio, Einaudi (Loria considers La rendita fondiaria (Land Rent) by Luigi Einaudi (1900) a continuation of his own theory: Loria (1901), and Pantaleoni. If we go outside the discipline, Loria’s work was taken to task also by Ferri, Ferrero and various others, authors who were amply and meticulously discussed in Capitalism and Science.
29 For Loria (1909), income is “the quantity of the product of work, coactively associated, which is left over after having subtracted the reintegration and the eventual (inflationary) increase of subsistence for the workers and the technical capital”, 28). Income is then subdivided in many subcategories, but the main ones are the incomes given to the entrepreneurs (which we may call profits) and those which go to the rent.
30 The so-called “Agrarian participation of Nonantola” is still used, even if with various vicissitudes which happened during the century separating us from Loria, cf. http://www.partecipanzanonantola.it.
31 In his Autobiography, he put Marx in his “grandioso triunvirato”, together with Ricardo e Thunen, in his first readings (1927, 20).
32 The central idea especially in Economic Bases is that morality, religion, and law are only emanations of economic relations in a certain time and place, an idea very close to the Marxist distinction of structure/superstructure.