Maffeo Pantaleoni on labour exchange: bridge between neoclassicism and Fascism

Abstract

This article examines Maffeo Pantaleoni’s views on labour exchange and their transition. Pantaleoni’s theory shared the neo-classicist antinomy that, despite the emphasis on agent subjectivity, disregarded the variability in the content of labour resulting from worker subjectivity towards labour performance and employer countermeasures. Consequently, Pantaleoni espoused the neoclassical principle that takes for granted the market determination of capitalistic labour exchange without socio-political intervention. The transition of Pantaleoni’s outlook on actual labour issues reflected the gulf between his faith in this principle and realities. Thus, Pantaleoni’s perspective on labour exchange functioned as a bridge between neoclassicism and Fascism.

Keywords:

• Pantaleoni
• labour exchange
• neoclassical economics
• Fascism

JEL CODES:

• B13
• J01
• J50

Acknowledgements

The present author would like to thank the three anonymous referees for their helpful comments on earlier drafts of this article. Any remaining errors are the author’s alone.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 The term “labour exchange” in this article signifies the worker’s provision of labour services and the employer’s returns for it. The intentional adoption of this term instead of labour market is grounded on the argument to be given later that a proper market for labour services generally cannot be formed in a modern capitalist society. For an illustration with the use of this terminology, see Gintis (1976).

2 “…a value, that is, a final degree of utility…” (Pantaleoni 1882, 82). “…the going price [is] directly on the grounds of the action of final degrees of utility” (300). Also see (114–5, 245–6). All quotations from non-English literature in this article have been translated by the present author.

3 Pantaleoni (1889, 338) stated that “special talents give rise to extra-incomes, or revenues.”

4 Jevons (1957, 165–6) had already expressed a similar view, but Pantaleoni (1882, 82, 91–2) paid close attention to John Elliott Cairnes’s arguments on labour market segregation in his theory of “non-competing groups.” As will be explained shortly, the labour heterogeneity among workers emphasised by Pantaleoni must be distinguished from the variability in the same worker’s content of labour resulting from her/his subjectivity towards labour performance and the employer’s countermeasures. It is the latter that characterises capitalistic labour exchange.

5 The Jevonian approach was characterised by the British hedonism or utilitarianism-rooted postulate that views economics as “a calculus of pleasure and pain,” thus attempting to explain all economic activities in alignment with their agents’ exertions to maximise pleasure and minimise pain (Jevons 1957, vi, 37). On this principle, the Jevonain theory of labour supply focused on the worker’s pursuit of maximising the difference between the utility of labour outcome and the disutility of labour.

6 Both regarding wages as the prices of productive services of “personal faculties (facultées personnelles)” or “personal capitals (capitaux personnels),” Walras and Pareto drifted away from the tradition of wage fund doctrine, which did not clearly distinguish between labour abilities and labour services. Unlike Pantaleoni, on the other hand, Walras and Pareto scarcely considered the direct effect of labour activity on worker welfare. Thus, their treatment bore resemblance to the present-day neoclassical approach that assumes labour supply to be exclusively based on the worker’s choice between wage earnings and leisure (Okada 2016a, 2016b).

7 Marx distinguished between abstract human labour as the basis of exchange value and concrete useful labour as the basis of use value, whereas neoclassical economics de facto solely assume concrete useful labour. Hence, Marx’s doctrine of surplus value founded on his distinction between labour power and labour in its abstract human form has limitations qua an intrinsic criticism of the neoclassical theory of labour exchange. For the details, see Okada (2014, 2019).

8 “…the [wage] price results mechanically from…a given quantity of disposable capital and a number of workers” (Pantaleoni 1889, 360). “…[the wage fund doctrine] provides an exact law for the determination of the rate of wages under the condition of a static economy” (360–1).

9 For early neoclassical economists’ differences of views on the relationship between labour and worker welfare, see Pagano (1985, 76–115) and Spencer (2009, 69–93).

10 “The theory of wages finally presupposes the existence of a single rate of wages to which every concrete wage tends” (Pantaleoni 1889, 338).

11 The first elaborate study on marginal productivity theory in Italy was conducted by Barone (1896).

12 For Italian labour movements in those days, see, for example, Horowitz (1963), Musso (2011), and Yokoyama (2001).

13 As a result, Pantaleoni himself became a target for discipline when he was a professor at the University of Naples, and he fled to Geneva in 1896.

14 In those days, Pareto (1964, 164), who had a similar opinion, remarked straightforwardly: “In order for free competition to exist in the sale of labour, it is indispensable that workers have the unlimited right to strike.”

15 Pantaleoni (1898, 185–9) classified political settlements into “predatorial,” “parasitical,” and “mutualistic.” Pantaleoni (186) remarked on the “parasitical” settlement: “Here the contest cannot end in death for one of the contending parties, it being an essential condition that both should live, if the stronger is to utilise the weaker. If the stronger were to kill the weaker, he would be committing suicide. Action is limited to taking the eggs of the hen.” Pantaleoni (186) cited Marx’s conception of strong capitalists’ exploitation of weak workers’ labour product as an instance of the “parasitical” settlement. In Pantaleoni’s views on the working-class “parasitism” on capital, by contrast, this strong-weak relation was substantially reversed. Such arguments suggested a possibility of development of Pantaleoni’s approach to economic phenomena that differed from “pure economics,” as was the case of Pareto’s sociological enquiries. Mosca (2015) highlighted a Spencerian social Darwinist feature of Pantaleoni’s outlook. However, Pantaleoni did not advance in a sociological direction markedly, with the result that neoclassicism continued dominating his thinking. Thus, Pantaleoni left the gap between the two lines of thought unfilled.

16 Pantaleoni ([1921c] 1936, 495) noted that a rise in the nominal price level harms pensioners and small rentiers in particular.

17 Moreover, Pantaleoni (1917c, 221–2, 1919, 224, [1921b] 1922) held that Jews, especially Jewish financiers, were heavily committed to “demagogic plutocracy.” For Pantaleoni’s “not racial but politico-economic anti-Semitism” derived from this dogma, see Michelini (2011) and Michelini and Maccabelli (2015).

18 “…for Pantaleoni the battle was between (liberalist) civilization and (socialist) «barbary»” (Bellanca 1997, 140). For Pantaleoni’s “selective evolutionist individualism,” see Bini (1997).

19 De Stefani’s austerity measures included a large-scale dismissal of public service personnel, especially of their labour activist elements, the abolition of the Ministry of Labour and Social Security and the May Day holiday, the cut-off of subsidies to the Socialist Party-line co-operatives, a tax increase for low-income people, and a rise in land rent. This bespoke the authoritarian nature of De Stefani’s “economic liberalism,” as well as the interventionism of Giuseppe Volpi, who succeeded De Stefani as finance minister and bore a hand with measures like the revival of grain protection duties and the enactment of the Rocco Laws, which, under the pretext of corporatism, banned strikes and sabotage, thus strengthening employers’ dominance over workers. Fascist policies continued to exhibit such anti-labour and pro-capitalist–landowner inclinations after Volpi left office in 1928.

20 Present-day neoclassical labour economics is also founded on the competitive market model constituted by the employer’s demand for labour in accordance with its marginal productivity and labour supply based on the worker’s choice between wage earnings and leisure, assuming a given labour performance (McConnell, Bruce, and Macpherson 2010).

21 “If those who strike have the right to beat those who do not strike, the latter will have the right to beat the former as well” (Pantaleoni [1917b] 1919, 280).

22 Hodgson (1980) revealed that, while assuming the worker’s “free” will in the labour contract, neoclassical economists must eventually negate this will to admit the appropriation of labour like that of machine services. This, indeed, is a requisite for the market determination of labour exchange upheld by neoclassical economists. It should be restated that this paradox is rooted in their antinomy that, despite their emphasis on the worker’s subjectivity, they disregard the worker’s preference for the content of labour performance, thus failing to perceive that capitalistic labour, unlike slave and feudal labour, is originally not appropriable at the employer’s bidding but is endogenously settled depending on the worker–employer interaction in the actual labour process. This also necessitates socio-political influences on the working day and wages. Consequently, repressive policies like the Fascist measures would render those working conditions significantly unfavourable to workers. This reinforces Marx’s insight that, contrary to the labour market offering “freedom” and “equality,” capitalistic wage workers are coerced to sell their labour power (Marx 1983, 128).

23 Pantaleoni distinguished between individual hedonistic maxima and collective hedonistic maxima (Bertolini and Pantaleoni 1892; Bellanca 1997). He de facto assumed that Fascism could realise collective hedonistic maxima. In fact, it only facilitated individual or class maxima.

24 From a point of view that has an affinity with that of this article, Mattei (2017) afforded a remarkable exposition of the involvement of Pantaleoni, Einaudi, Ricci, and De Stefani in the Fascist’s early economic policies.

25 De Viti De Marco (1994, LI) expressed Italian economists’ initial hope and subsequent disillusionment over Fascism in a typical fashion: “There are two distinct moments: in the first, Fascism confronts socialism that degenerates into Bolshevism; in the second, it is against those who assume the liberty of the individual based on the State. We have a point of departure in common with Fascism: the criticism and the struggle against the old regime. However, our criticism, being intended to create in the country a more elevated public conscience against all the degenerative forms of individual liberty and representative system, always aims for the defence and the consolidation of the liberal and democratic State.”

26 Like Pantaleoni, Pareto constantly criticised socialism and embraced the free market system. However, Pareto also opposed the Italian government’s protectionism and oppression of labour movements in the 1890s. He favoured strikes as an effective measure of resistance by workers and commended socialists’ bravery in their fight against the ‘state socialist’ policies. Having experienced the political changes in the early 1900s and the resulting “excessive” elevation of labour movements backed by socialists in Italy, Pareto’s sympathy with labour activists and socialists turned into a loathing of them. He then denounced “demagogic plutocracy,” an elite worker–bourgeois “conspiracy,” for sacrificing other classes’ interests for their own. Thus, Pareto, who held that the post-WWI economic turbulence was mainly caused by such socio-political factors, backed Fascism as a promising solution to this unrest (Pareto 1965a, 1965b, 1980a, 1980b; Okada 2016b). For comparisons between Pareto’s and Pantaleoni’s thoughts, see Chauvel and Fitoussi (1997), Dardi (2014), and Michelini (1999).

27 As another example, Attilio Cabiati, who was also a leading Italian neoclassical economist but had been critical of Fascism ever since its early stage, made very few references to labour issues in his writings (Cabiati 1920, 1924, 1926; Marchionatti, 2011).

28 Valdés (1995) vividly described that Chicago school economists’ commitment to the Chilean Pinochet regime was a case in point of the lasting nexus between neoclassicism and authoritarianism.