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Vilfredo Pareto: Theories
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Early last century, M. O. Lorenz and Vilfredo Pareto were studying distribution theory. Lorenz found that a large percentage of crime was committed by a small percentage of the total population. A few of the crooks were responsible for most of the crime.
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[A]ccording to Pareto, wise rulers seek to reinvigorate their ranks by allowing the best from the lower strata of society to rise and become fully a part of the ruling class. This not only brings the best and brightest to the top, but deprives the lower classes of talent and of the leadership qualities that might one day prove to be a threat. Summarizing this component of Pareto's theory, a contemporary sociologist observes that practicality, not pity, demands such a policy:
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Pareto is een van de grondleggers van de moderne welvaartstheorie. Deze theorie maakt inzichtelijk onder welke voorwaarden er een optimale verdeling van productiemiddelen ontstaat en hoe de welvaartsverdeling over de huishoudens plaatsvindt. Van belang hierbij is het zogenoemde pareto-compensatiebeginsel. Dit beginsel betekent het volgende:
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Conventional economic theory has never managed to explain the origin of Pareto's distribution law, but physics has. French physicists Jean-Philippe Bouchaud and Marc Mézard have demonstrated that this law shows up almost everywhere in nature.
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[One] contribution of the Cours was Pareto's criticism of the marginal productivity theory of distribution, pointing out that it would fail in situations where there is imperfect competition or limited substitutability between factors. He'd repeat his criticisms in future writings.
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