Pareto: the Pareto "law" and the receipts

Vilfredo Pareto has never been a well known name, outside of economics and a part of sociology. He has, however, entered popular culture due to his so called “80/20” law, a power law that is often used by conservatives to indicate that inequality is not caused by social arrangements but transcends them – is rooted, in fact, in human nature.

In many ways, Pareto, who lived during a time when the classical liberal order was dissolving, prefigured neoliberalism. He advocated for two theses that have become part of neo-liberal doctrine. The first is that inequality isn’t bad, poverty is: thus, growth is the way out of poverty, and the only real economic concern of the state. The other thesis, which he called the “circulation of elites”, is that family wealth – wealth attached, as it were, to the house – does not secure a specific elite over time. In other words, social mobility is such that the rich become poor and some of the poor become rich.

These two theses make up the apologetic for capitalism in our time. It is for this reason that taking a critical view of Pareto is a politically charged act.

It is one of the peculiarities of the secondary literature on Pareto that so few are interested in the sources from which he took his statistics to derive his  famous “law” of the distribution of income. Admittedly, Pareto himself simply articulated a power law in which the significant variable {a} could be a bit different. Still, he was very sure that he had stumbled upon a statistical relation that must, somehow, be rooted in human nature, and he claimed that he did so empirically: by looking at statistics about total income and its distribution in various countries. In other words, Pareto didn’t bring his power law to these stats, they brought the power law to him. Pareto used that law to attack socialistic schemes for equality. Go to twitter and advocate for equality, and [by a special power law I will entitle Gathmann’s law] before the string of replies is complete, someone will have invoked the 80/20 law, or some distorted form of it. It has become business school wisdom, which is where all truisms go to be shined up for perky MBAs to pour forth to the workers.

According to Jean-Sebastian L’enfant’s study of the Pareto law, Pareto viewed statistics from colonial Peru as an affirmation of what he had (supposedly) found in studying income distribution in Europe – his 80/20 law.

“Ainsi, lorsqu’il constate que sa loi peut tout aussi bien décrire la répartition des revenus au Pérou, à la fin du XVIIIème siècle 14, il n’hésite pas à y voir une confirmation et un motif de généralisation : “une coïncidence fortuite est possible mais peu probable, et il se pourrait qu’une même cause eût produit les mêmes effets observés” (Pareto, 1897a, 46). C’est en tout cas un indice supplémentaire que la distribution des revenus n’obéit décidément pas au hazard. [Thus, when he observed that his law could describe, as well, the distribution of incomes at the end of the 18^th century, he didn’t hesitate to see in this a confirmation and a motive to generalization: “a fortuitous coincidence is possible but not very probable, and it could be that the same cause produces the same observed effects.” In any case this was a supplementary index that the distribution of incomes did not obey mere chance.

This statement interested me. Knowing that statistics for colonial Peru, especially as they were available to a historian who was writing in the late eighteenth century in Britain, were unlikely to be extensive, I went to Pareto’s text. Pareto writes:

Curious information is furnished to us by W. Robertson on Peru, at the time of Spanish rule, at the end of the 18^th century. They sold there a certain [papal] bull, said to be from the crusades, and everyone bought it, Spaniard creole or mulatto, at a price fixed by the government.. the price of the bull varied according to the rank of persons.”

Robertson gives us the numbers of persons who bought the bull. We find here, approximately, the law that we saw presiding over the distribution of total income.”

Pareto then constructs a little table of figures derived from Robertson. It is all very neat. Yet when we look at what Robinson says, huge gaps appear in this account. It should be said Robertson uses the figures on the issuances of the bull to make an estimate at the population of Peru, since he has no census figure, (evidently he was not  familiar with the Peruvian census of 1740 – which he would not have had access to anyway in the 1790s). Even so, these figures themselves are shaky. In Robertson’s account, from whence Pareto derives his numbers, the reference source is not quoted, and Robertson falls back on numbers of copies of the bulls printed, not bought.  And one thing Robertson tells us straight out: the figures tell us nothing about the Indian population, since so few Indians bought the bull from the government,  even though he estimates that the Indians were perhaps the majority of the population. Other sources – not Robertson – have implied that there was a strong secondary market in the bula – it was, basically, a bull of indulgence. Thus, Indians may not have bought it from the government, but they did from salesmen who bought it from the government. So we are talking about a product that was bought both for consumption and for sale – which already tells us that we cannot use these figures as a proxy for income distribution, any more than we could use figures about television sets that mix up wholesale and retail sales. Robertson never gives his source for the sales of the bull, although he claims that he believes they are accurate. He gives an estimate for the Indian population as around 2,600,000 from another source before he gets to the bulls.

 “According to an account which I have reason to consider as accurate, the number of copies of the bull of cruzada exported to Peru on each new publication, is 1,171,953; to New Spain, 2,649,326. I am informed that but few Indians purchase bulls, and that they are sold chiefly to the Spanish inhabitants, and those of mixed race.”

Comparing Pareto’s source to what Pareto claims Robertson says, we do have to say that chance plays probably plays little role in the emergence of Pareto’s power law, here. What seems to play the biggest role is Pareto’s own obsession. The printing of these bulls, at different prices, from an indeterminate source, over a period of at least two hundred years, does not offer empirical confirmation except through the most hazardous of conjectures. We have Robertson’s numbers, at best, for the “last predication”, which is undated, although the selling of these bulls goes back to the sixteenth century. So what we have is the essence of an unsound method for making statistical analysis. Far from being an independent confirmation of the Pareto law, the Robertson quote seems to be a confirmation of a hermeneutic tendency: to assume the law and look for instantiations.

Yet I have yet to read any doubt about Pareto’s method for gathering his data. And perhaps his data set  from Italy is sound. Pareto’s leaping upon confirmation in his reading of a hundred year old text about Peru, in spite of its own author’s cautions, gives me pause, though.

poem by Karen Chamisso

Leilah changes my sheets

once every three days

Phillipe and I lay encoupled

in the odor of ironing and sachet.

“According to the naturalist A.N. Bragham

The waters of the Mare Nostrum

are changed complete every 7500 years

- an estimate that like most of ‘em

depends on a host of alterable circumstances.

From Gibraltar to Beirut

the sea turns and tosses

on an undercurrent that would not suit

with Leila’s notions, nor mine

Still, we dive, one after the other

in the water of the Calanque de Port d’Alon

and plunge down into that unmade water.

Intimations of death

are cheap in the eyes of this sea.

We’ll pass before one snorting breath

is exhaled by geology.

Note to Sanders camp: read Invisible Man, chapters 17-19, by tomorrow.

Biden, according to one exit poll, took 60 percent of the black vote in Texas. The same story is writ large across the South.

It is a story with a moral, and the Sanders people better quickly get the punchline here. My suggestion to whoever is advising Sanders: read the section in Ralph Ellison’s Invisible Man about organizing for the Brotherhood in Harlem. The Brotherhood has a “scientific plan” (it is Ellison’s proxy for the Communist Party in the 30s). And the Invisible Man, with his experience of racism, and his own skin color, is an activist, with a sense of what the “scientific plan” means. But he comes against the limits not of the plan, but of the planners.

The planners, like the Sanders people, seem to have decided to repress difference – the real history of African Americans in this country – for their “own good”. It isn’t that Sanders doesn’t denounce racism, but he is averse to the whole symbolic universe around that struggle, partly because he seems to think that it is hypocritical – a buncha neoliberals celebrating the civil rights era while collaborating with the immiseration of the black working class. But just because a buncha neoliberals celebrate the civil rights era – for instance, by attending the ceremony in Selma to commemorate the 1965 march – doesn’t mean the civil rights era shouldn’t be commemorated. And it certainly doesn’t mean that the black politicians that have inherited, and in many ways squandered, the symbolic succession of that era should be treated with contempt, or kept at arm’s length. That can only lead to disaster.

Universal healthcare will make our lives better, but it is our lives, with all the symbolism and poetry of them, that are the dominant party here. The “scientific plan” should serve the people, not the other way around. Sanders campaign will fatally err if it doesn’t make a very forceful correction here. Do not come on like the social worker who knows better, cause that is only gonna lead to defeat.

What is human life worth? William James and Bossuet

Il a eu le paradoxe pour parrain, et le poesie pour marraine – Delvau on Gerard Nerval

In the third lecture of William James’ Pragmatism (1907), James gives us his sense of the pragmatic response to the great metaphysical question: is there only matter, or is there spirit too? A question which implies: is there a God?  And if there is not, does this have a bearing on the meaning of life in a world that is an ephemeral collection of molecules, which will be utterly swept away as all solar systems are ultimately swept away?

James takes Herbert Spencer as his defender of materialism – although, save for the Darwinism, the position Spencer defends could as well have been taken from Helvetius. Spencer sees no problem in substituting matter for God, and James concedes that Spencer is right not to think of matter as somehow “dirty” (James doesn’t explore, as 20^th century anthropologists will, dirtiness itself as a cultural construct, the abject pole in the sacred economy). At this point in the lecture, James paints an interesting counter-example to matter’s “dirtiness”:

Matter is indeed infinitely and incredibly refined. To any one who has ever looked on the face of a dead child or parent the mere fact of matter could have taken for a time that precious form ought to make matter sacred ever after. It makes no difference what the principle of life may be, material or immaterial, matter at any rate cooperates, lends itself to all life’s purposes.”

The intrusion here of the dead child or parent, this semi-explicit flashback, lends to James’s essay, at this point, a certain hortatory tone that derives from the sermon. It is not for nothing that James’s father was a religious figure, the leading American Swedenborgian. Metaphysics, for James I think, comes out of the funeral – out of death.

Which is my justification to compare what James is doing to a funeral sermon – an oraison funébre – by  Bossuet, the 17^th century French Bishop. England’s Anglican preachers, Donne, John Taylor, etc., were perhaps the greatest English artists of the sermon. In France, Bossuet holds that title. I’ve been reading his famous funeral sermon for Madame – Henriette d’Angleterre, the sister of Charles II of England and the (unfortunate) wife of Monsieur, Louis XIV’s brother . Monsieur was not into the female sex – at least sexually, although he loved dressing up as a woman. Unfortunately for him, he had to be married and his wife had to produce children, hence the incredibly unhappy marriage of Henriette. Not that she was incredibly unhappy – much of the time, she was entertaining lovers too, which probably included Louis XIV. Her problem with her husband came about as much from the fact that she was infinitely intellectually superior to him, and everybody knew it. Henriette was the friend and patron of Corneille, Moliere and Racine, all of whom dedicated work to her. She was, as well, Bossuet’s friend – he was her confessor. Her sudden death has given rise to speculation that she was poisoned, and the case has never been cleared. Monsieur’s second wife was told by a servant a story about one of the friends of Monsieur’s banished lover, the Duc de Lorraine, that seems to have been told to Saint Simon too, who records it in his Memoires. The story could easily be an Edgar Allen Poe story, replete with poisoned cups, substituted drinks, etc., etc.

Bossuet tells us in the sermon that her death, which was so sudden, left him unprepared to prepare her funeral sermon. So opening the Scriptures he came by chance to Ecclesiastes, which offered him the texts that he uses to structure the sermon. Already, then, the listener is clued in to accident as not only possible in the great wide world, striking down princesses, but also as a formal element in the sermon itself. Quite a neat trick.

Accident led to Ecclesiastes, and Ecclesiastes leads Bossuet to contemplate vanity. To an extent that is unparalleled in the Bible, the writer of Ecclesiastes seems prepared to write off the creation as an accident – defining our delusive satisfactions in that  accident as vanity.

There has long been a Christian thematic about the vanity of the world, and Bossuet follows it up to a point, where he asks if this is all the story. If man himself is a vanity, did God send his only child to die “for a shadow”?

This moment, this question, begins a re-ascent of the other side of the Christian scold, the discourse of amour de soi. It is a re-ascent that is not only rhetorical, but that points to the desire for “balance” that was not only inscribed in the classical age’s aesthetic, but as well in its metaphysics. Balance is not merely a formal preference, but a sort of end-state towards which rationality pushes the soul.  At the point of balance, the forces arrayed against that the forces arrayed for can be transcended. Balance is the grace of reason.

Balance is, as well, the grace of economics in the classical age. Fortuna plays a zero-sum game. When God exchanges his life for “man”, man must be as valuable as God’s life. Man’s redemption is, then, man’s value. And yet underneath this placid understanding of the ransom of souls is another thought – what if man is not worth God’s death? Or what if our reckoning here is absurd, an exchange of the infinite for the finite, of all for zero, of light for shade?

That fierce baroque irrationality breaks through in Pascal, but not in Bossuet. And even Pascal retreats to a less absurd articulation of the terms – Pascal’s wager is a way out of the question.

Bossuet himself considers the terms as double: on the one hand, the exchange of the infinite for the finite, in the world’s terms, is absurd – instead of revealing the value of the finite, it reveals its insignificance. Measured against God, however, man’s acts become suddenly important.

“Oh God, says the prophet king, you have made my day measurable, and my substance is nothing before you.” It is so, Christians: everything that is measured finishes; and everything that is born to finish never completely escapes nothingness, into which it is soon replunged. If our being, if our substance, is nothing, what about everything we build on it? No edifice is more solid than its foundation, nor is the accident attached to being more real than being itself.”

Bossuet’s movement pre-figures Hegel’s 19^th century notion of the two infinities, one of which is simple endlessness, and one of which is the Idea, the Spirit. The Spirit is the heir of this escape from the universal dissolvent of the bad infinity that is, ultimately, worth nothing more than a program that gives you an algorithm for always adding +1.  A program that is useless.

To return to James: in his pragmatic metaphysics, there is a variation of Bossuet’s dialectic, which goes to an interesting place.

James contrasts two time frames – or, really, two frames of reference which seem to be distinguished temporally.

One is that frame in which the entire contents of the world are irrevocably given – which is how James defines the “past”: “to end at that very moment, and to have no future, and then let a theist and a materialist apply rival explanations to its history.”

Immediately one senses that we are in trouble with this thought experiment when we see it commences with a “then”. Thought experiments are much more difficult to do than is thought of, for the most part, in philosophy. Here in James’ scenario, we encounter a scenario that seems to be larger than the philosopher’s attempt to understand or imagine it. If indeed the world is vanished in some absolute sense, the one thing that we won’t have is a materialist or a theist then applying their analysis to it. This is, in a sense, an example of Hegel’s bad infinity – the confusion of a finite endlessness and the infinite interiorization of the Spirit – which is something like what Christians like Bossuet would call eternity. In James’ scenario, the materialist and the theist exist only in a condition of impossibility. Any recollection, analysis, theory, expression, pulse beat – violates the conditions of their existential credentialing. It is important to remark on the invalidity of the thought experiment – that is, to remark on the fact that if a philosopher can imagine a thing, it doesn’t mean that he or she can imagine it well – before remarking on the fact that for James, this thought experiment is meant to lead us to what we might call the Ecclesiastes doctrine: all is vanity. All distinction between the theist and the materialist, for James, vanishes into uselessness.

Such is the prelude to his second scenario, which presses on the idea of the future:

“… in every genuine metaphysical debate some practical issue, however conjectural and remote, is involved. To realize this, revert with me to our question and place yourself, this time, in the world we live in, in the worth that has a future, that is yet uncompleted while we speak.”

Here, again, James has an uncertain grasp of the temporal mode. For the first scenario too has a future – unless of course time itself is abolished. Unconsciously, James is supposing a wholly subjective cast to the future – the future is only a human perception of time. It is upon this foundation – a shaky one, from Bossuet’s viewpoint – that he moves to a very American moment of “positive thinking”.

While the materialist has nothing to say about the nihilism of the endpoint, the theist, from James’s point of view, does. “… tragedy is only provisional  and partial, and shipwreck and dissolution not the absolutely final things… Here, then, is the different emotional and practical appeals, in these adjustments of our concrete attitudes of hope and expectation, and all the delicate consequences which the differences entail lie the real meanings of materialism and spiritualism.”

This, then, becomes James’s argument about the truth of the matter:

“Materialism means simply the denial that the moral order is eternal, and the cutting off of ultimate hopes; spiritualism means the affirmation of an eternal moral order and the letting loose of hope.” 

For a long period of time after World War One – perhaps all the way up to the 21^st century – this kind of thing was damning to the modernist. Hemingway mocks this kind of American optimism in one of the last lines in The Sun Also Rises:  “Isn’t it pretty to think so?” For the modernist, better the nihilism of the final end, as imperfectly envisioned by James, then the flatness of “positive thinking”. In American culture, though, positive thought has had a strong presence as a sort of defense of capitalism and the American order. From James to Dale Carnegie we can draw a line. Oddly, at the turn of the twentieth century there was a strong rush on the citadels of pessimism. Happiness therapy engages in just this kind of pragmatist sleight of hand. At the same time that Happiness therapy started to gain a foothold in academia, the positive thought meme in the general culture at large started to deflate. We have had more than enough evidence, over the last twenty years, of a despair culture – a culture of rising suicide and drug overdose rates. Meanwhile, the vision of the world’s end has become more real, and it doesn’t involve the sun exploding as much as it involves the climate shifting due to our very human success in making this world ours – even to the egotistical extent of calling this the Anthropocene.

Bossuet, in this sense, is less of a monument now, and more of a conversation partner, while James, in this instance, is less of a conversation partner and more of a monument.  Is there any importance to human life if it isn’t validated by some enormous, trans-human sacrifice? Are these our choices?