An Italian Foundation for New Fiscal Sociology: A Reflection on the Pareto-Griziotti and Pareto-Sensini Letters on Ricardian Equivalence and Fiscal Theory
This paper reflects on the influence of Vilfredo Pareto’s letters to two of his ex-students, Benvenuto Griziotti and Guido Sensini, on Ricardian equivalence and fiscal theory. The letters are of historical interest because of their emphasis on the need for fiscal studies to consider “social equilibrium” and because they were written when Italian fiscal sociology was in its formative stages. It is suggested that the two sets of letters had quite different consequences; with Griziotti rejecting Pareto’s contention that social equilibrium should play a central role in fiscal studies and Sensini attempting to develop an approach to public finance where the relationship between fiscal phenomena and social equilibrium is presented as the central issue in the theory of public finance. Griziotti’s approach, which accommodates a fiscal sociology that focuses on specific political and legislation issues rather that general social equilibrium, proved more influential than Sensini’s approach, but the Pareto-Sensini line of investigation is of greater current relevance.
Schumpeter's crisis of the tax state: An essay in fiscal sociology
Schumpeter'sCrisis of the Tax State and other fiscal writings are summarized. His crisis theory and its relation to his prognosis of capitalist decline is explored, along with Goldscheid's earlier model. Both are found to have underestimated the resilience of the tax state and its ability to sustain expanding budgets. Schumpeter's view of the income tax as appropriate for a minimal state is assessed along with subsequent tax development. His fiscal model is placed in the context of his understanding of sociology as a social science. Some conjectures on his response to the subsequent course of fiscal sociology are added.
Weapon exports and aid to developing countries
The goal of the rich countries should be to aid the poor countries to increase their standard of living but not to increase their holding of weapons. It is shown that a basic conflict of goals arises. The structure of consumption of the recipient countries cannot be influenced by giving the aid in the form of (civilian) goods in contrast to, the transfer of untied foreign exchange. In any case there results a substitution towards the bundle of commodities desired by the developing countries. Compared to that situation, the consumption of civilian goods can be induced to increase by granting a price-subsidy which, however, leads to a smaller increase in. utility than with a transfer in money or kind. Transfers of goods with restricted substitutability and all-or-none schemes are suggested to overcome the conflicts mentioned but they are most difficult to put into practice. To be effective, they imply an interference with the internal affairs of the poor countries which is per se undesirable. The paper suggests .that much more thought should be given to this important problem which is only rarely explicitely considered but which is most difficult to solve.