The speculator and equilibrium: Pareto and Pigou

This paper considers Vilfredo Pareto’s analysis of the speculator and equilibrium by way of comparison with that of Cambridge economist Arthur Cecil Pigou. While Pareto and Pigou both devoted considerable attention to the speculator in their works, fundamental differences in their conceptions of economic science give rise to substantial differences in the roles ascribed to that economic agent in their analyzes. Pareto analyzed the equilibrating function of the “commercial” speculator to illustrate the importance of general equilibrium for the framing of pure economic theory. In addition, he also considered the effects of interactions between speculators and political elites on the social equilibration within his sociology. Pigou confined his analysis of the speculator to the economic framework established by his welfare economics. Within this narrower scope, however, in contrast to Pareto, Pigou provided depth by devoting particular attention to the influence of institutional arrangements on the equilibrating behavior of speculators