Count Pietro Verri (12 December 1728 – 28 June 1797) was an Italian economist, historian, philosopher and writer. Among the most important personalities of the 18th-century Italian culture, he is considered among the fathers of the Lombard reformist Enlightenment and the most important pre-Smithian authority on cheapness and plenty.
Early life Pietro Verri was born to a conservative noble family the eldest son of Gabriele Verri and Barbara Dati Della Somaglia, in a house of the Archinto in via Stampa 19 in Milan, then under Austrian rule. He had three brothers: Alessandro, Carlo and Giovanni.( ^ Angolani Bartolo, Gli Scritti di argomento familiare e autobiografico di Pietro Verri, Rivista di storia della filosofia. Fascicolo 3, 2007 (Firenze : [poi] Milano : La Nuova Italia; Franco Angeli, 2007) After the death of his brother, Carlo, he raised his nephew Luigi Castiglioni and greatly influenced the young man. He studied in the Jesuit college in Monza, five years (1740–44) in the college of Barnabites in San Alessandro in Milan and two years (1744–45) in Rome in the college of Nazareno run by the Scolopi order. He received a strong religious education, from which he began to rebel when he reached his twenties.
He volunteered to serve in the Seven Years' War in order to escape his father's decision to register him for legal studies but quit after a year. In mid-September 1759, he met the economist Henry Lloyd and developed a lifelong friendship with him.Porta, Pier Luigi. 2011. "Lombard Enlightenment and Classical Political Economy". European Journal of the History of Economic Thought. 18 (4): 521–550. Verri soon became convinced that Political Economy had to be at the center of all serious social and political interests. In his early life, he translated Destouches' works and wrote satirical almanacs (Borlanda impasticciata, Gran Zoroastro and Mal di Milza) which scandalized the Milanese society.
Verri's early steps in educating himself in the science of civil society were guided by four eighteenth-century intellectual giants of the Enlightenment: Montesquieu, Voltaire, Rousseau, David Hume, Edward Gibbon, and Helvétius. In combination, these particularly informed his emerging views on law and civil society, the importance of historical understanding, his utilitarian tendencies and, more specifically, economic issues associated with trade, money, credit, and taxation. In 1761, together with his brother Alessandro, he founded a literary association, the Società dei Pugni ("Society of the Fists"), and, from 1764, published the magazine Il Caffè ("The Coffeehouse"). Pietro Verri was the founder, leader, and active contributor to both. Il Caffe appeared between 1764 and 1766 in successive magazines made in two volumes. Magazine 10 of Volume 1 has an article by Pietro Verri devoted to thoughts on the spirit of Italian LiteratureBianchini (2002) Here Verri describes Galileo-Newtonianism at the philosophical level as a force of renovation, providing a new connecting frame for scientific reasoning, in the spirit of what we have called above moral Newtonianism. his magazine became an important reference on Enlightenment Milan. Other figures who wrote on it include his brother Alessandro, the famous philosopher Cesare Beccaria, Alfonso Longo and Pietro Secchi.
Political economy
In 1764, he also entered the public administration, where he distinguished for his reforming attitudes: in particular, he proposed the abolition of the exaction of taxes through intermediaries. After a documented Bilance on the Commerce of the State of Milan, In 1769 Verri published notable work, Elementi del Commercio ("Elements of Commerce"), inspired by a wide interpretation of liberalism in commerce. This was followed by the Meditazioni sull'economia politica ("Reflection's on Political Economy", 1771), the book contains 40 sections and when Verri's Meditiazioni first appeared was well received. Its success was considerable, in just one year, five different editions produced. According to Schumpeter, Verri was one of the first economists to figure out a balance of payments and Schumpeter adds Verri is the most important pre-Smithian authority on Cheapness and Plenty.Schumpeter, Joseph A, and Elizabeth B. Schumpeter. History of Economic Analysis. London: Routledge, 1997. Print.(page-273)
His work is clearly one of the many examples in the economic literature which during the quarter-century after 1750 marks the emergence of political economy as a separate science.Verri, Pietro, Barbara McGilvray, and Peter D. Groenewegen. Reflections on Political Economy. Fairfield (N.J.: Kelley, 1993. Print (page-274) Pietro Verri provides the first systematic contribution stemming from the quarters of Lombard enlightenment in the field of political economy. From the vantage point afforded by Verri's political economy, we gain a wide view of significant elements and characteristic concepts of Lombard enlightenment during the latter half of the 18th century.Porta, Pier L, and Roberto Scazzieri. Pietro Verri's Contribution to the Economic Theory of the 18th Century: Commercial Society, Civil Society and Governance of the Economy. Milano: Università di Milano, Istituto di Economia Politica, 1998. Print (page-3)
Meditiazioni can be separated three different parts. The first, covering the first five sections, presents the general principles of the science by explaining economic development and growth, circulation, production, exchange, money, and prices in general terms. These general principles are supplemented and elucidated on money, industry, interest, and circulation and on population. Part II then applies these principles to a number of policy questions in political economy: the distribution of landed property, guilds and other forms of restrictive practices through privilege, price controls, controls over sales, sumptuary laws and some observations associated with population and agriculture. Part III presents the theory of finance while the last three sections act as a sort of summary of the policy implications of the material presented.Verri, Pietro, Barbara McGilvray, and Peter D. Groenewegen. Reflections on Political Economy. Fairfield (N.J.: Kelley, 1993. Print (page-275) First 5 editions of Meditiazioni do not contain any mathematical term, however, some footnotes added in the sixth edition in order to interpret Verri's economic thought into mathematical terms.Tubaro, Paola. "A Case Study in Early Mathematical Economics: Pietro Verri and Paolo Frisi, 1772." Journal of the History of Economic Thought. 24.2 (2002): 195–214. Print (page- 195)
The aim of political economy to increase national power, strength and happiness is achievable through an increased population, incentives to labor, increased production and an appropriate balance between it and consumption. Success in achieving this policy objective can be measured by at least three different means in the absence of reliable national output data, as Verri indicates at various points in his treatise. These are the balance of trade, which he regarded as an imperfect measure; the level of the rate of interest, which he saw as a better measure, and population size and characteristics, which he saw as the best measure because it could be most accurately measured.
Verri's economic theory concentrates on three subjects: 1. prices; 2. aggregate equilibrium; 3. distribution.Marco E. L. Guidi PAIN AND HUMAN ACTION: LOCKE TO BENTHAM DSS PAPERS STO 1–95
Theory of prices According to Verri, the price of a commodity is directly related to "need" and inversely to plenty. By "need", Verri does not mean any indeterminate desire, but the effective demand of goods, i.e. the level of demand at which the expected utility of any good is higher than the cost individual are ready to pay in order to acquire it . Verri stresses consumer sovereignty, by arguing that demand regulates supply and not the contrary. As to plenty, it basically depends on the market form: it is larger when the market approximates to perfect competition.Verri, P. (1781) "Discorso sull'indole del piacere e del dolore (1st edition 1773, 2nd ed. 1881)", in Id., Del piacere e del dolore ed altri scritti di filosofia ed economia, R.De Felice ed., Feltrinelli, Milano 1964.(page-144)
An equilibrium between production and consumption The problem of equilibrium between production ("reproduction" in Verri's terms) and consumption is analyzed examining two opposed cases of disequilibrium. Verri's contribution is strictly connected here to the basic theoretical assumptions of his theory of action. It is also very original in its issues.Verri, P. (1781) "Discorso sull'indole del piacere e del dolore (1st edition 1773, 2nd ed. 1881)", in Id., Del piacere e del dolore ed altri scritti di filosofia ed economia, R.De Felice ed., Feltrinelli, Milano 1964.(page-137-139)
The first case takes place when national consumption is greater than production and the balance of commerce is unfavorable. Unlike Hume, Verri pays no attention to deflux of money and to the ensuing deflation. His interest is devoted to real re-equilibrating mechanisms. There are two possible solutions to disequilibrium: the first one is negative and consists of factor mobility (emigration of a part of the laboring force). When the other solution prevails, new productive branches are created in the country: these new industries compete in quality and price with those located abroad, toward which the demand for imported goods was addressed. This process of import substitution re-equilibrates the balance of commerce. Welfare grows in the country with the increasing size of the internal market. The role of ideas is central to this picture: a class of individuals understands the existence of national demand for certain goods and produces it at better conditions than foreign competitors.Verri, P. (1781) "Discorso sull'indole del piacere e del dolore (1st edition 1773, 2nd ed. 1881)", in Id., Del piacere e del dolore ed altri scritti di filosofia ed economia, R.De Felice ed., Feltrinelli, Milano 1964.
In the second case, consumption is smaller than production, and the balance of commerce is favorable. As a matter of fact, Verri engages himself in demonstrating that a favorable balance of commerce is possible at certain conditions, that inflation is not a necessary outcome of it, and finally that a growth of the real side of the economy is consistent with it. Inflation takes place only if the extra monetary demand clashes with rigidities on the supply side (in this case, money "stops" in the hands of an unmodified number of sellers). However, this case is not very likely in a "polite" nation. Verri describes here a sort of Hume-Cantillon transmission mechanism without inflation. Additional money, passing from hand to hand, incites industry and puts unemployed factors at work. The Verrian self-sustained mechanism of growth based on increasing income, new needs, and new productions, is the result of this first impulse. Here too, the entrepreneurial spirit plays an essential part.
Distribution