Paolo Sylos Labini

Paolo Sylos Labini
Born	(1920-10-30)October 30, 1920 Rome, Kingdom of Italy
Died	December 7, 2005(2005-12-07) (aged 85) Rome, Italy
Nationality	Italian
Academic career
Field	Economics
Alma mater	Sapienza
Influences	Joseph Schumpeter, Adam Smith
Contributions	Oligopoly

Paolo Sylos Labini (Roma, October 30, 1920 – Roma, December 7, 2005) was an Italian economist and a key figure in the economic debate in post World War II Italy. He was a professor of political economy at Sapienza University of Rome and an active member of Accademia Nazionale dei Lincei.

Early life and education

After secondary school, Labini enrolled in the Faculty of Law at the Sapienza University of Rome. Mainly interested in scientific subjects, he became passionate about economics, the only subject outside of the law in its study program. He graduated with a thesis on "The economic effects of inventions on the industrial organization". In his research, he became aware of the limited interest in innovations among contemporary economists and so turned to study classical economists, in particular Adam Smith, David Ricardo and Karl Marx. In these early years, his guide was Alberto Breglia (1900–1955), a professor of political economy at Sapienza University of Rome since 1942.

After graduating cum laude in Law in July 1942, Labini was appointed voluntary assistant and then assistant professor of political economy at the Faculty of Economics of the Sapienza University of Rome. The relationship with Alberto Breglia left to Labini the concept of economy as a way to understand history. Alberto Breglia encouraged Labini to travel to the United States to complete his studies. Labini was among the first young people after World War II to study abroad, both to deepen his economic knowledge and to better understand the peculiarities of the Italian economic situation.

In 1948 Labini went to the United States, first to Chicago, where he met Franco Modigliani, and then to Cambridge, Massachusetts, to study with Joseph Schumpeter at Harvard University. At Harvard, he met Gaetano Salvemini and John Kenneth Galbraith. He also spent a period of study at Cambridge (UK), where he was supervised by Dennis Robertson and became friends with Piero Sraffa, Nicholas Kaldor, Joan Robinson and others.

Career

Labini qualified as a lecturer in political economy in 1953. He then devoted himself to university teaching in various venues. In 1954 he held a course entitled “Market forms”, at the Faculty of Economics of Sapienza University of Rome. The following year he became an assistant professor of political economy at the Faculty of Economics of the University of Sassari, then, from February 1958 he was appointed professor of Economic and Financial Policy at the Faculty of Law and, the next year, of Political economy at the Faculty of Economics of the University of Catania. He then moved to the University of Bologna, before returning to Sapienza University in October 1962. There he taught principles of political economy at the Faculty of Statistical, Demographic and Actuarial Sciences until his retirement in 1995. He was appointed emeritus professor in 1997.

Labini trained several students and became their teacher in the most pregnant sense of the term. He then continued his research in parallel with his civil commitment, which he pursued for the rest of his life.

Contributions to economic theory

Cover of the italian edition of "Oligopoly and technical progress"

Labini's writings reflect his personality, in which intelligence and passion combine.

Labini's main contribution came in 1956, with Oligopolio e progresso tecnico (English edition, Oligopoly and Technical Progress, 1962). The book was published more or less simultaneously with Joe Bain's Barriers to New Competition (1956); the two works were grouped together in a widely read article by Franco Modigliani (1958) and in Modigliani's version, they came to be accepted as part of mainstream theory about non-competitive market forms.

However, Labini's notion of oligopoly was based on the classical economic notion of competition, as freedom of entry into an economic sector of activity. Labini represents the market power of firms through the notion of entry barriers which prevent new competitors from entering their field of activity. This means that the case of oligopoly, where such barriers exist but are not insurmountable, is the general case for analysis of market forms. On the other hand, competition (absence of any difficulty of entry) and monopoly (insurmountable barriers) are but limiting cases, quite rare in practice.

In spite of the presence of other producers, an oligopolistic firm can achieve extra profits because new competitors are hindered by barriers to entry that depend essentially on technological factors, i.e., the fact that the optimal plant size is large and constitutes a considerable share of the product market. Consequently, a new entrant would have to build a large plant in order to be efficient. This would lead to a significant increase in output, which the market could only absorb by reducing the price. If a new entrant wants to determine whether it would be worthwhile to enter an industry, even if it is attracted by the extra profits that existing firms are able to make, it must reckon with the situation after entry, and hence with the new, lower price level. The question then is how much the price will have to fall after new producer enters the sector. The answer is simple: it depends on the size of the technologically optimal plant in relation to the market's size, on elasticity of demand, and on the market's expected growth rate, which determines the time needed for the price decrease to be absorbed. Thus, incumbent firms can keep prices above those corresponding to cost recovery plus a competitive profit. In this way they obtain an extra profit, which is, however, limited by the need to prevent new firms from entering the market, i.e., by the height of the entry barrier: the so-called "limit price"—a concept already present in the literature of the time—is precisely the maximum price that prevents new competitors from entering. Of course, all this applies if existing firms do not reduce production levels to make room for the new entrant. This hypothesis, which Labini regards as a simple fact generally found in reality, gave rise to lengthy discussions under the name of "Sylos Labini's postulate" after the theory of market forms began to be studied with the tool of game theory.

Labini attached great importance to the dynamic aspects of his analysis. For over sixty years, from his dissertation onwards, the theme of technical progress has been a constant presence in his work: like Adam Smith, Labini considered it as the main element for economic development (Smith's Wealth of Nations), as a precondition, though not automatic, for civil development of society. Alongside this, the other central theme was that (Ricardian, but also present in Smith) of the distribution of income, and more generally of the living conditions of the various strata of society. However, analysis of market forms is also key in understanding the problems of technological change and income distribution. This line of research was developed in Sindacati, inflazione e produttività (1972); English edition, Trade Unions, Inflation and Productivity, 1974. Wages and prices are not determined in fully competitive markets; utilization of mark-up pricing on the side of oligopolistic firms interacts with bargaining over money wages between trade unions and industrial confederations, affecting —together with technical change— the path of income distribution. These themes reappear in many subsequent contributions; an idea of the width and depth of Labini's analysis is provided by The Forces of Economic Growth and Decline (1984), which remains the major reference point for studying his economic thought.

Economic growth is always presented as a tangle of causal links, which are studied in isolation and then combined in interpreting real economic developments. Nor can interrelationships between strictly economic and social and cultural aspects be overlooked in economic development. In various works, Labini dwells on the link between economic development and civil development. Here also are found the roots of his interventions in the political field, aimed at calling for respect for civic rules that are essential for coexistence and social progress. These are the themes in which references to Adam Smith are most frequent, especially after reading the Theory of Moral Sentiments in the early 1990s. The pursuit of self-interest, which is at the heart of the analysis in The Wealth of Nations, is not to be understood as absolute selfishness, but as part of a complex set of motivations for action, of which the so-called "morality of sympathy", developed by Adam Smith himself in The Theory of Moral Sentiments, is an essential part.

Like Smith, Labini argues that economic development can foster civil development in society, while the latter is in turn a fundamental condition for sustainable economic development. These analyses are the specific subject of a number of writings, and play a prominent role in the writings on underdevelopment. But they are above all a living memory of many discussions with his students and colleagues about the problems of the university and the duties of teachers, as well as on the absolute necessity of a morally rigorous behaviour in university life.

The econometric model of the Italian economy (MOSYL)

Between 1966 and 1967, Labini worked on developing an econometric model of the Italian economy. From the post-war period many hopes were placed in econometrics. Labini's model is the first systematic econometric research on the Italian economy. The model aimed to reconcile theoretical analysis with historical changes and has been gradually modified with the introduction of new variables. The econometric studies intertwined with the analysis of major Italian problems of economic policy, and between 1965 and 1975, Labini published a series of works on wages, productivity, and inflation, incorporating the results of his econometric analysis.

Economics and politics

According to Labini, an economist is necessarily influenced by personal judgment, which determines, at a minimum, the choice of problems studied and which may also skew the outcome of analysis. That is why it is vital for an economist to be acutely conscious of the responsibility to study society for the sake of promoting progress, the economic, social, and civil progress of society, and not one's own personal interest.

Labini’s engagement in politics thus appears to grow naturally out of his understanding of the work of the economist, and while his 'political' statements certainly intensified in the last years of his life, they had been a frequent and important feature of his writing throughout previous decades.

In his last book Ahi serva Italia (2006), Labini spoke as a civic-minded economist to Italians who refuse to understand that respect for rules is an absolute requirement of a market economy, and, in particular, that a market economy needs rules to defend the community against unbridled expansion of positions of power (as Adam Smith explained, referring to the East India Company). Moreover, Labini argued, capitalism cannot function without a widespread moral sentiment that condemns the breach of rules.

On this subject, Sylos Labini used to refer to an excerpt from Gaetano Salvemini:

Almost all of those old teachers belonged to a school of thought which today is viewed disparagingly as positivistic, enlightened, intellectualist. Their culture, and ours, was narrow, dry, and down-to-earth, inept when it came to rising to the lofty skies of intuitionism and idealism. In those times of unelevated culture, we were clearly split into believers or non-believers, the pro- or anticlerical, conservatives or revolutionaries, monarchists or republicans, individualists or socialists. White was white and black was black. White was good and black was bad. With us or against us. When we poor little empirical sparrows ended up in the clutches of the idealist eagles and were devoured, white became half-black and black half-white, good half-bad and bad half-good, the scoundrel was half a gentleman and the gentleman was half a scoundrel. Today, in Italy, the clerics are half-communists, and the communists half-clerics. The same lamps that light the Communist celebrations serve in the pilgrimages of the Blessed Virgin. It is the Tower of Babel. As for myself, I have remained anchored, or if you prefer, aground there where my teachers had first led me: an odd boulder left behind on some plain by a receding glacier. (Salvemini, 1950, p. 87)

.

The Teacher

"Economists around the world, from Cambridge to Cambridge and Osaka to Omaha, admire you for a lifetime of Schumpeterian innovation, Keynesian brilliance, Ricardian rigor, and Smithian realism". When Paul Samuelson wrote this sentence, in his message published at the opening of the collection of essays presented to Labini on his 75th birthday, he intended to emphasize the esteem outside his country, among his academic colleagues, the Italian economist. In Italy, Labini was not only a recognized teacher of successive generations of economists; he was also a public person esteemed for his moral rigor and the well-documented concreteness of his interventions in political debates.

Selected bibliography

• Oligopolio e progresso tecnico. Milano, Giuffré 1956. Second edition 1957; following editions (3rd – 6th) Torino, Einaudi, 1964, 1967, 1972 e 1975 English edition: Oligopoly and Technical Progress, Cambridge (Mass.), Harvard University Press, 1st edition 1962, 2nd ed. 1969. Several translations:in Polish 1963, in Japanese 1st ed. 1964, 2nd ed. 1970; in Spanish 1966, in Czech 1967, in Portoguese 1980.
• Economie capitalistiche ed economie pianificate. Bari, Laterza, 1960.
• Problemi dell'economia siciliana. Milano, Feltrinelli, 1966.
• Problemi dello sviluppo economico. Bari, Laterza, 1970.
• Sindacati, inflazione e produttività. Roma-Bari, Laterza, 1972.
• Saggio sulle classi sociali. Roma-Bari, Edizione Laterza, 1974.
• Lezioni di Economia, Volume I: Questioni preliminari, La macroeconomia e la teoria Keynesiana. Roma, Edizioni dell’Ateneo, 1979.
• Lezioni di Economia, Volume II: microeconomia. Roma, Edizioni dell’Ateneo, 1982.
• Il sottosviluppo e l'economia contemporanea. Roma-Bari, Laterza 1983.
• Le forze dello sviluppo e del declino. Roma-Bari, Laterza, 1984. (English translation: Forces of Economic Growth and Decline, Cambridge (Mass.), MIT Press 1984).
• Le classi sociali negli anni '80 Roma-Bari, Laterza, 1986.
• Nuove tecnologie e disoccupazione. Roma-Bari, Laterza, 1989.
• Elementi di dinamica economica. Roma-Bari, Laterza, 1992.
• Progresso tecnico e sviluppo ciclico. Roma-Bari, Laterza, 1993.
• Carlo Marx: è tempo di un bilancio (a cura di). Roma-Bari, Laterza, 1994.
• Il pensiero economico: Temi e protagonisti. Roma-Bari, Laterza, 1995. (with Alessandro Roncaglia).
• La Crisi Italiana. Roma-Bari, Laterza, 1995.
• Sottosviluppo - una strategia di riforme. Roma-Bari, Laterza, 2001. English translation: Underdevelopment A Strategy for Reform. Cambridge, CUP, 2001).
• Un paese a civiltà limitata. Roma-Bari, Laterza, 2001.
• Berlusconi e gli anticorpi. Roma-Bari, Laterza, 2003.
• Torniamo ai classici. Roma-Bari, Laterza, 2004.
• Ahi serva Italia: un appello ai miei concittadini. Roma-Bari, Laterza, 2006.

For the full bibliography of Paolo Sylos Labini see Di Falco, E. and Sanfilippo, E. (2007). Una bibliografia degli scritti di Paolo Sylos Labini, Economia & Lavoro, 41 (3): 79-109.

A large number of Labini’s publications is collected in a digital fund: https://www.syloslabini.info/online/pubblicazioni/fondo-sylos-labini/ The University of Tuscia hosts the fund on its Open Archive in agreement with Labini's heirs and the Paolo Sylos Labini Association. Acquisition and digitization of the materials began in 2007 thanks to funding from the Ministry of University and Research and the support of the Sapienza University of Rome. The archiving work has been coordinated by Professors Marcella Corsi and Alessandro Roncaglia.

References

Citations

Wikiquote for citations about or of Paolo Sylos Labini.

External links

• Wikimedia Commons
• Paolo Sylos Labini, su Treccani.it – Enciclopedie on line, Istituto dell'Enciclopedia Italiana.
• Paolo Sylos Labini, in Enciclopedia Italiana, Istituto dell'Enciclopedia Italiana.
• Paolo Sylos Labini, in Dizionario biografico degli italiani, Istituto dell'Enciclopedia Italiana.
• Opere di Paolo Sylos Labini, su Liber Liber.
• Opere di Paolo Sylos Labini, su openMLOL, Horizons Unlimited srl.
• (EN) Opere di Paolo Sylos Labini, su Open Library, Internet Archive.
• (FR) Pubblicazioni di Paolo Sylos Labini, su Persée, Ministère de l'Enseignement supérieur, de la Recherche et de l'Innovation.
• Registrazioni di Paolo Sylos Labini, su RadioRadicale.it, Radio Radicale.
• Web site of the Paolo Sylos Labini Association.
• Corsi, M. (2006), In memory of Paolo Sylos Labini (1920 – 2005), The European Journal of the History of Economic Thought, Volume 13 - Issue 4