Vilfredo Pareto: Portions of The Circulation of Elites
From Vilfredo Pareto, The Mind and Society, ed. Arthur Livingston trans. Andrew Bongiomo (New York: Harcourt, Brace & Co., 1935), Vols. III and IV, Sections 2026 - 2029 and Sections 2233 - 2236.
2026. Social elites and their circulation.  Suppose we begin by giving a theoretical definition of the thing we are dealing With, making it as exact as possible, and then go on to see what practical consideration we can replace it with to get a first approximation. Let us for the moment completely disregard considerations as to the good or bad, useful or harmful, praiseworthy or reprehensible character of the various traits in individuals, and confine ourselves to degrees--to whether, in other words, the trait in a given case be slight, average, intense, or more exactly, to the index that may be assigned to each individual with reference to the degree, or intensity, in him of the trait in question.
2027. Let us assume that in every branch of human activity each individual is given an index which stands as a sign of his capacity, very much the way grades are given in the various subjects in examinations in school. The highest type of lawyer, for instance, will be given 10. The man who does not get a client will be given 1--reserving zero for the man who is an out-and-out idiot. To the man who has made his millions--honestly or dishonestly as the case may be--we will give 10. To the man who has earned his thousands we will give 6; to such as just manage to keep out of the poor-house, 1, keeping zero for those who get in. To the woman "in politics," such as the Aspasia of Pericles, the Maintenon of Louis XIV, the Pompadour of Louis XV, who has managed to infatuate a man of power and play a part in the man's career, we shall give some higher number, such as 8 or 9; to the strumpet who merely satisfies the senses of such a man and exerts no influence on public affairs, we shall give zero. To a clever rascal who knows how to fool people and still keep clear of the penitentiary, we shall give 8, 9, or 10, according to the number of geese he has plucked and the amount of money he has been able to get out of them. To the sneak-thief who snatches a piece of silver from a restaurant table and runs away into the arms of a policeman, we shall give 1. To a poet like Carducci we shall give 8 or 9 according to our tastes; to a scribbler who puts people to rout with his sonnets we shall give zero. For chess-players we can get very precise indices, noting what matches, and how many, they have won. And so on for all the branches of human activity.
2028. We are speaking, remember, of an actual, not a potential, state. If at an English examination a pupil says: "I could know English very well if I chose to; I do not know any because I have never seen fit to learn," the examiner replies: "I am not interested in your alibi. The grade for what you know is zero." If, similarly, someone says: "So-and-so does not steal, not because he couldn't, but because he is a gentleman," we reply: "Very well, we admire him for his self-control, but his grade as a thief is zero."
2029. There are people who worship Napoleon Bonaparte as a god. There are people who hate him as the lowest of criminals. Which are right? We do not choose to solve that question in connexion with a quite different matter. Whether Napoleon was a good man or a bad man, he was certainly not an idiot, nor a man of little account, as millions of others are. He had exceptional qualities, and that is enough for us to give him a high ranking, though without prejudice of any sort to questions that might be raised as to the ethics of his qualities or their social utility.
2233. The facts just mentioned put us in the way of making a more general classification in which the preceding classification would be included and to which we shall have frequent occasion to refer in explaining social phenomena hereafter (Ss 2313f).  Suppose we put in one category, which we may call S, individuals whose incomes are essentially variable and depend upon the person's wide-awakeness in discovering sources of gain. In that group, generally speaking and disregarding exceptions, will be found those promoters of enterprise--those entrepreneurs--whom we were considering some pages back; and with them will be stockholders in industrial and commercial corporations (but not bondholders, who will more fittingly be placed in our group next following). Then will come owners of real estate in cities where building speculation is rife; and also landowners--on a similar condition that there be speculation in the lands about them; and then stock-exchange speculators and bankers who make money on governmental, industrial, and commercial loans. We might further add all persons depending upon such people--lawyers, engineers, politicians, working-people, clerks--and deriving advantage from their operations. In a word, we are putting together all persons who directly or indirectly speculate and in one way or another manage to increase their incomes by ingeniously taking advantage of circumstances.
2234. And let us put into another category, which we may call R, persons who have fixed or virtually fixed incomes not depending to any great extent on ingenious combinations that may be conceived by an active mind. In this category, roughly, will be found persons who have savings and have deposited them in savings-banks or invested them in life-annuities; then people living on incomes from government bonds, certificates of the funded debt, corporation bonds, or other securities with fixed interest-rates; then owners of real estate and lands in places where there is no speculation; then farmers, working-people, clerks, depending upon such persons and in no way depending upon speculators. In a word, we so group together here all persons who neither directly nor indirectly depend on speculation and who have incomes that are fixed, or virtually fixed, or at least are but slightly variable. 
2235. Just to be rid of the inconvenience of using mere letters of the alphabet, suppose we use the term "speculators" for members of category S and the French term rentiers for members of category R.  Now we can repeat of the two groups of persons more or less what we said above (S 2231) of mere owners of savings and entrepreneurs, and we shall find analogous conflicts, economic and social, between them. In the speculator group Class I residues predominate, in the rentier group, Class II residues. That that should be the case is readily understandable. A person of pronounced capacity for economic combinations is not satisfied with a fixed income, often a very small one. He wants to earn more, and if he finds a favourable opportunity, he moves into the S category. The two groups perform functions of differing utility in society. The S group is primarily responsible for change, for economic and social progress. The R group, instead, is a powerful element in stability, and in many cases counteracts the dangers attending the adventurous capers of the S's. A society in which R's almost exclusively predominate remains stationary and, as it were, crystallized. A society in which S's predominate lacks stability, lives in a state of shaky equilibrium that may be upset by a slight accident from within or from without.
Members of the R group must not be mistaken for "conservatives," nor members of the S group for "progressives," innovators, revolutionaries (Ss 226, 228 - 44). They may have points in common with such, but there is no identity. There are evolutions, revolutions, innovations, that the R's support, especially movements tending to restore to the ruling classes certain residues of group-persistence that had been banished by the S's. A revolution may be made against the S's--a revolution of that type founded the Roman Empire, and such, to some extent, was the revolution known as the Protestant Reformation. Then too, for the very reason that sentiments of group-persistence are dominant in them, the R's may be so blinded by sentiment as to act against their own interests. They readily allow themselves to be duped by anyone who takes them on the side of sentiment, and time and time again they have been the artisans of their own ruin (S 1873). If the old feudal lords, who were endowed with R traits in a very conspicuous degree, had not allowed themselves to be swept off their feet by a sum of sentiments in which religious enthusiasm was only one element, they would have seen at once that the Crusades were to be their ruin. In the eighteenth century, had the French nobility living on income, and that part of the French bourgeoisie which was in the same situation, not succumbed to the lure of humanitarian sentiments, they would not have prepared the ground for the Revolution that was to be their undoing. Not a few among the victims of the guillotine had for long years been continually, patiently, artfully grinding the blade that was to cut off their heads. In our day those among the R's who are known as "intellectuals" are following in the footprints of the French nobles of the eighteenth century and are working with all their might to encompass the ruin of their own class (S 2254).
Nor are the categories R and S to be confused with groupings that might be made according to economic occupation (Ss 1726-27). There again we find points of contact, but not full coincidence. A retail merchant often belongs to the R group, and a wholesale merchant too, but the wholesaler will more likely belong to the S group. Sometimes one same enterprise may change in character. An individual of the S type founds an industry as a result of fortunate speculations. When it yields or seems to be yielding a good return, he changes it into a corporation, retires from business, and passes over into the R group. A large number of stockholders in the new concern are also R's--the ones who bought stock when they thought they were buying a sure thing. If they are not mistaken, the business changes in character, moving over from the S type to the R type. But in many cases the best speculation the founder ever made was in changing his business to a corporation. It is soon in jeopardy, with the R's standing in line to pay for the broken crockery. There is no better business in this world than the business of fleecing the lambs--of exploiting the inexperience, the ingenuousness, the passions, of the R's. In our societies the fortunes of many many wealthy individuals have no other foundations. 
2236. The differing relative proportions in which S types and R types are combined in the governing class correspond to differing types of civilization; and such proportions are among the principal traits that have to be considered in social heterogeneity.  Going back, for instance, to the protectionist cycle examined above (Ss 2209 f.), we may say that in modern democratic countries industrial protection increases the proportion of S's in the governing class. That increase in turn serves to intensify protection, and the process would go on indefinitely if counter-forces did not come into play to check it (S 2221).
1. Kolabinska, La circulation des elites en France, p.5: "The outstanding idea in the term 'elite' is 'superiority.' That is the only one I keep. I disregard secondary connotations of appreciation or as to the utility of such superiority. I am not interested here in what is desirable. I am making a simple study of what is. In a broad sense I mean by the elite in a society people who possess in marked degree qualities of intelligence, character, skill, capacity, of whatever kind. . . . On the other hand I entirely avoid any sort of judgment on the merits and utility of such classes." [The phrase "circulation of elites" is well established in Continental literature. Pareto himself renders it in Italian as "circulation of the Elite (selected, chosen, ruling, "better") classes." It is a cumbersome phrase and not very exact, and I see no reason for preferring it to the more natural and, in most connexions, the more exact, English phrase, class circulation.--A. L.]
2. The classification in question was first suggested in my "Rentiers et speculateurs," in Independence, May 1, 1911.
3. Monographs along the lines of Le Play's would be of great use in determining the character of the persons belonging in our S group, and those belonging to our R group. Here is one such, contributed by Prezzolini: La Francia e I francesi dew secolo XX osservati da un italrano. I know it as quoted by E. Cesari in the Vita italiana, Oct. 15, 1917, pp. 367 - 70. The person in question is a well-known member of the French parliament--we suppress the proper name: for us here, he is not a person but just a type. The figures given by Prezzolini are those publicly declared by the member himself, Monsieur X. X's fixed income yields a total of 17,500 francs, of which 15,000 are salary as a member of the parliament and 2,500 interest on his wife's dowry. Only the latter sum belongs in category R--the salary belongs rather in category S, because to get such a thing one must have the ability and the good fortune to be elected. X's expense-account shows a total of 64,200 francs, divided as follows: household expenses, 33,800; office expenses 22,550; expenses for his election district (avowable expenses), 7,850. There ought, therefore, to be a deficit of 45,700 francs; but the deficit is not only covered but changes into a surplus in view of the following revenues: contributions to newspapers and other publications, 12,500 francs; honorarium as general agent of the A.B.C. Company, 21,000 francs; commissions on sales, 7,500. In this connexion, Prezzolini notes that X, reporting on the war budget, enters 100,000 francs for supplies delivered to himself, as general agent of the A.B.C. Company: that gives X his "sales commissions." Finally, because of the influence that he enjoys, our member, X, receives a stipend of 18,000 francs from a newspaper. In all, these revenues, which clearly belong in the category S, yield a total of 50,000 francs. Prezzolini adds that the member in question is not the only one, nor the least, of his species. He is just a better-known and an honester type.
4. It might be well to repeat that our use of such terms is not based on their ordinary senses, nor upon their etymologies. We are to use them strictly in the sense defined in Ss 2233-34, and the reader must refer to those definitions whenever he encounters them in the remainder of this volume. [I keep the term "speculator." English ordinarily analyzes the matter embraced under Pareto's term, especially in slang. Pareto's "speculator" is our "hustler," "man of pep," "wide-awake individual," "livewire," and so on.--A. L.]
5. Many people conclude that such facts are enough to condemn our social organization, and hold it responsible for most of the pains from which we suffer. Others think that they can defend our present order only by denying the facts or minimizing their significance. Both are right from the ethical standpoint (Ss 2162, 2262), wrong from the standpoint of social utility experimentally considered (S 2115). Obviously, if it be posited as an axiom that men ought, whatever happens, to observe certain rules, those who do not observe them necessarily stand condemned. Trying to put such a reasoning into logical form, one gets as its premise some proposition of the type mentioned in Ss 1886, 1896-97. If one goes on to say that the organization so condemned is in the main injurious to society, one must logically fall back on some premise that confuses morality and utility (Ss 1495, 1903-98). On the other hand, if premises of those types are granted and one would, notwithstanding, still defend or approve the organization of our societies, there is nothing left but to deny the facts or say they are not significant. The experimental approach is altogether different. Anyone accepting it grants no axioms independent of experience, and therefore finds it necessary to discuss the premises of the reasonings mentioned. On so doing one soon perceives that it is a question of two phenomena that do indeed have points in common, but are in no sense identical (S 2001), and that in every particular case experience has to be called in to decide whether one is dealing with a point of contact or a point of divergence. An instant's reflection is enough to see that if one accepts certain conclusions one adopts by that fact the premises to which they are indissolubly bound. But the power of sentiment and the influence of habitual manners of reasoning are such that people disregard the force of logic entirely and establish conclusions without reference to the premises or, at the very best, accept the premises as axioms not subject to discussion. Another effect of such power and such influence will be that in spite of the warnings we have given and over and over again repeated, there will always be someone to carry the import of the remarks that he is here reading on the R's and S's beyond the limits we have so strictly specified, interpreting all that we have been saying against one of those groups as implying that the influence of the group is, on the whole, harmful to society and the group itself "condemnable"; and all that we have been saying in its favour as a proof that the influence of the group is, in general, beneficial to society and the group itself worthy of praise. We have neither the means nor the least desire to prevent the fabrication of such interpretations. We are satisfied with recognizing them as one variety of our derivations (S 1419, I-b).
6. As usual, one may raise the query: "If this social phenomenon is of such great moment, how comes it that people have not remarked it hitherto?" The answer, again as usual, is that people have indeed noticed it, but have proceeded to cover it over again with a cloak of derivations. The substratum underlying anti-Semitism is a movement against speculators. It is said that the Semite is more of a speculator than the "Aryan" and the Jew is therefore taken as representing the whole class. Consider the case of department-stores and bazaars in Europe. They are the targets, especially in Germany, of the anti-Semites. It is true that many such stores are owned by Jews, but plenty of others are owned by Christians, and in either event are equally harmful to the small retailer, whom the anti-Semites would protect--anti-Semite in this case meaning "anti-speculator" and nothing more. The same may be said of financial syndicates and other characteristic forms of speculations. Socialists pick their quarrel with "capitalists," and theoretically it is a good thing that for once the "capitalist" is not confused with the "speculator"; but practically, the mobs that follow Socialist leadership have never grasped head or tail of Marx's pretty theories as to "surplus value", they are inspired solely by an instinctive impulse to take for themselves at least a part of the money that is going to "speculators." Theorists, too, when dealing with "capitalism" in history, confuse it, to some extent at least, with "speculator" rule. Finally, if anyone is inclined to go farther back in history, he may find ample traces of remarks and doctrines that reflect the conflict between speculators and the rest of the public. In the case of Athens the people in the Piraeus are at outs with the farmers, and Plato (De legibus, IV, 705) would place his republic far from the sea to keep it safe front the influence of speculators. In that he is a predecessor of the anti-Semites of our time. Speculators may be found at work in all periods of history. Various the ways in which their influence manifests itself, various the names that are applied to it, various the derivations that it provokes; but the substance is ever the same.