Luigi Einaudi’s ‘Scienza delle Finanze’ or the science of good government

Abstract

This paper rediscovers the meaning and relevance of Luigi Einaudi’s Scienza delle Finanze, which still aspired to a reflection on man and good polity. It reconstructs some key moments in Einaudi’s thought: the vision of the fiscal process, the legal-political speculation, the last reflections aimed at going beyond both the Italian Tradition in Public Finance and Wicksell’s scheme, up to the synthesis elaborated in the critical point theory. Einaudi shows why the fiscal process is at the heart of horizontal/vertical reciprocities and vicious/virtuous circles between society and state, and why a good polity needs free and morally responsible people.

Keywords:

• Italian tradition in public finance
• state
• critical point theory
• reciprocity
• liberty

JEL codes:

• B31
• H11
• H20
• H41
• A12
• A13

Acknowledgments

I would like to thank, for all of their innumerable suggestions and constructive criticisms on various versions of this paper: the three editors of this special issue, Maxime Desmarais-Tremblay, Marianne Johnson and Richard Sturn, and, in addition, Amedeo Fossati, Benoit Walraevens, Alain Marciano, the participants at the following Conferences (held in 2022): “From Public Finance to Public Economics” (Schumpeter Center, University of Graz), HES (virtual) and STOREP (University of Viterbo), and, last but not least, the two anonymous reviewers.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 Since the MPJT were only partially translated (see Section 2.1) in this paper I will cite the 1940 Italian edition when the translation of the quoted passage is missing.

2 The first official bibliography of Einaudi’s works (Firpo (1971)) counted almost 3800 writings.

3 To aggravate the situation, the translation of Einaudi’s treatment of Wicksell’s scheme is not flawless.

4 Fossati (2006), Eusepi and Wagner (2013), Fossati, Montefiori (2019).

5 Even one of the best attempts to reconstruct and reinterpret the relationship between the ITPF (as a precursor to Public Choice) and Wicksell – namely Medema’s (2005) “‘Marginalizing’ Government: From La Scienza delle Finanze to Wicksell” – has followed these “marginalist interpretations”. Medema is obviously justified by the fact that his work came out before the translation of the last chapter of MPJT, where Einaudi criticizes Wicksell’s scheme.

6 Fossati pointed out that De Viti’s guiding idea was not so much marginalism as the pre-marginalistic concept of the principle of minimum means (Fossati 2006, but see also Fossati, Montefiori 2019). On the similarities and differences between Einaudi and De Viti, see Forte (2019) and Silvestri (2017d).

7 For an overall reconstruction of the Einaudi-Fasiani debate see Fossati, Silvestri (2012), Fossati (2014a, 2014b), Silvestri (2017a, 2017b, 2017c, 2017d).

8 Silvestri (2017a, 2017b, 2017c, 2017d).

9 See Fasiani (1932-33 [1980]), Buchanan (1960), Bellanca (1993), Fausto (2003), Boccaccio, De Bonis (2003), McLure (2007).

10 In this regard Einaudi’s judgment of Adam Smith’s three souls – “moralist, historian and economist” (Einaudi 1938) – can rightly be addressed to himself (Forte, Marchionatti 2012: 620).

11 For a reconstruction of this theory and the relative debates in the ITPF see Fausto (2004). On the concept of ‘state’ in the ITPF see Fossati (2010). On the debate between Einaudi and Fasiani regarding the concept of the state as a factor of production see Fossati (2014b).

12 On the similarities and differences between the benefit principle and the paradigm of fiscal exchange see Musgrave (1939, 1959).

13 See Forte (2009).

14 That the benefit principle has its roots in the principle of commutative justice, later applied to citizen-state relations, is a fairly widespread idea in public finance discussions from late nineteenth to mid-twentieth centuries. See, for example, Seligman (2001: 41-42) and the reconstruction of these discussions by Johnson (2015: 174).

15 See Einaudi (1982: 347-352). On Einaudi’s understanding of the balanced budget principle see Forte (2009: 105ff) and Silvestri (2012b).

16 See Bobbio (2004).

17 Bobbio (1983).

18 See Silvestri (2008 and 2012a). In this reconstruction I will leave aside the art of governing well, which, for Einaudi, also requires knowledge of political economy and public finance. On the key role played by Smith in renewing the ideal of mixed government and, above all, the third meaning of good government see Silvestri, Walraevens (2023).

19 On the similarities between Einaudi, Hayek and Popper see Silvestri (2008: 62-63).

20 See Silvestri (2008, 2012a) and Pavanelli (2023).

21 On the differences among Einaudi, Mosca and Pareto with regard to their theory of élite, see Silvestri (2012a: 74-88). On Einaudi’s critique to the political-sociological approaches of the ITPF see Forte, Silvestri (2013).

22 See Fausto (1998).

23 Einaudi does not use the concept of ‘free-rider’, but his explanation of the opportunistic behavior of those who do not pay taxes seems to me very similar to that of the free-rider.

24 Here I take up and develop some reflections made in Silvestri (2017d).

25 Einaudi refers to the Italian tranlsation of Wicksell’s Finanztheoretische Untersuchungen (1896 [1934]), and in particular its second essay on “A new principle of just taxation” (pp. 68–129).

26 See Johnson (2010: 189).

27 On Einaudi’s critical point theory see Leoni (1964), Silvestri (2012a), Heritier (2012) and Bruni (2015).

28 See Silvestri (2019: 138-140)

29 But see also Wagner (2006).

30 See at least Sinn (1999), Hansjurgens (2000), Reisman (1990), Johnson (2006).

31 For a critique of this belief see also McCloskey (2011).

Additional information

Funding

This work was supported by the People Programme (Marie Curie Actions) of the European Union’s Seventh Framework Programme (FP7/2007-2013); under REA grant agreement n° [609305]; STOREP Grant Award 2016.