Emilia Bonaccorsi di Patti

Rome, Italy

James M. Buchanan and the Italian economic thought in XIX century: my research on Francesco Ferrara and the theory of subjective value

It would be an ambitious task to explain in how many different ways James M. Buchanan’s work has influenced my studies and my views on economic theory and policy. I wish to thank him for this but, more specifically, I would like to celebrate dr. Buchanan’s birthday expressing how much did I appreciate his encouragement and guidance in a specific research project I greatly enjoyed working on.

James Buchanan is one of the few American economists who has read Ferrara and who appreciates his theory of value. The core of Ferrara’s analysis is a subjectivist and psychological approach, that has led him also to the intuition of decreasing utility of successive doses of a good. According to Ferrara, value is determined by individuals’ choices on how to achieve equivalent utility by substituting between different goods for the least cost possible or between producers of the same good, either in space or over time. The Ferrarian notion of cost is strictly subjective and is close to the notion of opportunity cost discussed by Buchanan in his essay on LSE cost theory (Buchanan 1987a) and in his Cost and Choice (Buchanan 1969).

In his well known survey on the Italian public finance tradition, Buchanan says about Ferrara that "He was forceful in his emphasis that value theory must be based on individual behavior, his whole construction departing from what he called 'the economic action' , the author of such thing being the individual who feels, thinks, wants." (Buchanan 1987b, 319-321)

According to Buchanan, Ferrara anticipated, "and in some respects surpassed, the subjective-value theorists.....value was determined by both utility and cost, with exchange value representing a comparison of these two forces. As a single principle, he developed the idea of the cost of reproduction as a measure of value, meaning by this the cost which would have to be incurred if the unit in question were to be reproduced. This principle was extended to apply to goods and services which were not physically reproducible by the introduction of the idea that it is the utility produced by the good, not the good itself, which determines value" (Buchanan 1960, 27-28).

I started my early investigations on Ferrara at the Buchanan House, a marvelous and silent place among the trees, where I discovered the complete collection of Ferrara’s works in Italian on the personal shelves of dr. Buchanan. I still remember how carefully I took those books to make copies! One of the moments I can recall best has been a discussion with dr. Buchanan on Ferrara’s Preface to Ricardo, the main work where the author presents his critique to the theory of labor cost and presents his own views on value. While I was reading parts of the preface and translating it on the spot, we would pause to discuss what we thought were the key points. It was exciting to get such a feedback. When Italian students think about Nobel Laureates they view abstract individuals up there, that cannot be distracted from their superior thoughts; what I can say in this respect is that I have had the great luck of experiencing something different in this and many other occasions.

Ferrara has also given me the chance to "encounter" interesting people, including my great grand father Francesco Carlo Bonaccorsi and others whose contribution to my experience is implicitly acknowledged here. In one among the papers on Ferrara that I red, I ran across a citation of a newspaper article of his, which led me to check in my ascendant’s Memories. There, I found that he mentions Ferrara as one of his friends of the intellectual circles of Palermo after the Sicilian revolution and during the process of unification of Italy.

My interest in Ferrara’s theory of value has now turned into an article and at least two new ideas to be developed into future research work.

In conclusion, I greatly welcome this special event to thank dr. Buchanan for the occasion that the intellectual contact with him has represented for me. I am convinced that the invaluable wealth that has derived from this experience will continue to represent a source of stimuli in the years to come.

References

Buchanan, James M. 1969. Cost and Choice, Markham, 1969.

Buchanan, James M. 1987a. LSE Cost Theory in Restrospect. In Economics. Texas A&M University Press.

Buchanan, James M. 1987b. La Scienza delle Finanze: The Italian Tradition in Fiscal Theory. In Economics. Texas A&M University Press.

Ferrara, Francesco. [1856] 1956. David Ricardo. In Prefazione al volume undicesimo della Prima Serie della Biblioteca dell’Economista. Reprinted in Opere Complete vol. III, edited by Bruno Rossi Ragazzi. Rome: Bancaria Editrice.

Notes

1) Ferrara's theory of value is first discussed in the Preface to Carey (Prefazione al volume tredicesimo della Prima Serie della Biblioteca dell’Economista, [1853] 1956) and the Preface to Senior (Prefazione al volume quinto della Prima Serie della Biblioteca dell’Economista,[1854] 1956), and fully elaborated in the Preface to Ricardo (Prefazione al volume undicesimo della Prima Serie della Biblioteca dell’Economista, [1856] 1956); all reprinted in Opere Complete, various volumes.