Paolo Sylos Labini

After the secondary school, Paolo Sylos Labini would have liked to enrol in the Faculty of Engineering, but due to the limited financial means that forced him to work while studying, he enrolled in the Faculty of Law at Sapienza University of Rome. Mainly interested in scientific subjects, he became passionate about economics, the only non-legal subject in its study program. He graduated with a thesis on "The economic effects of inventions on industrial organization" and in searching for references for his thesis he became aware of the limited interest of contemporary economists for innovations, and from then on felt the need to turn to the study of Classical economists, in particular Adam Smith, David Ricardo and Karl Marx. In these early years, his guide was Alberto Breglia (1900-1955), who had been teaching political economy at Sapienza University of Rome since 1942.

After graduating in Law in July 1942 with full marks (110) cum laude, he 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 Sylos Labini the conception of economy to understand history, an economy therefore to be inserted in a wide cultural context. It was Alberto Breglia who encouraged Sylos to travel to the United States to complete his studies. Thus, Paolo Sylos Labini was among the first young people after World War II who went to study abroad, both to deepen his economic knowledge in general and to better understand the peculiarities of the Italian economic situation.

In 1948 Sylos 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 friend with Piero Sraffa, Nicholas Kaldor, Joan Robinson and many others.

Paolo Sylos Labini qualified as 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 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, in the following year, of Political economy at the Faculty of Economics of the University of Catania. He then moved to the University of Bologna, and finally went back to Sapienza University of Rome in October 1962. Here he taught Principles of political economy at the Faculty of Statistical, Demographic and Actuarial Sciences until his retirement in 1995 (to be appointed emeritus professor in 1997).

In the rich and stimulating environment of the Roman faculty of those decades, Sylos Labini trained several students and became their teacher in the most pregnant sense of the term.[1] He then continued his research activity always in parallel with his civil commitment, which saw him personally involved until his death.

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

Paolo Sylos Labini’s writings reflect his personality, in which intelligence and passion combine in a fascinating way.

His main contribution came in 1956, with Oligopolio e progresso tecnico (English edition, Oligopoly and Technical Progress, 1962).[2] The book was thus published more or less simultaneously with Joe Bain’s Barriers to New Competition (1956);[3] the two works were then grouped together in a widely read article by Franco Modigliani (1958) and it is in Modigliani’s version that they came to be accepted as part of the mainstream theory of non-competitive market forms.

However, Sylos Labini’s notion of oligopoly was based on the classical economists’ notion of competition, as freedom of entry into an economic sector of activity. Sylos 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 the oligopoly, where such barriers exist but are not insurmountable, is the general case for the 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.[4]

In spite of the presence of other producers, the oligopolistic firm can achieve extra profits because the entry of new competitors is 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 entering the industry, even if it is attracted by the extra profits that existing firms are able to make, it has to reckon with the situation after entry, and hence with the new, lower price level. The question is then how much the price will have to fall following the entry of a new producer in the sector. The answer is simple: it depends on the size of the technologically optimal plant in relation to the size of the market, on the elasticity of demand, and on the expected growth rate of the market, which determines the time needed for the price decrease to be absorbed. Thus, incumbent firms can keep prices higher than 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 the already active firms do not reduce their production levels to make room for the new entrant. This hypothesis, which Sylos 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.[5]

Sylos 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, Sylos Labini considered it as the main element for the development of economic development (Smith's Wealth of Nations), considered as a precondition, though not automatic, for the 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, the analysis of market forms is also a key to 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).[6] 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 Sylos Labini’s analysis is provided by The Forces of Economic Growth and Decline (1984),[7] 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 the interpretation of real economic developments. Nor can the interrelationships between strictly economic and social and cultural aspects be overlooked in proceeding in this direction. Sylos Labini dwells in various works on the link between economic development and civil development. Here we also find the roots of his interventions in the political field, aimed at calling for respect for those 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, Sylos Labini argues that economic development can foster the civil development of 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.

Between 1966 and 1967, Paolo Sylos Labini worked on developing an econometric model of the Italian economy. From the postwar period many hopes were placed in econometrics. Sylos 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, Sylos Labini published a series of works on wages, productivity and inflation, taking into consideration the results of his econometric analysis.

According to Sylos Labini an economist is necessarily influenced by his or her own personal judgement, 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.

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

On this subject, Sylos Labini used to refer to a beautiful 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)[8]

.

• 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 Paolo Sylos 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 the heirs Sylos Labini and the Paolo Sylos Labini Association. The 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 Proff. Marcella Corsi and Alessandro Roncaglia.

Wikiquote for citations about or of Paolo Sylos Labini.

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