After graduating top of his class in 1870, ... Pareto worked as the director of a railway and the managing director of an iron and steel concern, the Società Ferriere d'Italia in Florence. While in Florence Pareto became increasingly frustrated with government regulators.... He sided with the radical democratic movements and the liberals whom, he believed, would replace privilege with meritocracy, restore real democracy, pursue free trade and true competition. Pareto made an unsuccessful bid for office on an opposition platform in 1882.
In 1889, after the death of his parents, Pareto quit his job and moved to a villa in Fiesole... From his retreat, he began writing numerous polemical articles against the government and gave public lectures at a working man's institute. He was quickly targeted as a troublemaker by the authorities. Trailed by police, intimidated by hired thugs, his lectures were often closed down and his applications for teaching jobs blocked (incidentally, being well-trained with the sword, a crack shot with a pistol and equipped with an aristocratic sense of honor, Pareto never let himself be physically intimidated).
[Pareto] would later take up economics and succeed Léon Walras at the University of Lausanne in Switzerland.] In a famous 1900 Rivista article, Pareto suddenly changed direction. Heretofore a radical democrat, Pareto now decided to declare himself an anti-democrat. The disturbances of the 1890s in Italy and France led Pareto to realize that, far from restoring true democracy, meritocracy and promoting social welfare, the radical movements were really just seeking to replace one élite with another élite, the privileges and structures of power remaining intact. The struggle was not for a good society, but a squabble among élites over whom exactly was to ... govern. And the ideals and theories they claimed to fight for? Just propaganda, Pareto declared, the way upwardly-mobile folks incite the helpless, hopeless mob to take to the streets on their behalf. For Pareto, humanitarianism, liberalism, socialism, communism, fascism, whatever, were all the same in the end. All ideologies were just smokescreens foisted by "leaders" who really only aspired to enjoy the privileges and powers of the governing élite. Pareto decided to have none of it—and went on a crusade to expose the sham of political ideology and doctrine. He condemned socialists of all stripes roundly in a 1902 book, but took particular aim at logically demolishing the "new gospel" of Marxian economics. For Pareto ... the promised "classless" society that would emerge under communism was merely ideological fodder for socialist leaders to lay on their flock.
[Pareto’s] sociological observations also begin to indicate the future course of his ideas. In 1900, Pareto had entered into a brief controversy with Benedetto Croce. Croce had criticized economists' positivistic approach, particularly the assumption of "rational economic man". Pareto defended economists, but, at the same time, realized that the conventional defense was not even convincing ... to himself. Why did the predictions of economics fail to correspond to reality? Why were its policy recommendations, to him logically irrefutable, not adopted? The explanation, he concluded, echoing Georges Sorel, was simply that much of human activity was driven not by logical action, but rather by non-logical action.
Pareto ... moved to Villa Angora in Céligny, near Lake Geneva... Pareto used his time at Céligny to write his Trattato di sociologia generale [known in English as The Mind and Society], which was finally published, after wartime delays, in 1916. This was his great sociological masterpiece. He explains how human action can be neatly reduced to residue and derivation. People act on the basis of non-logical sentiments (residues) and invent justifications for them afterwards (derivations). The derivation is thus just the content and form of the ideology itself. But the residues are the real underlying problem, the particular cause of the squabbles that leads to the "circulation of élites". The underlying residue, he thought, was the [most fruitful] object of sociological enquiry.
If we focus on Pareto’s career, up until at least the late 1890s, we might be able to make something of an Objectivist hero out of him. After all, he was director of a railroad and steel concern, and he was a champion of economic freedom and an opponent of “intervention.” He fought to educate working man in the principles of freedom and even showed in courage in facing up to attempts by the government to intimidate and silence him. But in 1900, something happened to Pareto that made him much less the Objectivist hero. What happened? Why did Pareto suddenly lose all his idealism and become so “cynical” (as his critics claim) of human nature, particularly the human nature of political elites?
The answer is really quite simple: it is yet another case of the proverbial “mugging by reality.” Pareto, from his own experience, found that trying to convince large numbers of people (whether workers, intellectuals, politicians, whomever) was a hopeless endeavor, and that his attempts to change the social order through arguments based on sound economic reasonings were a waste of time. Instead of trying to change society, he would seek to understand it. In his The Mind and Society, he examined literally hundreds of “theories, theologies, cosmogonies, systems of metaphysics, and so on,” with the idea of trying to “gain some knowledge of the forces which are at work in society — that is, of the tendencies and inclinations of human beings.” The result is an impressive compendium of the non-logical and non-rational in human nature. In four long volumes, Pareto builds a massive empirical case for the important role that "non-logical conduct" plays in human life and in the social order. By demonstrating the logical and empirical ineptitude of most of the theories put forth by intellectuals and philosophers, Pareto gave ample evidence that rationalization, rather than rational pursuit of truth, is what governs most of what passes for thought outside the hard sciences. After reading his massive treatise, it is difficult to ever again to swallow the romantic notion that social conditions can be changed by winning philosophical arguments.