Enrico Barone (Italian:[baˈroːne]; 22 December 1859,Naples,Kingdom of the Two Sicilies – 14 May 1924,Rome, Italy) was asoldier,military historian, and aneconomist.
Barone studied theclassics andmathematics before becoming an army officer. He taught military history for eight years from 1894 at the Officers' Training School.[where?] There he wrote a series of influential historical military works. In these he employed a method of successive approximations to which his study in economics had introduced him. In 1902, he became head of the historical office of the General Staff. He resigned his commission in 1906.
From 1894 he collaborated withMaffeo Pantaleoni andVilfredo Pareto in theGiornale degli Economisti.[1][2]
He was the first to state conditions under which acompetitive market would bePareto efficient.[3] He introduced variable factor proportions intoneoclassical economics, contributing to the marginal-productivity theory offactor-incomedistribution. He extended conditions ofgeneral equilibrium inWalrasian theory, suggesting the feasibility oftrial-and-error movement tomarket equilibrium. He pioneered the economic theory ofindex numbers. His contributions were made without use ofutility or evenindifference curves.[4]
Barone has been described as a "founder of the pure theory of a socialist economy."[1] In 1908, he presented a mathematical model for a socialist economy under which certain relations, later identified withshadow prices, must be satisfied for "maximum collective welfare."[5] The latter corresponds to least-cost-price of production from Pareto efficiency reached in competitive equilibrium. He stressed that such a result could not be arrived ata priori but only by experimentation on a large scale with great demands on data collection, even assuming unchanging productive conditions. In this, he suggested that movement toward economic efficiency in a socialist economy was not inconceivable, outlining two types of socialism: a centralized and decentralized model. For such regimes, whatever thedistribution rule for output and income adopted by the Ministry of Production, the same economic categories would reappear for prices, salaries, interest, rent, profits, saving, etc., though perhaps with different names. His analysis and theAustrian School economists' responses, fueled discussion of theeconomic calculation problem andmarket socialism in the 1930s.[1] His method also anticipatedAbram Bergson's seminal formulation of asocial welfare function three decades later.[4]
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