Enrico Barone
Encyclopedia
Enrico Barone is a unitary parliamentary republic in South-Central Europe. To the north it borders France, Switzerland, Austria and...

 – May 14, 1924, Rome
Rome
Rome is the capital of Italy and the country's largest and most populated city and comune, with over 2.7 million residents in . The city is located in the central-western portion of the Italian Peninsula, on the Tiber River within the Lazio region of Italy.Rome's history spans two and a half...

) was a soldier
Soldier
A soldier is a member of the land component of national armed forces; whereas a soldier hired for service in a foreign army would be termed a mercenary...

, military historian, and economist
Economist
An economist is a professional in the social science discipline of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy...

.

Barone studied the classics
Classics
Classics is the branch of the Humanities comprising the languages, literature, philosophy, history, art, archaeology and other culture of the ancient Mediterranean world ; especially Ancient Greece and Ancient Rome during Classical Antiquity Classics (sometimes encompassing Classical Studies or...

 and mathematics
Mathematics
Mathematics is the study of quantity, space, structure, and change. Mathematicians seek out patterns and formulate new conjectures. Mathematicians resolve the truth or falsity of conjectures by mathematical proofs, which are arguments sufficient to convince other mathematicians of their validity...

 before becoming an army officer. He taught military history for eight years from 1894 at the Officers' Training School. 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 with Maffeo Pantaleoni
Maffeo Pantaleoni
Maffeo Pantaleoni was an Italian economist, and a notable proponent of neoclassical economics. He was occasionally referred to as "the Marshall of Italy", because of his unrelenting defence of laissez-faire economic policies....

 and Vilfredo Pareto
Vilfredo Pareto
Vilfredo Federico Damaso Pareto , born Wilfried Fritz Pareto, was an Italian engineer, sociologist, economist, political scientist and philosopher. He made several important contributions to economics, particularly in the study of income distribution and in the analysis of individuals' choices....

 on the Giornale degli Economisti.

Barone's accomplishments as an economist included these. He was the first to state conditions for which a competitive market
Perfect competition
In economic theory, perfect competition describes markets such that no participants are large enough to have the market power to set the price of a homogeneous product. Because the conditions for perfect competition are strict, there are few if any perfectly competitive markets...

 could be Pareto efficient. He expanded on Pareto efficiency
Pareto efficiency
Pareto efficiency, or Pareto optimality, is a concept in economics with applications in engineering and social sciences. The term is named after Vilfredo Pareto, an Italian economist who used the concept in his studies of economic efficiency and income distribution.Given an initial allocation of...

, deducing that not all losers could be compensated for deviations from conditions of competitive equilibrium. He introduced variable factor proportions into neoclassical economics
Neoclassical economics
Neoclassical economics is a term variously used for approaches to economics focusing on the determination of prices, outputs, and income distributions in markets through supply and demand, often mediated through a hypothesized maximization of utility by income-constrained individuals and of profits...

, contributing to the marginal-productiviy theory of factor-income
Factor income
Factor income is income derived from selling the services of factors of production. In the case of labour, this means wages, plus the part of the incomes of the self-employed which is a reward for their own labour. Income from land is rents, including part of the incomes of the self-employed, and...

 distribution. He extended conditions of general equilibrium
General equilibrium
General equilibrium theory is a branch of theoretical economics. It seeks to explain the behavior of supply, demand and prices in a whole economy with several or many interacting markets, by seeking to prove that a set of prices exists that will result in an overall equilibrium, hence general...

 in Walrasian theory
Léon Walras
Marie-Esprit-Léon Walras was a French mathematical economist associated with the creation of the general equilibrium theory.-Life and career:...

, suggesting the feasibility of trial-and-error
Trial and error
Trial and error, or trial by error, is a general method of problem solving, fixing things, or for obtaining knowledge."Learning doesn't happen from failure itself but rather from analyzing the failure, making a change, and then trying again."...

 movement to market equilibrium. He pioneered the economic theory of index numbers
Index (economics)
In economics and finance, an index is a statistical measure of changes in a representative group of individual data points. These data may be derived from any number of sources, including company performance, prices, productivity, and employment. Economic indices track economic health from...

. All this was without use of utility
Utility
In economics, utility is a measure of customer satisfaction, referring to the total satisfaction received by a consumer from consuming a good or service....

 or even indifference curve
Indifference curve
In microeconomic theory, an indifference curve is a graph showing different bundles of goods between which a consumer is indifferent. That is, at each point on the curve, the consumer has no preference for one bundle over another. One can equivalently refer to each point on the indifference curve...

s.

Barone has been described as a "founder of the pure theory of a socialist economy." In 1908, he presented a mathematical model for a collectivist economy under which certain relations, later identified with shadow price
Shadow price
In constrained optimization in economics, the shadow price is the instantaneous change per unit of the constraint in the objective value of the optimal solution of an optimization problem obtained by relaxing the constraint...

s, must be satisfied for "maximum collective welfare." 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 at a priori but only by experimentation on a large scale with great demands on data collection, even assuming fixity of production relations. In this, he suggested that movement toward economic efficiency in a collectivist economy was not inconceivable. For such a regime, whatever the distribution
Distribution (economics)
Distribution in economics refers to the way total output, income, or wealth is distributed among individuals or among the factors of production .. In general theory and the national income and product accounts, each unit of output corresponds to a unit of income...

 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 the Austrian Economists' responses, fueled discussion of the economic calculation problem
Economic calculation problem
The economic calculation problem is a criticism of central economic planning. It was first proposed by Ludwig von Mises in 1920 and later expounded by Friedrich Hayek. The problem referred to is that of how to distribute resources rationally in an economy...

 and market socialism
Market socialism
Market socialism refers to various economic systems where the means of production are either publicly owned or cooperatively owned and operated for a profit in a market economy. The profit generated by the firms system would be used to directly remunerate employees or would be the source of public...

 in the 1930s. His method also anticipated Abram Bergson
Abram Bergson
Abram Bergson , born Abram Burk, was an American economist. He was born in New York City....

's seminal formulation of a social welfare function three decades later.
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