Born in Naples, Enrico Barone was educated in military schools in Naples and Turin, receiving the mix of technical and humanist education typical of those institutions.
From 1880 on he climbed the ranks of a regular military career in the army up to general staff colonel, but he suddenly resigned in 1906 - apparently after a clash with his superiors on matters of national defence.
Economics was only one of the many interests of this renowned teacher and prolific writer in strategic and historical matters. Yet while still in the army, in the early 1890s, he managed to establish himself as one of the leading Italian economists, although not in an academic position until 1910 when he became full Professor of Political Economy at the University of Rome. He contributed to the literature on mathematical marginalism on a par with Walras, Pareto, Wicksell and other eminent economists of the age. As with Pareto, Pantaleoni acted as mentor in directing Barone’s considerable talent towards pure theory. The range of his interests was much wider than that, however. His economic writings - most of which are collected in Barone (1894-1924 [1936-37]) - are concentrated in two periods, 1894-96 and 1906-24, and apart from mathematical economics they cover a variety of topics such as public finance, colonial, transport and war economics, industrial syndicates, and tariffs. Many other interests - journalism, politics and public debate, even film making - competed with economics for his attention. Einaudi, a good friend of his, remarked that “had he been less distracted by the most diverse engagements [...] and less unwilling to spend time in refining his own works, he would have left a much more remarkable imprint” (in Finoia 1980: 105). Barone died in Rome in 1924. Most of his personal papers were lost in the bombings of World War II. For a detailed biographical study see Gentilucci (2006).As a pure analyst, Barone worked mainly in the wake of Walras’s general equilibrium approach, but his mathematical skill and nonsectarian spirit set him apart in the tangle of misunderstandings, disputes and personal rivalries of the period.
In a compact assessment of his contributions, Kuenne (1972) wrote that Barone’s mathematical background was superior to that of Walras and Pareto, which is certainly true of the former but very doubtful of the latter. Probably the impression is due to Barone’s treasuring concise and crystal-clear expression, while Pareto cared little for form and always wrote as if in a hurry, driven by an urge to cover more and more ground. An interesting linkage concerning the mathematics is provided by the physicist Galileo Ferraris: a fellow student of Pareto’s at the University of Turin, where they both attended the lectures of the mathematician Angelo Genocchi, Ferraris taught Barone physics and rational mechanics at the Turin military academy about 20 years later. An acknowledgement of Barone’s superior clarity came from Schumpeter, who had Barone’s 1908 textbook, Principles of Political Economy, translated into German in order to introduce his German-speaking colleagues to general equilibrium theory (Schumpeter 1927).Personally less touchy than Walras or Pareto, Barone disliked controversies and if necessary would act as a peacemaker. Although he himself had reasons to complain about the British, he was unwilling to comply with the creeping rivalry between continental and British marginalists. Loyal to Walras, he was ready to adopt Marshallian concepts and methods whenever they were handy, as was the case with the hypothesis of constant marginal utility of money and with the measure of net utility gains through producers’ and consumers’ rents. In papers written for the Giornale degli Economisti in
1894 (Barone 1894-1924 [1936-37], I: 57-114), Barone sided with Edgeworth against Nicholson in defending rent, and provided a precise characterization of the different behavioural assumptions underlying Walras’s and Marshall’s price-quantity functional relations. He also argued that, whereas the former provided exact tools for comparative statics, the latter were more effective for investigating the “approximate equilibrium” dynamics of an economy subject to a continuous flow of small perturbations.
Notably, in this pioneering attempt at applying general equilibrium theory to the analysis of dynamical questions Barone never mentioned - and implicitly distanced himself from - Walras’s tatonnement procedure. To the best of my knowledge, the only case in which Barone resorted to tatonnement was as a device for computing the accounting prices needed by his “Ministry of production” in the famous 1908 paper “Il Ministro della Produzione nello Stato Collettivista”.Another line of research attesting to Barone’s originality is represented by his development of a fully blown theory of equilibrium of the competitive firm, combining Wicksteed’s notion of the production function (launched in the latter’s 1894 Essay on the Coordination of the Laws of Distribution) with the conditions of the entrepreneur’s “net product” maximization. Walras, who in the second edition of the Elements had stuck to the hypothesis of constant coefficients of production, was at first puzzled by Barone’s formulation, neatly presented for the first time in a letter to him of 20 September 1894 (Jaffe 1965: 619-21). A complicated chain of reactions followed (for the details, see Jaffe 1964; Kuenne 1972). On Walras’s part, the resolve to take Barone’s perspective into account led to important changes in the treatment of production in the definitive edition of the Elements. Barone formalized his ideas in a long 1896 paper on distribution (Barone (1894-1924 [1936-37], I: 145-228), outlining a theory of equilibrium business profits based on free entry to match Walras’s notion of an entrepreneur “making neither profit nor loss”. Before this, in reviewing Wicksteed’s Essay for the Economic Journal on Edgeworth’s invitation, he had also shown how a marginalist theory of distribution could be derived without needing to assume first-degree homogeneity of the production function. The review, however - a French version of which has survived among Walras’s papers (Jaffe 1964: 68-73) - was inexplicably rejected by the journal with what Barone perceived as embarrassment on the part of Edgeworth.
Walras and Pareto took it as a sign of Marshall’s underhand manoeuvring, a suspicion that has since become history although there is no evidence for it - indeed, why should Marshall have acted so maliciously in a matter in which he had no direct interest? Barone, while at first piqued, ended by assuming a forgiving attitude, but the episode continued to fuel hostility between continental and British economists for a while. Finally, Pareto, who was not keen on considering the firm as the kernel of distribution and disparaged the production function in favour of the greater flexibility of production coefficients, in a letter to Pantaleoni of 1896 boasted of having persuaded Barone of the validity of his own approach. No surprise, then, if in the “Ministry of production” paper Barone, too, used a production coefficients representation of technology.This 1908 paper doubtless represents Barone’s chief claim to international renown. Made available to the English reading public by Hayek in the 1930s (Hayek 1935: 245-90), it has since become a point of reference for two main lines of economic literature of the twentieth century, the theory of socialist planning and the so-called “new welfare economics”. On both accounts the primary inputs came from Pareto, but Barone, once again, managed to rework them with characteristic originality and clarity. Neither the theoretical importance of this contribution (see, for example, Petretto 1982) nor its political and ideological background (Michelini 2005) can be adequately illustrated here. Suffice it to recall that the possibility of using perfectly competitive equilibrium as an algorithm for tracing the efficient states of a generic social system, be it planned or decentralized, was investigated by Barone without any reference to individual utilities, simply by using the net social product evaluated at competitive equilibrium prices as an index the maximization of which guarantees, on the grounds of a revealed preference argument, that no possibility of Pareto improvement remains unexploited.
Further, the paper contained the first clear statement of the role of lump-sum transfers of income or of property as a device to select among efficient states according to ethical and social criteria.Marco Dardi
See also:
British marginalism (II); Lausanne School (II); Vilfredo Pareto (I); Marie-Esprit-Leon Walras (I); Welfare economics (III).
References and further reading
Barone, E. (1894 1924), Le opere economiche, 3 vols, reprinted 1936-37, ed. A. Piperno, Bologna: Zanichelli. Barone, E. (1908), ‘Il Ministro della Produzione nello Stato Collettivista’, reprinted in E. Barone (1894-1924), Le opere economiche, 3 vols, reprinted 1936-37, ed. A. Piperno, Bologna: Zanichelli, vol. 1, pp. 231-97.
Finoia, M. (ed) (1980), Ilpensiero economico italiano 1850-1950, Bologna: Cappelli.
Gentilucci, C.E. (2006), L’agitarsi del mondo in cui viviamo. L’economia politica di Enrico Barone, Turin: Giappichelli.
Hayek, F.A. von (ed.) (1935), Collectivist Economic Planning, London: Routledge.
Jaffe, W. (1964), ‘New light on an old quarrel’, Cahiers Vilfredo Pareto (3), 61-102.
Jaffe, W. (ed.) (1965), Correspondence of Leon Walras and Related Papers, vol. 2, Amsterdam: North-Holland. Kuenne, R.E. (1972), ‘Barone, Enrico’, in D.L. Sill (ed.), International Encyclopaedia of the Social Sciences, New York: Macmillan and The Free Press, pp. 16-19.
Michelini, L. (2005), ‘Innovazione e sistemi economici comparati: il contributo di Enrico Barone e il pensiero economico italiano (1894 1924)’, Societa e storia, 28 (110), 741-97.
Petretto, A. (1982), ‘Enrico Barone e i fondamenti della moderna teoria dell’allocazione delle risorse’, Rivista internazionale di scienze sociali, 90 (1-2), 89-118.
Schumpeter, J.A. (1927), ‘Introduction’ to E. Barone, Grundzuge der theoretischen Nationalokonomie, Bonn: Schroeder.