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Barone spent much of his life as an army officer, resigning in 1907 only after obtaining a professorship at the University of Rome. His most significant contributions to economics, however, were made earlier. Walras had proposed a mathematical model that demonstrated that products and prices automatically adjust in equilibrium; building upon this general equilibrium structure, Barone included variable combinations of inputs in production.
One of Baroneâs most important contributions to economic theory was his demonstration that in a hypothetical collectivist economyâin which the central planners would have access to all the information requiredâthe planners could plan production rationally and thereby achieve economic equilibrium. (This was comparable to the equilibrium theory of a competitive economy developed by Walras.) Barone believed he had solved the problems of attaining equilibrium, at least in principle, by introducing the concept of a trial-and-error process to achieve fair prices. Of course, because all the relevant information that exists in an economy exists in millions of minds and not just in a few minds, Barone did not have a solution for a real-world economy, nor did he claim to have.
Barone also worked on the marginal productivity theory of distribution independently of British economist Philip Wicksteed. However, Italian economist and sociologist Vilfredo Pareto convinced him that his approach to distribution was invalid.
