Knut Wicksell Research Articles

A note on revenue sharing and the theory of public expenditures

Knut Wicksell and Eric Lindahl stand early in the line of those who have attempted to integrate the problems of determining public revenues and expenditures.1 Lindahl's analysis of the determination of optimal tax shares and the level of public expenditures for two parties illuminates some of the properties of an optimal solution. A modern extension of this type of approach to public expenditure theory is P. A. Samuelson's "The Pure Theory of Public Expenditure."

The Cobb-Douglas or the Wicksell function? — A comment

Abstract In a recent issue of this Journal Mr. Carl-Axel Olsson has pointed out that the now ‘famous’ Cobb-Douglas function was used by Knut Wicksell long before Cobb and Douglas formulated this function on the basis of the empirical observations made by Professor Douglas about the share of wages in the total output. Mr. Olsson goes on to say that:

L'inutile nozione di "moneta naturale"

The concept of neutral money occupies a notable place in monetary theory, from neoclassical literature to the present. This paper reconsiders the meaning of the neutrality of money and the nature of the conditions that make for such neutrality. The author first focuses on Knut Wicksell’s pathbreaking formulation of the neutrality of the interest rate in a monetary economy. The subsequent expositions of the neutrality of money are considered with special reference to their recent analysis by Friedrich A. Lutz. The author finds that the neutrality of money is conceptually contradictory, and that the specification of conditions under which money would be neutral is inherently misleading. JEL: E43, B31, E40

Wicksell on Population

The following article is a translation of a speech the Swedish economist Knut Wicksell (1851-1926) gave in The Hague in 1910 to an international conference of Neo-Malthusians. The lecture was given in German and later published in a German Neo-Malthusian periodical called Die neue Generation.' Throughout his career Wicksell seems to have believed that the problem was the most important social question. In the earliest editions of his Foreliisningar i nationalekonomi [Lectures on political economy] he had devoted an entire chapter to the subject. The English translation of the lectures, however, was made from the third edition, where the chapter on had been left out. In 1909 he published a revision of this chapter as a separate pamphlet called Liiran om Befolkningen [The theory of population]. The theoretical considerations with regard to the optimum concept contained in this brochure are very similar to the contents of the address he made in The Hague. This speech can be considered to be his last word on the subject. Although sufficient information on Wicksell's life and career is available, the relationship between Wicksell's interest in population, Neo-Malthusianism, and other domestic issues, on the one hand, and developments in Sweden during Wicksell's lifetime, on the other, perhaps needs more emphasis. Between 1749 and 1930 Sweden's rose from 1,755,692 to 6,120,080. During Wicksell's lifetime the of his country increased by 2,591,827 even though 1,139,189 left the country, settling mostly in the United States. Without emigration the would have increased by 3,731,016. The growth rate rose especially after the 1820s when the secular downward trend in the death rate set in. Sweden's population explosion swelled the ranks of the landless agri-

Knut Wicksell on the Integration of Monetary and Value Theory

Knut Wicksell on the Integration of Monetary and Value Theory

Il processo cumulativo di Wicksell nella teoria e nella pratica. (Wicksell’s cumulative process in theory and practice)

Text of a lecture delivered at the university of UPSALA. The author discusses Knut Wicksell’s legacy, with specific reference to monetary theory. The author places Wicksell among the adherents of the quantity theory of money, although recognising that a fractional reserve banking system abides by different rules. The author rejects Cagan’s criticism of Wicksell and he considers empirical evidence in support of Wicksellian results. JEL: B31, B13, E40

Wicksell’s cumulative process in theory and practice

Text of a lecture delivered at the university of UPSALA. The author discusses Knut Wicksell’s legacy, with specific reference to monetary theory. The author places Wicksell among the adherents of the quantity theory of money, although recognising that a fractional reserve banking system abides by different rules. The author rejects Cagan’s criticism of Wicksell and he considers empirical evidence in support of Wicksellian results.

Abstracts of Doctoral Dissertations

S OF DOCTORAL DISSERTATIONS THE DICHOTOMY BETWEEN MONETARY AND VALUE THEORY IN CLASSICAL AND NEOCLASSICAL ECONOMICS* CHARLES W. BAIRD University of California, Los Angeles IN 1942 Oscar Lange demonstrated that if Law is interpreted as an identity, Walras' Law implies that the excess-demand-for-money function is identically zero. If Classical and Neoclassical writers are interpreted to hold Say's any monetary theory that they may advance (e.g., the Quantity Theory) would necessarily be incorrect. Clearly the excess-demand-for-money function cannot be both nonzero and identically zero. According to Don Patinkin, even if Law is interpreted as an equilibrium condition rather than an identity, there exists an invalid dichotomy between the monetary and value theories of Classical and Neoclassical writers. If the homogeneity postulate of Classical and Neoclassical theory is interpreted to mean that changes in the money supply and/or changes in the absolute money price level exert absolutely no effect on the demand functions for goods, a logical contradiction will arise. Starting from full equilibrium, where all excess demands are zero, an increase in the nominal supply of money creates a negative excess demand for money. If the absolute price level or money balances are not arguments of at least one other excess-demand function no offsetting positive excess demand will arise and Walras' Law will be violated. My hypothesis is that a careful reading of John Stuart Mill, Alfred Marshall, Knut Wicksell, and Irving Fisher reveals that each avoided the logical traps discussed above. Patinkin is very careful not to assert that any of these authors was consistently wrong. In fact he quotes key passages in Wicksell and Fisher which indicate that they both had more than just a glimpse of the real-balance effect. However, he immediately depreciates the value of these passages by noting other passages from both which indicate that they imperfectly understood the real-balance effect. But there is no reason to expect that anyone writing before the 1942 Lange paper would have gone through the analysis of the real-balance effect to the extent that Patinkin demands-they simply had no motivation to do so. In fact, if Lange had not made the unsupported contention that the Classics held to Identity, the elaborate taxonomy of dichotomies in Patinkin's book might never have been formulated. The question addressed in the thesis is whether or not in light of the latter-day theoretical discussion the early writers had consistent models. The results of my search of the literature are as follows. Mill included monetary and nonmonetary wealth as arguments in the demand functions of the goods market. Furthermore, he correctly specified the homogeneity postulate by defining the conditions necessary for reattainment of equilibrium after an injection of new outside money. Mill's statements on the relationship between Law and Walras' Law and their implications for monetary theory are second to none in clarity and accuracy. * A dissertation completed at the University of California, Berkeley in 1968.

CARL G. UHR. Economic Doctrines of Knut Wicksell. Pp. xv, 356. Berkeley and Los Angeles: University of Cali fornia Press for the Institute of Business and Economic Research, University of California, 1960. $7.50

CARL G. UHR. Economic Doctrines of Knut Wicksell. Pp. xv, 356. Berkeley and Los Angeles: University of Cali fornia Press for the Institute of Business and Economic Research, University of California, 1960. $7.50

The Life of Knut Wicksell.

Journal Article The Life of Knut WicksellSelected Papers on Economic Theory Get access The Life of Knut Wicksell. By Torsten Gardlund. Translated from the Swedish by Nancy Adler. (Stockholm: Almqvist & Wiksell, 1958. Pp. 355. 30 kr.)Selected Papers on Economic Theory. By Knut Wicksell. Edited with an Introduction by Erik Lindahl. (London: Allen & Unwin, 1958. Pp. 292. 30s.) Brinley Thomas Brinley Thomas University College of South Wales, Cardiff. Search for other works by this author on: Oxford Academic Google Scholar The Economic Journal, Volume 69, Issue 274, 1 June 1959, Pages 369–373, https://doi.org/10.2307/2228022 Published: 01 June 1959

REVIEWS

Book reviewed in this articleGREAT BRITAINR. H. Tawney Business and Politics under James IChristopher Hill. Economic Problems of the Church from Archbishop Whitgift to the Long Parliament.L. Margaret Midgley (Ed.). A History of the County of Stafford.R. A. McKinley (Ed.). A History of the County of Leicester.John LE Patourel (Ed.). Documents Relating to the Manor and Borough of Leeds, 1066‐1400.Acts of the Privy Council of England, July 1628 to April 1629.Margaret Walker (Ed.). Warwick County Records: Hearth Tax Returns, Vol. I. Hemlingford Hundred: Tamworth and Atherstone Divisions.D. C. Coleman. The British Paper Industry 1495‐1860.William Woodruff. The Rise of the British Rubber Industry During the Nineteenth Century.John Clive. Scotch Reviewers: The Edinburgh Review, 1802‐1815.A. R. Schoyen. The Chartist Challenge. A Portrait of George Julian Harney.Walter E. Houghton. The Victorian Frame of Mind, 1830‐1870.T. F. T. Plucknett. Early English Legal Literature.R. J. Mitchell and M. D. R. Leys. A History of London Life.Kathleen MajorT. Woodrooffe. The Enterprise of England.W. B. Stephens. A Study of Industrial and Commercial Development, 1625‐1688.H. Cecil Pawson. Robert Bakewell, Pioneer Livestock Breeder.G. Rattray Taylor. The Angel‐Makers.WALTER HAGENBUCH. Social Economics.ITALYRoberto S. Lopez. La prima crisi della Banca di GenovaGiuseppe La Mantia. Codice diplomatic dei Re Aragonesi di Sicilia. Vol. II, edited by A. De Stefano and F. Giunta. Series I, vol. XXIV of‘Documenti per servire alia Storia di Sicilia’.Renato ZanoheriUgo TucciUNITED STATES OF AMERICALev E. Dobriansky. Veblenism: A New Critique.Bernard Rosenberg. The Values of Veblen.Arthur Nussbaum. A History of the Dollar.Marvin Meyers. The Jacksonian Persuasion: Politics and Belief.Walter D. Wyman and Clifton B. KroeberFred A. Shannon. American Farmers’Movements.E. S. Lee and Others. Population Redistribution and Economic Growth: United States, 1870‐1950. Vol. I. Methodological Considerations and Reference Tables.Milton Handler. Antitrust in Perspective: The Complementary Roles of Rule and Discretion.Kenneth O. Bjork. West of the Great Divide: Norwegian Migration to the Pacific Coast, 1847‐1893.John H. Krenkel. Illinois Internal Improvement 1818‐1848.Milton Derber and Edwin Young. Labor and the New Deal.Robert David Enterbero. The Changing Competitive Position of Department Stores in the United States by Merchandise Lines.Raymond G. Miller. Killowatts at Work: A History of the Detroit Edison Company.David Loth. Swope of G.E.‐The Story of Gerard Swope and General Electric in American Business.Kendall Birr. Pioneering in Industrial Research. The Story of the General Electric Research Laboratory.Martin Demino Lewis. Lumberman From Flint: The Michigan Career of Henry H. Crapo 1855‐186/t).Alfred H. Conrad and John R. Meyer.‘The Economics of Slavery in the Ante Bellum South’, Journal of Political Economy, LXVIUniversity of North CarolinaGENERALLudwig VON Mises. Theory and History.Karl R. Popper. The Poverty of Historicism.Torsten Garrdlund. The Life of Knut Wicksell. Translated from the Swedish by Nancy Adler.John T. Noonan, Jr. The Scholastic Analysis of Usury.Agronomisch‐Historische Bijdragen. Vol. IV.George T. Matthews. The royal general farms in eighteenth‐century France.Stanley J. Stein. Vassouras. A Brazilian Coffee County, 1850‐1900.Stanley J. Stein. The Brazilian Cotton Manufacture: Textile Enterprise in an Underdeveloped Area, 1850‐1950.Richard M. Morse. From Community to Metropolis: A Biography of São Paulo, Brazil.A. W. Currie. The Grand Trunk Railway of Canada.Vernon C. Fowke.The National Policy and the Wheat Economy.A. V. Raman Rao. The Economic Development of Andhra Pradesh, 1766‐1957Jerome B. Cohen. Japan's Postwar Economy.Capital Formation and Economic Growth.

REVIEWS

Value, Capital and Rent. By KNUT WICKSELL, with a foreword by Professor G. L. S. Shackle. Translated by S. H. Frowein Christianity and Economic Problems. By D. L. MUNBY Economy and Society: A Study in the Integration of Economic and Social Theory. By TALCOTT PARSONS and NEIL J. SMELSER National Income Analysis by Sector Accounts. By A. J. and D. C. VANDERMEULEN Mathematical Economics. By R. G. D. ALLEN Israel's National Income: 1950–1954. By DANIEL CREAMER and others Immigration to Israel: 1948–1953. By MOSIIE SICRON Estimates of Israel's International Transactions: 1952–1954. By NADVA HALEVI Nigerian Cocoa Farmers. By R. GALLETTI, K. D. S. BALDWIN and I. O. DINA Planning for an Expanded Economy: Accumulation, Employment and Technical Progress in Underdeveloped Countries. By C. N. VAKIL and P. R. GRAHMANAND The A B C of the Foreign Exchanges. By NORMAN CRUMP Essays in Canadian Economic History. By H. A. INNIS

THE REHABILITATION OF MONETARY THEORY IN SWEDEN

PROFESSOR ERIK LUNDBERG's book Business Cycles and Economic Policyl is very hard to review. It is a large and most ambitious work which deals with a great many aspects of the central theme. Moreover, Professor Lundberg's main points are often so carefully qualified that it is sometimes difficult to know exactly what the author's opinion really is. This caution is probably partly due to the fact that he knew that in Sweden his book would be revolutionary; and it has, in fact, already given rise to a widespread discussion on economic policy which will probably have farreaching effects. Indeed, the development of economic theory in Sweden is bound to be affected as a result of the new slant given to the discussion by Professor Lundberg and not least by his revival of older theories in new forms. The book reflects the author's struggle to arrive at new conceptions, as far as Swedish economic thought is concerned, and to work out a fresh method of approach, but it cannot be said to constitute, as now presented, a clear statement of fully matured ideas. Nor can it be said that many of the ideas expressed by Lundberg are 'new' in an absolute sense, as most of them are already fairly familiar to economists in England and on the Continent. In Sweden, however, where, for instance, the interest rate was banned as a subject of discussion for several years, from the spring of 1945 onwards, many of Lundberg's conceptions are new to most of those who have taken up the study of economics since the late 1920's. Only an economist of Erik Lundberg's standing could give these old ideas in their new form sufficient authority to establish a new trend; and he is to be congratulated on having had the courage to show so fully in what direction his economic thinking has been taking him. The Stockholm School of Economics had its origin in the lectures and writings of Knut Wicksell, a man of the Left with, on the whole, liberal ideas, and in the work and teaching of David Davidson,2 politically a 1 Konjunkturer och ekonomisk Politik, Stockholm, 1953 (550 pages). 2 Knut Wicksell's first major published work was Geldzins und Giterpreise (Jena, 1898). This was followed by the Lectures on Political Economy, which were published in Swedish in 1901 and 1906 and appeared in an English translation in 1934, 9 years after Wicksell's death. David Davidson reviewed Wicksell's Geldzins und Giiterpreise in Ekonomisk Tidskrift in 1899 and in this review he already made clear the main points on which he differed from Wicksell. Although there was a vast field of agreement between Wicksell and Davidson, the debate continued for over two decades, mainly in articles in Ekonomisk Tidskrift. Gustav Cassel and Eli F. Heckscher also contributed to the economic theory of their time, but they did not occupy quite such a central position as Wicksell and Davidson, who, in spite of all their differences, had the most profound respect for each other's economic thinking. Wicksell had the more original mind, and it is probably true to say that he is now recognized all over the world as having been one of the half-dozen greatest economists of the last hundred years.

Reviews

Book reviewed in this article: The London Mason in the Seventeenth Century. By Douglas Knoop and G. P. Jones Tariff Policy By O. Paranagua The Distribution of National Capital. By G. W. Daniels and H. Campion World Dislocation and World Recovery. By Dr. W. H. C. Knapp Planning under Socialism and Other Addresses. By Sir William H. Beveridge Ways and Means. A Study of the Econmu Structure of Great Britain Today. By Geoffrey Crowther Lectures on Political Economy, Vols. I and II. By Knut Wicksell Crises and Cycles. By Wilhelm Röpke. Adapted and Revised by Vera C. Smith The State and the Standard of Living. By Gertrude Williams The Study of Prices, 2nd Edition. By Sir Walter T. Layton and Geoffrey Crowther

Knut Wicksell, A Pioneer of Econometrics

THE progress of economic science from the Tableau e6conomique of Quesnay up to the Synthetic Economics of Moore may be symbolized by a tree gradually growing higher. The tree trunk is strongly rooted and its nature was determined by the place where it grew. Signs of a fresh orientation have become increasingly frequent during the last ten years, but, as yet, we do not see clearly which method to follow to unite the economics of yesterday to that of tomorrow. In the meantime, we can observe how minute inquiries into economic cycles, the laborious statistical determination of demand curves, and similar studies, are constantly opening up new perspectives of the fundamental economic problems. The classical theory was essentially that of Ricardo, and any effort to build up a theory conforming to modern economic life and modern scientific conceptions must, therefore, be in conflict with the Ricardian edifice. The classical, Ricardian theory is an economic theory of static equilibrium. Any attempt to look for assumptions more true to economic life will more or less become an economic theory of Time. It is a remarkable fact that most economists who have attempted an exhaustive analysis of these economic factors, in which time is necessarily involved, have found themselves at variance with the classical economic theory of Equilibrium. Two names must be mentioned in this connection: Stanley Jevons and Knut Wicksell. In this short account of the latter I shall take up only a single aspect of his work, and try to show why and how he may be called a pioneer of econometrics. With regard to Wicksell's life and work in general, I shall content myself with the brief statement that he was born in 1851 and died in 1926, and that his three principal works were published at the age of 42 to 47 years, that is to say, between 1893 and 1898: Ueber Wert, Kapital und Rente (Jena, 1893), Finanztheoretische Untersuchungen (Jena, 1896), and Geldzins und Giuterpreise (Jena, 1898). He was a professor of Political Economy at Lund University, Sweden, from 1900 to 1916, and two volumes of Lectures appeared during this period, one of which is a theory of money (1906), and the other a theory of value based on the principle of marginal utility (1913). A synopsis of Wicksell's econometric works can be given under the following five heads: 113

International Freights and Prices

Journal Article International Freights and Prices Get access Knut Wicksell, Knut Wicksell Mörby, Stocksund, Sweden Search for other works by this author on: Oxford Academic Google Scholar F. W. Taussig F. W. Taussig Mörby, Stocksund, Sweden Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 32, Issue 2, February 1918, Pages 404–414, https://doi.org/10.2307/1885435 Published: 01 February 1918

Finanztheoretische Untersuchungen nebst Darstellung und Kritik des Steuerwesens Schwedens, by Knut Wicksell

Knut Wicksell's contribution to modern economic analysis has been immense, although his work only became better known during the 1930s. The Finanztheorie Untersuchungen is the least widely discussed of his major works, although the topic, public finance and taxation, and Wicksell's treatment of it, still merit this work as a major contribution to the history of economic thought.