Faculty of Social Sciences Stockholm University 1964 – 2014
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Faculty of Social Sciences Stockholm University 1964 – 2014 Eds. Dahl and Danielson 111 Department of Economics Astri Muren and Hans Wijkander LECTURES IN Economics at Stockholm Uni- unions and long-run unemployment. He played versity College started already in 1888 with an important role as entrepreneur, channelling Johan Leffler (1845–1912) as lecturer. Leffler, money from the Rockefeller Foundation to an who had studied in Leipzig, combined econom- extensive empirical investigation of wage for- ic liberalism with an interest in social policy mation and national income in Sweden. Bagge (Olofsson & Syll 1998). The first full professor was also a politician; from 1913 he was active of economics was Gustav Cassel who was ap- in local Stockholm politics and later he was pointed in 1904 (Nycander 2005, ch.1). Cassel party leader for the Conservatives (1935–1944) (1866–1945) had originally studied mathemat- and Minister of Education. ics (writing a doctoral dissertation on linear Cassel retired in 1934 and was succeeded by algebra) and later turned to economics. Cassel Gunnar Myrdal (1898–1987) (Gustafsson 1998). is known for his deve lopment of general equi- Myrdal’s dissertation, ‘Pricing and Change’, in- librium theory. During the 1920s, he was one troduced inter-temporal planning and risk into of the most prominent economists in the world, price theory. Cassel was the dissertation advi- lecturing widely on monetary issues. Bringing sor. Erik Lindahl, another of the prominent mone tary analysis into general equilibrium Stockholm school economists, who was at the theory is still an unresolved issue, particularly time lecturing in the Department, is mentioned regarding financial economics. A second chair in the preface for his advice. Lindahl’s own de- in economics was created in 1921, with Gösta velopment of inter- temporal and temporary Bagge (1882–1951) as its first incumbent equilibrium theory in the late 1920s was, in (Waden sjö, in Nycander 2005, ch.2). Bagge’s turn, influenced by Myrdal’s analysis. During early work concerned wage-setting under trade the 1930s, several members of the Department 112 Department of Economics were involved in the development of employ- apparatus and the conclusions reached in Sweden ment theory. Considering the economic crisis in on the one hand and Mr. Keynes’ ‘General Theory’ on the world at that point, it was the hot topic of the other hand. Hoping that a discussion of two in- the time. Gunnar Myrdal, Gösta Bagge, Alf Jo- dependent attacks on the same set of problems hansson and Dag Hammarskjöld contributed may throw some light on the latter, I intend in this to the Unemployment Commission. From 1937 and the succeeding paper to make some observa- to 1944, Myrdal spent his time in the United tions on these two theories. (Ohlin, 1937:53) States, working on ‘An American Dilemma’ and financed by the Carnegie Foundation. After re- The Stockholm school of thought has attracted turning, he became Minister of Trade in 1945– a lot of interest and publicity through the years, 47. Much later, in 1974, Myrdal shared the though opinions have always differed on the Sveriges Riksbank Prize in Economic Sciences extent to which the Stockholm school really in Memory of Alfred Nobel with Friedrich von was very different from Keyne sian theory. In Hayek. He was not entirely happy about that; any case, the Stockholm school economists, to perhaps the main problem was the co-laureate which Lindahl, Hammarskjöld, Johansson, whose values he did not share, but he had also Myrdal and Ohlin, as well as Lundberg and expressed criti cism of the prize itself (Swedberg Svennilson belong, were creative and influen- 2004). tial researchers and policy makers. Erik Lundberg and Ingvar Svennilson offered The Stockholm school of thought theoretical contributions to the Stockholm The term ‘Stockholm school of thought’ or school in their doctoral dissertations. Lund- ‘Stockholm school’ was used by Bertil Ohlin in berg’s dissertation, ‘Studies in the Theory of Eco- 1937 in the first of two articles in the ‘Economic nomic Expansion’, completed less than a year Journal’. He introduced the article by stating: after the publication of Keynes’ ‘General Theory’, presents an independently developed dynamic Owing to a coincidence of circumstances, already at theory of business cycles, later formalized by an early stage of the depression Swedish econo- Paul Samuelson (Lindbeck & Persson 1987). mists came to deal with the problem of variations in Lundberg took up a position at Konjunkturin- employment, output and prices by means of a theo- stitutet (KI, the National Institute of Economic retical apparatus rather different from the price the- Research) in 1937 and became its head in ory in economic textbooks. There are surprising sim- 1946. The same year he was also given a per- ilarities as well as striking differences between that sonal professorship at the Department, where Faculty of Social Sciences – Stockholm University 113 Seminar in political economy in the seminar room A700. (Photo: Mats Danielson) he acted as a full-time professor after 1955 to the newly created ‘Research Institute of when he left Konjunkturinstitutet. Lundberg’s Industrial Economics’ (Industriens Utrednings- overview of business cycles and stabilization institut) and was its head 1942–51. Svennilson policy from 1953 (Konjunkturer och ekonomisk was appoin ted professor at the Department in politik, translated into English as ‘Business 1947. In parallel with his professorship, he Cycles and Economic Policy’, 1957) influen ced played an important role in the development of a generation of students of Keynesian fiscal and The Medium Term Surveys (Långtidsutredning- monetary policy. arna) of the Swedish government. Svennilson Svennilson’s doctoral dissertation, Ekono- was an early proponent of econometrics, i.e. misk planering: Teoretiska studier, was a theo- the use of statistical methods of analysis of eco- retical study of organizational planning explor- nomic data. (Persson & Siven 2009) ing intertemporal decision-making under risk. At this time the academic world of econom- After his doctorate, Svennilson initially worked ics was almost exclusively male, in Sweden and as an expert in Konjunkturinstitutet where Lund- elsewhere. There was only one senior faculty berg was already working. He was then recruited woman in economics at Stockholm University 114 Department of Economics College, Karin Kock (1891–1976). She defended encouraging the intellectual development of her doctoral dissertation, A Study of Interest their students. One of Lundberg’s few graduate Rates, in 1929. It was the second in Sweden students was Peter Bohm, who became one of presented by a woman – the first was by Margit the Department’s more influential professors in Cassel (the daughter of Gustav Cassel) in 1924. a later era, to which we now turn. Kock’s advisors were Cassel and Bagge. Kock became docent in 1931 and replaced Bagge and The 1960s and 1970s: Expansion Myrdal as acting professor during the period and change 1936–1946, when they were often on leave. In the early days of Socialvetenskapliga institu- One of her teaching areas was monetary eco- tet, as the Department was called until 1964 (in nomics. Kock was given ‘professor’s name’ in English the Institute for Social Sciences of 1945, served as Minister of Trade during Stockholm University, according to Lundberg’s 1947–49, and was the head of Statistics Swe- foreword to his doctoral dissertation, written den from 1949 until her retirement in 1957 in December 1936), the students were few and (Jonung & Jonung 2013). comparatively undemanding. The situation seems Lundberg and Svennilson were professors in to more or less have remained like that through- the Department for some considerable time, out the 1940s and much of the 1950s. How- Lundberg until 1965 when he left for the Stock- ever, in the late 1950s that was about to change holm School of Economics, and Svennilsson un- in many ways. Ideas about how to organize the til 1967, when he succeeded Myrdal as head of education of future researchers were brought the Institute for International Economic Studies. in from leading universities in the United During that time, they were both also much in- States, where PhD course programmes were volved in policy advising activities (in those days held. Assar Lindbeck, who returned from a when there were not many students, it seems to two-year stay at Yale University, started by giving have been perfectly normal to combine a profes- an extensive course on monetary theory one year, sorship with extensive other commitments). and one on fiscal policy the second year. The Svennilson appears to have been a kind and car- initiative was followed up by Karl Jungenfelt ing person, if a bit preoccupied, while Lundberg and Östen Johansson. could be ironic towards his students. In general, It may seem a minor thing to start giving the Stockholm school economists were appar- courses for doctoral and licentiate students; ently more interested in their own scientific yet, this change was probably instrumental in a work and in being government advisors than in shift of research focus from research topics Faculty of Social Sciences – Stockholm University 115 much influenced by leading persons connected ed with the period when the baby- boom gen- with the National Institute of Economic Re- eration born in the 1940s was leaving school. search to research topics that were instead in- Hence, in the period 1956–1960 some 8,000 fluenced by international lite rature in economics people received a secondary school degree. In and other intensively discussed topics. The the period 1961–1965 that number almost dou- courses were much appreciated by young re- bled to 15,000, and between 1966 and 1968 searchers, who later became prominent in aca- (which is only two years) it increased to demia, such as Peter Bohm, Ingemar Ståhl, Alf 28,000.