KNUT WICKSELL ‘Usually when a great economist is translated into English, reputation is deflated. Not so with Wicksell.’ Paul A.Samuelson ‘No finer intellect and no higher character have ever graced our field’ wrote Joseph Schumpeter about the Swedish economist Knut Wicksell (1851–1926). Wicksell made lasting contributions to capital theory, monetary theory and fiscal policy. However, whilst most of his books, originally published in German or Swedish, have long been translated into English, only a few of his more than eight hundred articles are available in English. This volume fills part of that huge gap by presenting a wide range of hitherto untranslated material. This volume includes: • contributions to neoclassical marginalism and Austrian capital theory; • essays on income, taxes and duties, including Wicksell’s doctoral thesis On the Theory of Tax Incidence; • one of Wicksell’s few articles on unemployment. A second volume contains essays on monetary questions and population, as well as a number of Wicksell’s book reviews. Bo Sandelin has been at the Department of Economics, University of Gothenburg, Sweden since 1973. His publications in international journals include articles on the economics of housing, the economics of crime, capital theory and the history of economic thought, with special reference to Wicksell’s capital theory. He has published several books in Swedish, and edited The History of Swedish Economic Thought (Routledge, 1991). Page Intentionally Left Blank KNUT WICKSELL Selected essays in economics Edited by Bo Sandelin VOLUME I First published 1997 by Routledge This edition published in the Taylor & Francis e-Library, 2003. Simultaneously published in the USA and Canada by Routledge Published 2014 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN 711 Third Avenue, New York, NY 10017 USA Routledge is an imprint of the Taylor & Francis Group, an informa business © 1997 Bo Sandelin All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloguing in Publication Data Wicksell, Knut, 1851–1926. [Essays. English. Selections] Knut Wicksell: essays in economics/edited by Bo Sandelin. p. cm. Translated from German or Swedish. Includes bibliographical references and index. ISBN 0-415-15512-6 (alk. paper) 1. Economics. I. Sandelin, Bo, 1942– . II. Title. HB34.W48213 1996 96–9038 330–dc20 CIP ISBN 978-0-203-44354-5 Master e-book ISBN ISBN 978-0-203-75178-7 (Adobe eReader Format) ISBN 978-0-415-15512-0 (Print Edition) CONTENTS Preface vii Introduction viii Part I Marginalism and capital theory 1 IN DEFENCE OF THE THEORY OF MARGINAL UTILITY 3 2 KAPITAL—UND KEIN ENDE! (Reply to Docent Brisman) 15 3 LEXIS AND BÖHM-BAWERK 26 4 ON THE THEORY OF INTEREST (Böhm-Bawerk’s ‘Third Ground’) 41 Part II Income, taxes and duties 5 ON THE THEORY OF TAX INCIDENCE 57 6 THE INHERITANCE TAX 116 7 TARIFFS AND WAGES 153 8 HIGH PRICES, TARIFFS AND WAGES 158 9 VOLUNTARY OR FORCED SAVINGS? 166 10 THE HISTORICAL DEVELOPMENT OF THE CONCEPT OF INCOME 170 11 THE CONCEPT OF INCOME AS REGARDS TAXATION, AND SOME ASSOCIATED TAX ISSUES 213 12 A FEW COMMENTS 240 v CONTENTS Part III Unemployment 13 WHY ARE FACTORY OPERATIONS BEING CURTAILED? 253 Index 261 vi PREFACE This is the first of two projected volumes of previously untranslated writings by Knut Wicksell. The publishers have already responded to interest in Wicksell by publishing three volumes of articles on him in their Critical Assessments series, edited by John Cunningham Wood. Altogether, then, the availability of material both by and about Wicksell has now been improved for English- language readers. The texts have been translated by Dr Timothy Chamberlain (1, 4–6, 8– 13) and Julie Sundqvist (2–3, 7). Working with the translators has been very stimulating, and I have been impressed by their skill in interpreting Wicksell’s frequently complicated way of expressing himself. They deserve special thanks for their efforts. The translation has been financed by the Swedish Council for Research in the Humanities and Social Sciences. I should like to thank the Council for its support, which has made this project possible. Bo Sandelin vii INTRODUCTION ‘Einige werden posthum geboren’—some are born posthumously—says the German philosopher Friedrich Nietzsche in his autobiography; he has himself in mind. From the perspective of English-language readers, the same claim can be made for the Swedish economist Knut Wicksell (1851–1926), since his most important writings only began to be published in English after his death. Wicksell’s best-known work, the two volumes of Lectures on Political editions had already appeared, the first in 1901–6. In addition, a German ediEconomy, was published in English in 1934–5. By this time, three Swedish tion had come out in 1913–22.1 The Lectures on Political Economy were followed almost immediately by the translation of Interest and Prices. A Study of the Causes Regulating the Value of Money (1936).2 The original edition (in German) had been published in 1898. Wicksell’s first book, Value, Capital and Rent, was published in German as early as 1893, but had to wait until 1954 before appearing in English translation.3 Wicksell’s main work on the theory of public finance, Finanztheoretische Untersuchungen nebst Darstellung und Kritik des Steuerwesens Schwedens (1896) is still not available in its entirety in English. The main part of the section ‘A New Principle of Just Taxation’ has, however, been translated into English by James Buchanan.4 The preceding section, ‘On the Theory of Tax Incidence’, is published in English for the first time in this collection. Wicksell himself published very little indeed in English—barely a dozen short articles, about half of them on population. He published a couple of brief contributions on the gold problem in the Economic Journal and an article on international freights and prices in the Quarterly Journal of Economics. All his more significant essays were published in Swedish instead, and to some extent in German. Ekonomisk Tidskrift, which was renamed the Swedish Journal of Economics in 1965 and the Scandinavian Journal of Economics in 1976, was his most important scholarly forum in Swedish. Wicksell’s German articles were spread among several different journals, most prominently Jahrbücher für Nationalökonomie und Statistik. Fourteen articles viii INTRODUCTION have previously been translated for a volume edited by Erik Lindahl, entitled Knut Wicksell. Selected Papers on Economic Theory (1958). A bibliography of works by Wicksell printed between 1868 and 1950 lists 889 titles.5 In addition, he left about one hundred unpublished manuscripts, which are now preserved in Lund University Library.6 As stated above, very few of Wicksell’s works were originally published in English, but some have been translated. All things considered, a very small proportion of Wicksell’s work has been available in English.7 The present collection is the first of two projected volumes containing further translations from Wicksell’s ample production. PRINCIPLES OF SELECTION The selection has been guided by the following principles. First, only material that—as far as I have been able to establish—has not previously been published in English is included. Second, only writings on economics have been taken into account. (A few works on the closely related issue of population are included in the second volume.) The emphasis therefore lies on Wicksell’s role as a scholar of economics, while his contributions to general public debate are passed over. However, it is worth pointing out that in Wicksell’s lifetime it was his activity as a provocative participant in public debate that made him known to the public at large. Here, no topic was beyond his range. He wrote articles or gave lectures on subjects as far apart as defence, euthanasia, spiritualism, marriage, prostitution, foreign policy, issues of law and religion. On one occasion, he dealt with the latter topic in a lecture in so deliberately provocative a manner that as a reputable professor in his late fifties he spent two months in prison in 1909 for ‘blaspheming and mocking God’s holy word in such a manner as to occasion public offence’. Wicksell’s many contributions to public debate and letters to the press undoubtedly retarded his career as an economist. But he liked journalism and, in addition, for many years this kind of activity provided a necessary contribution to his livelihood. He had no regular income until he was fifty, when he became Professor of Economics and Fiscal Law at Lund University. Nevertheless, his contributions to the daily newspapers are not represented in this collection. A third criterion is that, to be included, an article should throw light on some principle. I have tried to avoid articles that focus too narrowly on a specific case and have little general interest. Fourth, Wicksell published a number of articles that were draft versions of chapters of his books, or that summarized central sections of his books. I have avoided those articles because they do not add much to what the reader can find in the books themselves. ix INTRODUCTION Fifth, Wicksell, however, also wrote articles in which he clarified points that may have seemed obscure in his books or in earlier articles, or in which he concurred with critical comments, or, on the contrary, defended his propositions against attacks. A few articles of this kind are included. One example is the first article in this collection, ‘In Defence of the Theory of Marginal Utility’, which contains a critique of ideas that Gustav Cassel had put forward in his article ‘Grundriß einer elementaren Preislehre’.