WICKSELL, KNUT.

Allianser mellan Arbetare och Arbetsgifvare. En ny företeelse på det socialpolitiska området. [Studenterföreningen Verdandis Småskrifter. 109.].

Stockholm, (1902). 8vo. Original printed orange wrappers. Wrappers fully intact but loosened from book block. Internally very fresh and clean. Uncut. 30 pp.

First edition, third thousand.

Wicksell contributed to a number of different economic disciplines, including his groundbreaking work in monetary theory.
"The standard view of the quantity theory before Wicksell was that increases in the money supply have a direct effect on prices - more money chasing the same amount of goods. Wicksell focused on the indirect effect. In elaborating this effect, Wicksell distinguished between the real rate of return on new capital (Wicksell called this the 'natural rate of interest') and the actual market rate of interest. He argued that if the banks reduced the rate of interest below the real rate of return on capital, the amount of loan capital demanded would increase and the amount of saving supplied would fall. Investment, which equaled saving before the interest rate fell, would exceed saving at the lower rate. The increase in investment would increase overall spending, thus driving up prices. This cumulative process of inflation would stop only when the banks’ reserves had fallen to their legal or desired limit, whichever was higher.

In laying out this theory, Wicksell began the conversion of the old quantity theory into a full-blown theory of prices. The Stockholm school, of which Wicksell was the father figure, ran with this insight and developed its own version of macroeconomics. In some ways this version resembled later Keynesian economics. Among the young Swedish economists who learned from Wicksell were Bertil Ohlin, Gunnar Myrdal, and Dag Hammarskjöld, later secretary general of the United Nations." (Tthe Library of Economics and Liberty).

Order-nr.: 42272