The Stockholm School (
Swedish: Stockholmsskolan) is a school of
economic thought. It refers to a loosely organized group of Swedish
economists that worked together, in
Stockholm, Sweden primarily in the 1930s.
The Stockholm School had—like
John Maynard Keynes—come to the same conclusions in
macroeconomics and the theories of
demand and
supply. Like Keynes, they were inspired by the works of
Knut Wicksell, a Swedish economist active in the early years of the twentieth century.
William Barber's comment upon
Gunnar Myrdal's work on monetary theory goes like this:
"If his contribution had been available to readers of English before 1936, it is interesting to speculate whether the 'revolution' in macroeconomic theory of the depression decade would be referred to as 'Myrdalian' as much as 'Keynesian'”[1]
History and aspects
Two of the most prominent members of the Stockholm School were
Stockholm School of Economics professors
Gunnar Myrdal and
Bertil Ohlin. The movement's name, "The Stockholm School", was launched in an article by Bertil Ohlin in the influential Economic Journal in 1937, "Some Notes on the Stockholm Theory of Savings and Investment".
The article was published in response to the publication of
Keynes' magnum opus, The General Theory of Employment, Interest and Money in 1936, and its purpose was to draw international attention to the Swedish discoveries in the field, many of which had predated the discoveries of Keynes. Gunnar Myrdal was early in supporting the theses of John Maynard Keynes, maintaining that the basic idea of adjusting national budgets to slow or speed an economy was first developed in Sweden by him and the Stockholm School.
Myrdal and Ohlin went on to further develop their theories, and in so doing, they developed the intellectual underpinnings of the modern
north Europeanwelfare state. Their theories were embraced and implemented as national policy by the two powerful arms of the Swedish labor movement, the
Swedish Social Democratic Party and the national labor union, the
Swedish Trade Union Confederation.
In the post-
World War II geopolitical situation of the Cold War, with two rival political blocks, their theories also achieved wide international appeal as a "Third Way", i.e. a middle way between a market economy and a command economy. The objective of this "third way" was to achieve a high level of social equality without undermining economic efficiency.
Erik Lindahl (21 November 1891 – 6 January 1960) was another member of the Stockholm school; he proposed a method of financing public goods in accordance with individual benefits. In the Lindahl equilibrium, the quantity of the public good satisfies the requirement that the aggregate marginal benefit equals the marginal cost of providing the good.
Ingvar Svennilson (14 March 1908 – 1972) became known for his theories in planned economics.
Patinkin, Don (1978). "On the Relation between Keynesian Economics and the 'Stockholm School'". The Scandinavian Journal of Economics. 80 (2): 135–143.
doi:
10.2307/3439878.
JSTOR3439878.