Wicksell, Knut

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Wicksell, Knut

Family background and education

Transition to economics

Early career as an economist

Further contributions to economic theory



Knut Wicksell (1851-1926), Swedish economist, was born in Stockholm. He made an important contribution to the marginalist theory of price and distribution with Value, Capital and Rent (1893) and emerged as a pioneer in monetary theory with Interest and Prices (1898). His final statement of his views on price and distribution theory and on monetary theory appeared in the two-volume Lectures on Political Economy (1901-1906).

Wicksell was intensely engaged in the political issues of his time. Although on the whole he was a believer in private enterprise, he strongly advocated economic and social reform. He wrote a number of articles and pamphlets that advocated policies of public finance designed to create a more equitable distribution of income and wealth; an active banking policy to safeguard the value of money; a Neo-Malthusian population policy; and an active social policy to mitigate the hardships brought about by industrialization.

Wicksell also took an active part in many of the radical movements of the late nineteenth century. His support of such causes as free speech, the extension of suffrage, women’s rights, antimonarchism, atheism, disarmament, and the appeasement of Russia held him back in his academic career but also led to an isolation that proved conducive to the theoretical work for which he was singularly gifted.

Both in his outspoken radicalism and in the originality of his thinking Wicksell resembled the American economist Thorstein Veblen. But he differed from Veblen in that his theoretical contributions became part of the mainstream of further scientific development and in that his ideas for social and economic reform anticipated a great deal of contemporary thought in the Western world.

Family background and education

Wicksell came from a commercial, middle-class background. His father, who had been raised on a small farm in the vicinity of Stockholm and who started as a shop assistant in the grocery trade, had by the late 1830s set up his own store, catering mostly to workers. His mother came from a Hungarian family that had immigrated to Sweden at the beginning of the century and set up a small silk-manufacturing firm in the capital. Wicksell’s family enjoyed such cultural interests as literature and music; it gave him a liberal and intellectual orientation that was shared by his circle of friends during his high school years in the late 1860s.

There was no strong religious sentiment in Wicksell’s home, but when he was being prepared for confirmation and came under the influence of a pietistic pastor, he was converted. Reminiscing about this conversion, he wrote: “It was a deeply repentant, dreadfully guilt-laden sinner of just over fifteen, who crept up to the communion table on Palm Sunday 1867, to beg for a share in the virtue of Christ.”

During the first years of his university studies in Uppsala, where, as he wrote, he went “with a view to becoming a doctor of philosophy and university lecturer and perhaps even a professor of mathematics,” his life was dominated by his newly won religious views, and in a spirit of austerity he concentrated on his studies in mathematics and physics. By 1874, however, he was beset by religious doubts. Under the influence of rationalist thinkers such as Darwin, Renan, Strauss, and Ibsen, he reconsidered his faith and became a freethinker. His personal conduct now became more worldly, but he kept up the pace of his studies and was able to obtain his licentiate degree, with mathematics as his major subject, in 1876.

Transition to economics

After leaving the university, Wicksell entered a period of indecision about his career. His difficulties in concentrating on further studies in mathematics arose partly from a general tendency to vacillate and partly from a growing interest in a wider range of social and cultural events. During his later university years he referred in several letters to a statement that Lagrange once made about the study of mathematics—“the mine is too deep” —and looking back on his academic studies in an autobiographical sketch, published in a Swedish journal, Fritankaren, in 1890, he complained about lacking “the perseverance and all-absorbing interest needed to produce something of real worth in a highly developed field like natural sciences.” The mine about which Lagrange had spoken had, he added, “not become shallower since, and to be an independent scientist nowadays one must renounce almost everything else and be content to remain ignorant of almost every sphere of knowledge except the most relevant—to be a child in political and social life.”

During the late 1870s, Wicksell’s interests widened, diverting him from serious academic work. Influenced by the writings of John Stuart Mill, Ibsen, Bjornson, and Strindberg, he began to take an active part in student life and pleaded, mostly in poetry, for freedom of thought and the emancipation of women.

It was in this context that Wicksell and a new friend, the physiologist Hjalmar Ôhrvall, came to study a massive Neo-Malthusian work—The Elements of Social Science, or Physical, Sexual and Natural Religion: An Exposition of the True Cause and Only Cure of the Three Primary Social Evils, Poverty, Prostitution and Celibacy. Written by George Drysdale, a young Scottish doctor, this work was published anonymously in 1854, went through 35 English editions, and was translated into ten languages. In Sweden the translation appeared in three editions between 1879 and 1885, enjoyed a succes de scandale—and brought Wicksell and his radical friends in close touch with Neo-Malthusianism and classical economics.

Early in 1880, inspired by Drysdale’s book, Wicksell volunteered to lecture on the causes of drunkenness at one of the meetings of an Uppsala temperance lodge. His lecture, first given to the horrified members of the lodge and then repeated to a large audience of students and university teachers, pointed to overpopulation as the root of all social evil. Wicksell asserted that among the lower classes drunkenness was caused by poverty, whereas among the educated, drunkenness could be attributed to the pressures created by the economic impossibility of early marriage and the ensuing “terrible” choice between celibacy and prostitution. Both evils could be overcome by checking the birth rate. To the “moral restraint” that Malthus had indicated as one of the main checks, the use of contraceptives had been added by nineteenth-century English reformers such as Place, Carlyle, Bradlaugh, and Besant; and Wicksell’s lecture ended with a practical suggestion for the establishment of societies, among the laboring classes as well as among the students, whose members would pledge themselves to limit the procreation of children by contraception.

The lecture was greeted with enthusiasm by the student world, and its message became part of the program of the radical “Eighties school,” which was taking form in the Scandinavian countries. Most of the professors at the University of Uppsala, however, considered Wicksell’s lecture “immoral,” and following a protest from the Uppsala Medical Association, the University Council censured the young lecturer and warned him that further activities of this kind would lead to dismissal.

For at least ten years, roughly the 1880s, Wicksell was torn between a longing for the scientific career he had originally chosen and a growing desire to devote himself to the study and propagation of Neo-Malthusianism. It was not until the 1890s that he recognized theoretical economics as a field giving scope to both these impulses. In 1885 a small inheritance made it possible for him to go to England for the academic year. In London he spent his evenings in the company of left-wing reformers but his days were spent at the British Museum, reading not only classical economics but also the works of such modern analysts as Jevons and Walras. Yet the more general problems of utilitarian ethics and social reform continued to be his main preoccupation, and when, with the help of a foundation grant, he went to London a second time in 1887, he did not study economics but spent his time in the company of such reformers as Drysdale, Bradlaugh, Besant, and Kautsky. His journeys took him to Strasbourg and Vienna, where he listened to lectures by such economists as Knapp, Brentano, and Menger. He got little out of these lectures, however, and his thoughts continually turned to matters of politics and social philosophy.

In the fall of 1888 Wicksell arrived in Berlin. One day early in 1889 he happened to see the newly published second part of Bohm-Bawerk’s Capital and Interest in a local bookshop window. It was this book that definitely turned his thoughts to theoretical economics. As he wrote in a letter to his friend Öhrvall:

I procured a copy and was soon lost in the book. I understood much of it rather imperfectly, as can be seen from my notes in the margin. The last section, “Die Hohe des Kapitalzinses,” in particular, I was able to assimilate only partially, although later I came to appreciate it more than all the rest. Nonetheless the book came to me as a revelation. … It was as though I now saw with my own eyes the roof being put on a scientific edifice that no economist since the days of Ricardo had managed to raise above its lower floors, using even at best building materials of uneven quality.

Early career as an economist

In 1888, Wicksell had applied for a lectureship in economics at the University of Stockholm, but the post had gone to a man holding less embarrassing views. After his discovery of Böhm-Bawerk, he returned to Stockholm and applied once more to the university, this time for permission to give a series of lectures on the theory of value. Again he was refused—the university depended on the City Council financially, and the rector was afraid to endanger amicable relations with the council by supporting a radical. Wicksell, therefore, had to deliver his lectures before the Workers’ Association. While his four lectures on marginal analysis were quite naturally incomprehensible to an audience of workers, they were to constitute the introduction to the treatise on value and capital that Wicksell published in 1893.

Although Wicksell’s interest in economic analysis had now been seriously aroused, there were still many difficulties to be overcome before he could devote himself to scientific work. His marriage to a Norwegian schoolteacher in 1889 had in one way brought him peace and made his “enthusiasm for work grow considerably.” But the form of the marriage—they were “united” without any religious or civil formalities—was to add to his reputation for extreme radicalism, and the birth of two children during the early years of the marriage contributed to his material difficulties. As no teaching post in economics was available, Wicksell had to make a living as an unattached lecturer, journalist, and pamphleteer, falling back on the old utilitarian themes of the 1870s and 1880s.

However, even in Wicksell’s popular lectures and articles, economic problems were beginning to occupy an increasingly important place. In 1891 he had taken part in an essay competition on the population problem, sponsored by the French Académie des Sciences Morales et Politiques. In spite of the fact that the academy obviously had wanted an exposition of a policy for encouraging population growth (so that the French population might match the growing German population), Wicksell was awarded one of the minor prizes—which was accompanied by many appreciative comments from the French economist Éimile Levasseur—for his close-knit demonstration, written in French, of the Malthusian case. Wicksell did not accept the mathematics of Malthus’ population theory, especially the Malthusian idea that subsistence increases in an arithmetic ratio and population in a geometric ratio; he argued that it was in his formulation of the theory of rent and in the idea of diminishing marginal return to an increasing labor force that Malthus had identified the essence of the population problem.

The marginal approach to economic theory, which Wicksell had gradually learned during the 1880s, also influenced his analysis of the problem of the normal working day. This problem had been brought to the forefront in the early 1890s by the international socialist movement. In several lectures and articles, Wicksell demonstrated by means of a marginal productivity model that the final economic result of shorter working hours was likely to be a decrease in wages. A real improvement in workers’ incomes, rather than the apparent one that the reduction of working hours produced, could be achieved by a decrease in population. His open criticism of the main plank of the socialist platform of that time made him lose the little popularity he had among the workers of Stockholm.

Politically isolated from the left as well as from the right, Wicksell was gradually driven back on his theoretical interests. In 1891 and 1892 he had written about seventy articles on political subjects, but in 1893 he produced only about twenty such articles. With the help of a small research grant he now began to concentrate on his work on the theory of value. In the autumn of 1892 he finished one part of the work and had it published separately under the title “Kapitalzins und Arbeitslohn” (“Interest and Wages”) in the Jahrbücher fur Nationalokonomie und Statistik. A year later the book Value, Capital and Rent was published, and he soon received the first signs of recognition in letters of thanks from Bohm-Bawerk and Walras.

That autumn, Wicksell became determined to give up journalism altogether and devote himself to science. In a Christmas letter to a friend, he wrote: “It is perhaps rash of me to have given up all newspaper writing, which more or less feeds us, and to live only for science and on credit. But I have a feeling that it is now or never.”

Further contributions to economic theory

With his Value, Capital and Rent, Wicksell had made a major, if somewhat late, contribution to the marginalist theory of price and distribution by integrating capital, a productive factor with a time dimension, into the Walrasian theoretical framework. Normally, such a work would have been submitted as a doctoral thesis, but as the two or three economists active in Sweden in those days had only the most elementary notions of marginalist theory and were quite incapable of following Wicksell’s mathematical presentation, he had to choose a different subject for his thesis. While he was working on his theoretical study, he had become interested in the problems of taxation and had published two pamphlets in the field of public finance. In a letter written to a friend during the summer of 1894 he said: “I am glad you liked my pamphlet. I have recently published another similar one …and now I shall set to work on my larger book covering the whole subject of taxes, for which I am receiving a grant from the Loren Foundation. When I delve into the details of the taxation system, I am truly shocked to see how confoundedly unfair it is to the little man—almost more than it used to be.”

After two years of industrious work, Wicksell produced a book in Swedish on the problem of the incidence of taxation, which was submitted as a doctoral thesis at the University of Uppsala in the spring of 1895. It was followed by a second volume centered on the problems of just taxation. This work was published in Germany under the title Finanztheoretische Untersuchungen nebst Darstellung und Kritik des Steuerwesens Schwedens (1896). As he had also passed the required oral examination in economics and public finance in the meantime, he began to make inquiries about a docentship, which in Sweden is the first step toward a chair for anyone whose thesis has been awarded honors.

Economics was then taught only in the law faculties in Sweden, and in order to get a docentship in the arts faculty of his old university, Wicksell had to petition the king for a special dispensation. His petition was refused on the recommendation of the faculty, which suggested that he apply to the faculty of law instead. There too his application was turned down, ostensibly because he had no knowledge of law. During the debates in both faculties, conservative members had made disparaging references to Wicksell’s popular lectures and to the “unethical” views he had propagated. When, a few months later, he tried his luck with the University of Stockholm, where economics was being established as a subject, he met with the same negative response, obviously for the same reasons.

It had now become clear that nothing less than a full law degree would satisfy the authorities. Uppsala was the nearest university that offered such a degree, so in the autumn of 1897 Wicksell and his family moved there. At the age of 45, with no means of livelihood, he had to settle down to cram for an examination that normally required a course of study lasting four years. The very traits of character—independence and stubbornness— that had involved him in so many material difficulties now stood him in good stead. For a period of two years he plowed his way through countless law compendia, in which he had but little interest. He took his last law examination in April 1899 and a few weeks later was confirmed as docent in economics and taxation law at the University of Uppsala.

In the four years between completing his doctoral dissertation and obtaining his law degree, Wicksell had not been entirely inactive in the field of theoretical economics, despite his cramming in law and his perennial popular writing (which had become more and more orientated toward economic subjects). By the middle of the 1890s his theoretical thinking had turned toward a new subject, the theory of money. He had previously been concerned with the problem of overproduction, of Malthus’ “general glut” this earlier concern may explain why he now set out to clarify the problem of variability in general prices, approaching it from the point of view that changes in the value of money are interrelated with variations in the volume of credit and in business activity. It was on this problem that he worked—assisted by new grants from the Loren Foundation—during the greater part of 1896 and 1897. In 1898 his Geldzins und Güter-preise was published.

With his Geldzins und Güterpreise Wicksell made a major contribution to economic science. The central problem of monetary theory—the causes of the variability of general commodity prices—is for the first time clearly defined, and the shortcomings of such earlier explanations as the production cost theory and the formal quantity theory are demonstrated with great thoroughness. His own contribution was to show that the relationship of the money rate of interest to the natural, or real, rate of interest on capital is of decisive importance for changes in the price level.

The idea that variations in credit, and thereby in the price level, arise when the money rate deviates from some sort of equilibrium rate had appeared earlier in English writings, notably in an essay and two parliamentary speeches by Henry Thornton in 1802 and 1811 and in a short passage in Ricardo’s Principles of Political Economy and Taxation in 1817. It is, however, unlikely that Wicksell knew of these precursors at the time he was working on his treatise; he seems to have found out about them after the turn of the century, when he was going over the ground again in order to publish a textbook. In any case, his theory of the relationship between a money rate and a natural rate was only a starting point for a further analysis of the cumulative economic process. In this respect his treatise goes deeper and is more detailed than any previous work on the subject, and it has given rise to a new treatment of the entire dynamic problem in economics.

In an appreciation of Wicksell’s work, G. L. S. Shackle (1959) said that it was Wicksell’s Geldzins und Güterpreise that made him perhaps the chief forerunner and prophet of modern monetary theory, introducing as it did certain fundamental ideas a whole generation before anyone else realized their significance. Because of its originality, however, the book was not received with much enthusiasm or even understanding when it appeared. In the Swedish and Danish economic journals the reviews were remarkably ungenerous, and in Germany it was not reviewed at all. Wicksell had hoped that the practical banking world in Sweden would respond with interest to a dynamic theory of credit, business fluctuations, and prices, but he heard nothing from that quarter. When he presented his theory to the Swedish Economic Association, the forum for bankers and businessmen with more general economic interests, none of those present had anything to say. The only consolation was that the Economic Journal, which in a supercilious article a few years earlier had dealt summarily with Wicksell’s book on price theory, now printed a warmly appreciative review of his new work. The reviewer even went so far as to suggest that the book be translated into English. Had the suggestion been followed then, instead of nearly forty years later, international monetary theory would almost certainly have advanced more rapidly.

In 1899 the creation of an associate professorship in economics and public finance at the University of Lund gave Wicksell his first chance for a chair. He was appointed provisionally to this professorship, and it was understood that he would later apply for the permanent post in open competition. He moved to Lund and took up his teaching duties in January 1900, working on his initial lectures with special care, since he was preparing the ground for his two-volume textbook, Lectures on Political Economy (1901-1906). This book has been called “a textbook for professors,” containing as it does a rigorous systematic contribution to price and distribution theory as well as to monetary theory.

When Wicksell did apply for the associate professorship in 1900, Gustav Cassel, who was only starting on his career as an economist, was a fellow applicant. Of the three judges, two placed Wicksell first. The judge who favored Cassel, a Danish professor, attacked Wicksell’s deductive mathematical method (which Cassel was not as yet using) and declared that he put more faith in Cassel as a teacher, claiming he was “better suited than Wicksell to give guidance to the young, particularly to future holders of public office.” In the Higher University Council the majority of the professors supported Wicksell, whereupon Cassel withdrew his application.

At this stage, Wicksell’s election would normally have needed only formal confirmation. But the vice chancellor, Bishop Gottfrid Billing, opposed the expected appointment; he declared that he could not accept the existing statutory requirement that applicants for academic positions be judged solely on their scientific knowledge; Wicksell had rendered himself unsuitable by his propagation of questionable social theories. To the accompaniment of a stormy debate in the press, protests by many groups in the universities that academic freedom was being violated, and demonstrations by the students in Lund and Uppsala, the matter was passed on to the university chancellor.

The chancellor expressed some hesitation about recommending Wicksell, who had no “feeling for the realities of life” and was inclined to opinions “repellent to patriotism and morality.” He proposed, nevertheless, that in view of his fully confirmed scientific ability, Wicksell be appointed professor in accordance with the university regulations. The appointment was confirmed by royal decree on November 1, 1901. It was greeted by radical opinion as “a victory for justice and law over the clerical threat to freedom of research.” But even among professed conservatives in the universities and in the rightist press there had been support for Wicksell’s appointment in accordance with the established university regulation.

Professorship at Lund. Wicksell’s appointment to a professorship at the age of 50 did not produce a new burst of scientific creativity. His later scientific work mainly took the form of articles in economic journals, notably the Swedish Ekonomisk tidskrift. It was this periodical that in the early years of the century published his important contributions to the theory of distribution and, later, at the time of World War i, several articles on monetary theory. His teaching took much time from research; instead of lecturing and giving seminars on pure theory, an easy task for him, he did most of his teaching in applied economics, out of consideration for the interests and needs of the law students.

There were also other things that distracted Wicksell from large-scale research during the early years of the century. In 1903 he was promoted from an associate to a full professorship—not without renewed protests in the University Council against his “pernicious, unpatriotic activities as an enlightener of the people”—and he now felt more free to resume his work as a popular lecturer. In 1904, in a speech at a May Day demonstration, he again challenged public opinion ( as he had done in 1892) by suggesting Scandinavian disarmament and by inviting Russia to annex Sweden and consequently be reformed by the Scandinavian welfare states. A few years later he acquired nationwide notoriety by defending a freethinking agitator who was in jail for blasphemy. He himself was prosecuted for casting ridicule on the story of the Immaculate Conception; in December 1908 he was sentenced to two months’ imprisonment. After an unsuccessful appeal, he spent the two months in a city jail, where he peacefully revised his published lectures, completed a pamphlet on population theory, and worked on a translation of Adam Smith’s Wealth of Nations.

In the following years Wicksell was on several occasions in danger of prosecution for satirical lectures on religious questions or for defending acts of violence on the part of the left-wing labor movement. His wife and closest friends tried to steer him away from such activities, which not only endangered the financial position of the family but also made concentration on scientific matters difficult for him. In his thinking about economic problems, he tended to become preoccupied with aspects of social injustice; to escape from these preoccupations, he often fled into the field of mathematical theory, which in the family circle was referred to as “π.”. “I do nothing but brood on lectures I feel I ought to give,” he wrote to his wife early in 1914, “and then, when I do not dare, I lose interest in my work and begin to brood on v instead; at least that is something neutral.” The dilemma was not solved until the outbreak of World War i, which provided him with an important new interest in the economics of war and, particularly, in the monetary problems involved.

Falling back on his earlier study of monetary matters, Wicksell now became a critic of—and to some extent an adviser to—the Swedish Central Bank. During the early years of the war he thought that inflation could be avoided by a restrictive policy of credit and public expenditure. Moreover, he felt that to counteract the inflationary effects of the gold influx, resulting from an increasingly favorable trade balance, this policy should be combined with a suspension of the gold standard. These recommendations were followed to a certain extent. Wicksell later added a policy of export duties and import premiums; he even thought that these measures could be expanded into a system regulating the whole of foreign trade.

These new activities kept Wicksell busy during the war years; he even had the opportunity for some foreign travel, facilitated by grants from the Central Bank. It was during a trip to England in 1916 that he briefly met J. M. Keynes, whom he recognized as the “keenest theorist in Britain.” However, the esteem was not reciprocal.

Last years. In 1917, when Wicksell retired from his chair in Lund, the family moved back to Stockholm, into the small suburban villa that their more affluent friends had acquired for them. Here Wicksell spent his declining years as the eminent authority in economic science, which was being taken over by a new generation—Eli Heckscher, Erik Lindahl, Bertil Ohlin, and Gunnar Myrdal. He became the first president of the Economists’ Club, which was founded in 1917, and he hardly missed a meeting during the following years. He retained his intellectual clarity in old age and actually wrote some of his most penetrating analytical articles during his last years.

Among Wicksell’s side interests, the population question remained the leading one. His other political interests had abated—in the social and constitutional fields most of the reforms he had fought for had actually been adopted—and he had given up his popular lecturing. However, he never gave up his radicalism, and as late as 1923 he contributed an antireligious article to the anarchist paper Brand (“Fire”).

Wicksell died on May 3, 1926, at the age of 74. In the elaborate funeral procession, like those usually reserved for statesmen, red banners predominated, and following the eulogies of friends and colleagues, there were speeches on behalf of the Social Democratic party of Sweden, the Young Socialist Association of Sweden, labor unions in Lund, and the Central Trade Union Organization of Stockholm. Various associations and academic institutions sent the customary wreaths, but many of his friends and disciples, honoring his request, sent contributions instead to the Malthusian Center for Birth Control.


[See alsointerest; and the biographies ofbÖhm-Bawerk; Malthus; Rlcardo; Thornton; Walras.]


1892 Kapitalzins und Arbeitslohn. Jahrbücher für Nationalokonomie und Statistik 59:852-874.

(1893) 1954 Value, Capital and Rent. New York: Rine-hart. → First published as über Wert, Kapital und Rente nach den neueren nationalökonomischen The-orien.

1895 Zur Lehre von der Steuerincidenz. Ph.D. dissertation, Univ. of Uppsala.

1896 Finanztheoretische Untersuchungen nebst Darstellung und Kritik des Steuerwesens Schwedens. Jena (Germany): Fischer.

(1898) 1936 Interest and Prices (Geldzins und Güter-preise). With an introduction by Bertil Ohlin. London: Macmillan. → First published in German. A study of the factors regulating the value of money.

(1901-1906) 1935-1951 Lectures on Political Economy. 2 vols. London: Routledge; New York: Macmillan. → First published in Swedish. Volume 1: General Theory. Volume 2: Money.

Selected Papers on Economic Theory. Edited with an introduction by Erik Lindahl. London: Allen & Unwin, 1958. → Contains papers first published between 1897 and 1958.


GÅrdlund, Torsten (1956) 1958 The Life of Knut Wicksell. Stockholm: Almqvist & Wiksell. → First published in Swedish.

Ohlin, Bertil 1926 Knut Wicksell: 1851-1926. Economic Journal 36:503-511.

Ohlin, Bertil 1937 Some Notes on the Stockholm Theory of Savings and Investment. Part 1. Economic Journal 47:51-69.

Sanger, C. P. 1898 [A Book Review of] Geldzins und Güterpreise, by Knut Wicksell. Economic Journal 8: 384-386.

Shackle, G. L. S. 1959 [A Book Review of] The Life of Knut Wicksell, by Torsten Gårdlund. Bankers’ Magazine (London) 187:259-261.

Sommarin, Emil 1930 Das Lebenswerk von Knut Wicksell. Zeitschrift fur Nationalokonomie 2:221-267.

Uhr, Carl G. 1960 Economic Doctrines of Knut Wicksell. Berkeley and Los Angeles: Univ. of California Press.