Lectures on Political Economy by Knut Wicksell

Author:Knut Wicksell [Knut Wicksell]
Language: eng
Format: epub, pdf
ISBN: 978-1-61016-284-5
Publisher: Augustus M. Kelley • Publishers
Published: 1977-11-06T16:00:00+00:00

IV

My review has become exceptionally long, or otherwise I should willingly write at rather greater length on the fourth book on Trade Cycles in order to compensate for my previously largely negative criticism. As I have already said, it is in my opinion incomparably the best part of his work. Professor Cassel’s great gifts for concrete description based on facts and figures here show to advantage. Besides, the somewhat irritating Olympian omniscience of the rest of the book has entirely disappeared; he never claims to have propounded some new theory of crises, but is content to suffer the older explanations of crises calmly and objectively and to accept the most plausible of them. At the same time he illuminates all the phenomena associated with the trade cycle with interesting statistical tables and diagrams.

Considering the extraordinary difficulty of the subject (and my own far from adequate comprehension of it), I certainly cannot vouch for the correctness of all his conclusions, but on the whole they appear preponderatingly sound and just.

Some objections can certainly be advanced; the description of the period of depression, which is the weak point of most theories, hardly emerges in a clearer light in Cassel. From his older essay (Ekonomisk Tidskrift, 1904), on which this is otherwise a great advance, he has taken the idea that capital accumulation even in a depression mainly takes the form of fixed capital. He tries to show by means of the statistics of railroad construction (inter alia) that the increase in fixed capital-goods does not stagnate even in the downward phase of the trade cycle; so that society is better provided with fixed capital at the end of the depression than at the beginning. He forgets that all this must be judged relatively. The provision of fixed capital must always keep pace with the growing needs of the population. If its growth is actually accelerated in the boom and retarded in a depression, the latter from this point of view cannot serve as “a preliminary to the subsequent upward phase”—other than negatively by creating a relative vacuum which must be filled. Logically speaking, what Professor Cassel says must hold for circulating capital—stocks of goods. What in fact happens cannot, unfortunately, be ascertained owing to the lack of statistical material. Professor Cassel does not wholly deny this possibility, but he is generally tempted to keep it in the background.

The agricultural situation is particularly relevant at this point. If, as he also maintains, agriculture relinquishes some labour to industry during a boom, it must on the other hand be possible to do some preparatory work in the subsequent depression, which will serve to provide food for the population in the next industrial boom. For during the depression a number of industrial labourers return to agriculture, which can also absorb part of the increase in the labouring population. Professor Cassel thinks—in my opinion wrongly—that agriculture is independent of trade cycles proper, thus differing from Dietzel and Petander, who perhaps go to the other extreme.

Here and there we still find inconsistent and loosely reasoned judgments.

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