Lectures on Political Economy, Volume I: General Theory

Knut Wicksell (1851-1926) was a Swedish economist who did pioneering work on the theory of interest. He distinguished between the money rate of interest and the “natural” rate, i.e., the rate of interest that would prevail in the absence of money. Ludwig von Mises was greatly influenced by this idea and developed on its basis a theory of the business cycle in The Theory of Money and Credit (1912). Wicksell also was an important contributor to the theory of public finance. His “unanimity principle” as a criterion of public policy was a major influence on the Public Choice School and figures prominently in The Calculus of Consent, by James Buchanan and Gordon Tullock.