Economists in the Swedish Debate

During the 1920s, the Swedish debate on the role of the state in the economy was lively. The fight over planning began in earnest in 1930, when the Conservative government introduced a “milling obligation” which Eli Heckscher branded as “economic planning with no plan”, after the pattern of Soviet Russia. The New Deal caught the attention in mid-1933 and was particularly scrutinized by Bertil Ohlin. In early 1934, when the Social Democrats revealed their intention to increase the influence of the state over economic life in spite of the economic recovery, the planning debate went into high gear. When Gunnar Myrdal succeeded Gustav Cassel as professor of economics at Stockholm University, he emphasized the necessity of central economic planning. Cassel, in a lecture in London, warned that cumulative government interventions would end in dictatorship. Heckscher, in the Economic Society, attacked his younger colleagues as “apostles of the planned economy”. Myrdal and Ohlin countered that interventions were needed to avoid major dangers. The next major battle, with Heckscher and Ohlin as antagonists, took place when economists from the Nordic countries in 1935 convened in Oslo. In 1936, Ohlin summarized his ideas on “framework planning” in a book on “Free or Directed Economy”. When John Maynard Keynes’ General Theory appeared, Cassel and Heckscher claimed it was all but general, whereas Ohlin attempted to establish that the younger generation of Stockholm economists had attacked the same problems as Keynes independently of him.