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TheStockholm School (Swedish:Stockholmsskolan) is a school ofeconomic thought. It refers to a loosely organized group of Swedisheconomists that worked together, inStockholm, Sweden primarily in the 1930s.
The Stockholm School had—likeJohn Maynard Keynes—come to the same conclusions inmacroeconomics and the theories ofdemand andsupply. Like Keynes, they were inspired by the works ofKnut Wicksell, a Swedish economist active in the early years of the twentieth century.
William Barber's comment uponGunnar 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]
Two of the most prominent members of the Stockholm School wereStockholm School of Economics professorsGunnar Myrdal andBertil Ohlin. The movement's name, "The Stockholm School", was launched in an article by Bertil Ohlin in the influentialEconomic Journal in 1937, "Some Notes on the Stockholm Theory of Savings and Investment".
The article was published in response to the publication ofKeynes' 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 modernnorth Europeanwelfare state. Their theories were embraced and implemented as national policy by the two powerful arms of the Swedish labor movement, theSwedish Social Democratic Party and the national labor union, theSwedish 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.
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Other members, such asErik Lundberg, continued asbusiness cycle-oriented economists.
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