Stockholm School

The Stockholm School is a loosely organized group of Swedish economists, chiefly Gunnar Myrdal, Bertil Ohlin and Erik Lindahl, working from the early 1930s and drawing on the earlier monetary and business-cycle theory of Knut Wicksell. Working independently of John Maynard Keynes and largely without access to his work, the group developed dynamic demand-and-supply and monetary-equilibrium theories reaching strikingly similar conclusions to The General Theory (1936) on the case for active government management of aggregate demand, several members' contributions predating Keynes's own book. Bertil Ohlin formally named and defined the school in a 1937 Economic Journal article, 'Some Notes on the Stockholm Theory of Savings and Investment.' The school's emphasis on using national budgets and public investment to stabilize employment fed directly into the intellectual foundations of the Nordic welfare state, a deliberate middle path between an unregulated market economy and central planning.