Abstract
Wicksell’s work in Public Finance exhibits his characteristic boldness of construction and its general line of approach seems one which must be taken into account before any satisfactory treatment of the problem (theory of the committee) can be arrived at.1 Yet, in spite of the interest of the questions it raises and the prominence accorded during the last two decades to his other theories, his work in Public Finance, because of the difficulty of the German in which it is written, has remained almost a closed book to the English-speaking countries.2
Black’s objective in this paper is to summarize Wicksell’s views on Public Finance, describe the historical background in which they were developed, examine the logic of specific arguments, and discuss the validity of Wicksell’s view of Public Finance. Against the prevailing tendency of Wicksell’s day, and almost equally of Black’s time, Wicksell rejected any sacrifice principle and accepted instead a form of the benefit theory. Aside from recognizing the benefit side of public expenditure, Wicksell’s benefit theory acted to set a limit on both expenditure and taxes. In so doing, it met a desire for justice in so far as everyone in society would receive a corresponding compensation in return for his taxes.
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Wicksell, K. 1896. Finanztheoretische Untersuchungen nebst Darstel-lung und Kritik des Steuerwesens Schwedens. Jena Gustav Fischer. The views that we discuss are to be found mainly in Chapters I and IV of the second part of the book. An Italian translation by Mario Einaudi appeared in 1934 in Finanza (Nuova Collana di Economisti, Vol. IX, edited by Gino Borgatta); and our own discussion is under obligation to the review essay by
Luigi Einaudi, “Del principio delle repartizione delle imposte,” Riforma Sociale, July-August, 1934.
A very helpful overview on Wicksell’s work has appeared in, Uhr, C. G., “Knut Wicksell — a Centennial Estimate,” American Economic Review, Dec, 1951, pp. 831–860;
and a note on his theory of Public Finance, Buchanan, J. M., “Wicksell on Fiscal Reform: Comment,” American Economic Review, Sept., 1952, pp. 599–602.
Mr. Uhr added “Wicksell on Fiscal Reform: Further Comment,” American Economic Review, June, 1953, pp. 366–8.
Wicksell, K. 1896. Finanztheoretische Untersuchungen. 76. I am indebted to my wife (Almut Uffenorde Black) for translations of the various passages.
Op. cit., 79.
Op. cit., 79.
Cf. Edgeworth, F. Y., Papers Relating to Political Economy. 2: 103. The pages that follow this section are an excellent illustration of Edgeworth when he is vacillating and undecided.
Finanztheoretische Untersuchungen. 81–2.
In discussing Wicksell’s book, Einaudi characterizes equal, proportional, and minimum sacrifice (and taxable capacity) as being “vacuities without content.” op. cit., Riforma Sociale, 1934, p. 451.
Op. cit., 114.
Op. cit., 78.
Op. cit., 85.
Op. cit., 84. He deals with the objections to the principle put forward by Mill (Principles of Political Economy, Book V, Chapter II, pp. 804–5 in Ashley’s edition), and gives them summary dismissal. For more recent criticism of the benefit theory, see Seligman, E. R. A., Essays in Taxation, sub voce Benefit Theory in index. So far as Wicksell’s theory is concerned, Seligman’s criticisms are beside the point.
Finanztheoretische Untersuchungen. 82–3.
Op. cit., 83.
Op. cit., 85.
Op. cit., 112.
Op. cit., 119.
Op. cit., 110–111.
Prinzip der (relativen) Einstimmigkeit und Freiwilligkeit der Steuer-bewilligung. “Voluntariness” is clumsy but it seems to convey Wicksell’s meaning better than any other equivalent that we can find.
Op. cit., 113–4.
Op. cit., 117–8.
Op. cit., 120.
Op. cit., 120.
For the corresponding feature when a simple majority is in use, see Part III of Newing, R. A. and Black, Duncan. 1951. Committee Decisions with Complementary Valuations, Glasgow: William Hodge and Co.
Wicksell says 10%, but as Einaudi points out, Luigi Einaudi, “Del principio delle repartizione delle imposte,”, Riforma Sociale, 1934, p. 433, it is more logical to take over 10%.
Bagehot, Walter, 1913. The English Constitution, London: Kegan Paul, French, Trubner & Co. Chapter V.
Op. cit., American Economic Review, June 1953, passim.
Op. cit., 115. Cf. also p. vii of his preface.
Op. cit., 122–3.
See in particular his review of Mazzola’s book, op. cit., 96–101.
It is not without significance that Borgatta, G., (Finanza, Nuova Collana di Economisti, Vol. IX, preface, p. xxi), had believed that Einaudi might be indebted to Wicksell’s theory of distribution of taxation; but Einaudi mentions that he had not read this part of Wicksell’s book until about 1934. Cf. Einaudi, Luigi Einaudi, op. cit., Riforma Sociale, 1934, p. 431. Both Wicksell and Einaudi belong to the same stream of reasoning.
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© 1996 Kluwer Academic Publishers
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Brady, G.L., Tullock, G. (1996). Wicksell’s Use of the Theory of Committees in Public Finance. In: Brady, G.L., Tullock, G. (eds) Formal Contributions to the Theory of Public Choice. Springer, Dordrecht. https://doi.org/10.1007/978-94-009-1794-1_16
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