capitalism

Wicksell, Knut (1851–1926) 543
also borrowed from the language of English republican
thought, which emphasized the temptations of political corruption,
the dangers in gratifying the private passions at the
public expense, and the need for an active electorate as
guardians of the polity.
Like most Whigs, Trenchard and Gordon strongly supported
the removal of the civil disabilities under which religious
dissenters then suffered. John Locke in his Letter
Concerning Toleration had earlier called for the removal of
restrictions on religious practice. Indeed, toleration for religious
dissidents was a cardinal principle of Whig ideology.
But the arguments put forward in Cato’s Letters were even
more forceful than those in Locke’s writings. In one of the
most impassioned defenses of freedom of conscience
published during the 18th century, Trenchard and Gordon
maintained that our consciences constitute the most integral
part of our being and, as such, are exempt from all regulation
by the civil magistrate. Those exhortations for religious
toleration did not go unheeded by the various Whig
governments, and a number of disabilities were repealed
over the course of the first 50 years of the 18th century.
Unfortunately, the easing of disabilities did not extend to
Roman Catholicism, which many regarded as combining
the most primitive elements of superstition with political
oppression.
Although no formal Whig or Tory parties existed as
such during the early part of the reign of George III, who
ascended the throne in 1760, they emerged in the Commons
following the appointment of William Pitt the Younger as
first minister and head of the Tory Party in 1783. At that
point, a revived Whig party, representing religious dissenters,
entrepreneurs, and other reformist elements, coalesced
around the leadership of Charles James Fox. The
name finally fell into disuse after the turn of the century
when the more radical members of the reformist party
began to call themselves Liberals and employed “Whig” as
a term of opprobrium for those members they regarded as
too conservative.
See also English Civil Wars; Glorious Revolution; Levellers;
Liberalism, Classical; Limited Government
Further Readings
Hamowy, Ronald. “‘Cato’s Letters,’ John Locke, and the Republican
Paradigm.” History of Political Thought 11 (Summer 1990):
273–294.
Robbins, Caroline. The Eighteenth-Century Commonwealthman.
New York: Atheneum, 1968.
Stephen, Sir Leslie. History of English Thought in the Eighteenth
Century. 2 vols. New York: Harcourt, Brace & World, 1962
[1876].
Williams, Basil. The Whig Supremacy, 1714–1760. 2nd ed. Oxford:
Clarendon Press, 1962.
RH
Wootton, David, ed. Republicanism, Liberty, and Commercial
Society, 1649–1776. Stanford, CA: Stanford University Press,
1994.
WICKSELL, KNUT (1851–1926)
Knut Wicksell was a Swedish economist. In any ranking of
economists who were active in the 100 years following
Wicksell’s birth, his name would surely appear in the top 10.
Wicksell’s work included substantial contributions both to
the Austrian theory of the business cycle and the theory of
public choice. Wicksell followed Eugen von Böhm-Bawerk
in treating production as a sequence of stages, where the
production of consumer goods was supported by a hierarchical
structure of capital goods. To this structure of production,
Wicksell attached the idea of two distinct rates of
interest: a natural rate and a loan rate. A divergence between
the natural rate and the loan rate would induce a change in
the structure of production. For instance, a fall in the natural
rate of interest through a decline in time preference would
lead to a more capital-intensive structure of production. In
contrast, a rise in interest and time preference would lead to
a less capital-intensive structure of production.
Wicksell’s work on capital and money centered on
securing macrolevel coordination among savers and
investors, and Wicksell’s significance to contemporary theorizing
about coordination was stressed especially strongly
by Axel Leijonhufvud in 1981. Among other things,
Wicksell’s coordinationist orientation set the stage for the
Austrian theory of the business cycle that subsequently was
developed by Ludwig von Mises and F. A. Hayek. Wicksell
maintained that an expansion in bank credit would drive the
loan rate below the natural rate. This initial effect of the
credit expansion is identical to a fall in time preference and
will produce an economic expansion, the first manifestation
of which would be an expansion in capital goods. Because
time preferences will not have fallen, however, voluntary
saving will be insufficient to sustain this lengthened structure
of production. Hence, the credit-financed boom will
subsequently bust.
In 1896, Wicksell published his Investigations in the
Theory of Public Finance. The core of this work emphasized
consensus and unanimity in place of majority rule as
a standard of governance and became the guiding framework
for the theory of public choice and constitutional economics,
particularly as illustrated by James Buchanan and
Gordon Tullock’s Calculus of Consent. In this work,
Wicksell asked what kind of institutional framework for
parliamentary governance would make it possible for
people in their capacities as taxpayers reasonably to say
that their tax monies were directed as they wished. Wicksell
assumed that, through proportional representation, it would