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Wicksell's Social Philosophy and

his Unanimity Rule
Marianne Johnson
a

University of Wisconsin Oshkosh, USA

Available online: 26 Jun 2009

To cite this article: Marianne Johnson (2010): Wicksell's Social Philosophy and his
Unanimity Rule, Review of Social Economy, 68:2, 187-204
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REVIEW OF SOCIAL ECONOMY, VOL. LXVIII, NO. 2, JUNE 2010

Wicksells Social Philosophy and his Unanimity

Rule

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Marianne Johnson
University of Wisconsin Oshkosh, USA

Abstract Wicksell saw economics as a way to eect social change. In addition

to academic writings, he produced a steady stream of pamphlets, newspaper
editorials, and public lectures that brought theoretical economics to bear on
social policy. In this paper, consideration is given to this wider variety of
Wicksells writings, and his unanimity rule for public goods decision making is
examined within the context of his social philosophy. We argue that the
unanimity rule, rather than being narrowly focused on eciency concerns,
operated as a practical mechanism to achieve Wicksells larger goal of social
justice. This stands in contrast to the interpretation of Wicksell commonly
presented in the public choice literature.
Keywords: Wicksell, unanimity, poverty, justice, public nance

INTRODUCTION
While Knut Wicksells contributions to economic theory and monetary
economics were widely recognized during his time, he often lamented that his
work in public nance failed to nd contemporary support or understanding.1 In particular, Wicksells benet approach to taxation, manifested
in the unanimity rule for public goods decision making, was consistently
characterized as impractical by many of his colleagues (Bastable 1896;

1 Except for Erik Lindahl, the academic reaction to Finanztheoretische Untersuchungen was poor; it was
received unsympathetically by his contemporaries who failed to understand the novelty of his approach to
tax incidence and were uninterested in the history of the Swedish tax system. Bastable reviewed the book
for The Economic Journal; of the second essay, Bastable made two complaints. First, pairing taxexpenditure decisions ran counter to modern generalized budgets. Second, the requirement of a supermajority meant that it would greatly weaken the power of the Government, and make the procuring of
the needed funds a matter of extreme diculty. (Bastable 1896: 594)

Review of Social Economy

ISSN 0034-6764 print/ISSN 1470-1162 online 2010 The Association for Social Economics
http://www.informaworld.com
DOI: 10.1080/00346760802714859

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REVIEW OF SOCIAL ECONOMY

Ohlin 1926; Davidson in Hennipman 1982: 215). Others, such as Walras and
Pareto, ignored it altogether. However, even Wicksells most abstract
theories had very concrete aims, as can be demonstrated in the case of the
unanimity rule. The combination of theoretical appeal and practical
application is perhaps the reason why, contrary to initial reactions,
Wicksells work came to have a major inuence on the evolution of radically
divergent branches of modern public economics, including Buchanans
(1949, 1987) public choice analysis, Musgraves (1939, 1959) tripartite
approach to public nance, and Samuelsons (1954) work on the optimal
provision of public goods.
Part of the problem for Wicksells contemporaries was that his
theoretical contributions to public nance were often extensions of his
social reform program and it was dicult to disentangle the two. Wicksell
(1967b: 4) was a radical and progressive thinker who viewed economics as
a thoroughly revolutionary program to achieve social change.2 At a time
when Sweden had a limited franchise and was socially and religiously
conservative, Wicksell championed the poor and working classes by
advocating reductions in the population growth rate, legalized contraception, expanded access to higher education, conscation and redistribution of inheritances, extension of the franchise, and reform of the tax
system. Recent scholarship (Swedberg 2002; Lundahl 2005) has sought to
understand Wicksells contributions to population theory, social theory,
and Scandinavian sociology within the framework of his period and
politics, arguing that What Wicksell had to say about the social and
political dimensions of some topic often found it way into his theoretical
economic writings and vice versa (Swedberg 2002: 133). This is not a new
phenomenon, as previous scholars emphasized Wicksells unusual life
almost as much as his economic theories (Uhr 1951, 1962; Gardlund 1996;
Henriksson 1991; Johnsen 1994).
If social progress is the key to Wicksells system of thought, then his
contributions to public economics should be considered within this structure.
However, despite recent English translations of several important essays on
public economics, the interrelation between Wicksells public economics and
his social philosophy has been largely neglected. In this paper, Wicksells
most famous contribution to public nancethe unanimity voting rule for
public goods decision-makingis examined within the broader context of his

2 Wicksells deeply held beliefs and penchant for radicalism got him into trouble on numerous occasions,
including a short stint in prison for blasphemy. It is well documented that Wicksells political activism held
up his chances for securing a professorship for a number of years (Gardlund 1996).

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views on poverty, political representation, and social policy. In addition to

academic contributions to economic theory and government reports,
Wicksells popular press writings, including newspaper editorials, pamphlets,
essays, book reviews, are used to re-examine Wicksells unanimity rule
through the lens of his social philosophy.3

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WICKSELLS SOCIAL PHILOSOPHY: POPULATION AND

POVERTY
Much of the previous work on Wicksell has focused on his contributions to
the development of modern economic theory (Lindahl 1958; Musgrave 1959;
Hennipman 1982; Wagner 1988), although Uhr (1962) cautioned that an
understanding of Wicksells social philosophy was necessary to truly
appreciate his innovativeness and creativity. A self-identied progressive,
Wicksell (1967a: 88) argued that the ultimate goal . . . is equality before the
law, greatest possible liberty, and the economic well-being and peaceful cooperation of all people. His social philosophy rested on two fundamental
tenants: individualism, originating in utilitarianism, and justice. In his public
economics, Wicksell distinguished between social justice, which dealt with
the distribution of opportunities and wealth in society, and economic justice,
which attempted to guarantee that each individual received benets
commensurate with sacrices. The former was necessary to achieve the
latter, as power asymmetries would undermine the possibility of achieving
economic justice. However,
The formidable diculty lies in the discovery of the basic principles . . . the diculty
rests, rst, on the ambiguity, the relativity and the changeability of the concept of justice
itself. Each attempted solution of our problem will be necessarily colored more or less
by the general social and political philosophy of the writer, by his station in life and by
his personal sympathies and antipathies. (Wicksell 1967a: 7374)

Wicksell believed social utility was comprised of the sum of individual

utilities, where individuals had interpersonally identical utility functions
3 The writings examined here include both long available sources (Gardlund 1996; Lindahl 1958; Uhr
1962; Hennipman 1982) and more recent publications and translations (Jonung 1988; Sandelin 1988,
1997, 1999; Wagner 1988; Lundahl 2005; Hashimoto forthcoming). Fortunately, much of Wicksells
work and correspondence has been preserved in the Wicksell Archives at the University Library in
Lund, although most of Wicksells popular press writings remain accessible only in Swedish.
Increasingly, however, academic essays and book reviews are available in English, particularly through
Sandelins volumes (1997, 1999). Numerous additional translated fragments exist in other works on
Wicksell.

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e.g., that people have the same ability to enjoy life and consumption,
especially within social or income groupsand a declining marginal utility
of income, for a penny or two more per day in the hands of the workers is
of greater advantage than a penny or two in those of the propertied
classes (Wicksell 1967a: 79). These views formed the basis of his approach
to public economics, which was also strongly inuenced by J.S. Mills On
Liberty. Wicksell (1967a: 77, 79) argued, If utility is zero for each
individual member of the community, the total utility for the community
cannot be other than zero . . . No one can judge this better than the
individuals themselves or those who represent their interests in the
legislature. His public nance can thus be understood as a balancing
act, concerned with protecting the rights of individuals while simultaneously exploring pathways for social reform.
Wicksells social philosophy was directly linked to his practical concerns of
poverty, quality of life, and social alienation in Sweden. For him, these were
fundamentally rooted in the population problem. Overpopulation contributed to both physical and emotional poverty, and could be linked to most of
the social ills of the time, including crime, prostitution, and alcoholism:
With poverty, I do not only mean living in rags (that would be to restrict the
concept too much); but poor, as I see it, is each and everyone who does not
own what he necessarily needs to and also lacks a reasonable chance of
getting it (Wicksell 1999a: 86). In a public lecture to a local temperance
society in 1880, Wicksell shocked Swedish society with a call for legalized
contraception as a way to ameliorate poverty: We are poor, because there
are too many of us . . . The consequence of this is poverty (Wicksell 1999a:
95; see also Wicksell 1891: 319). While thrift, industry, and prudence, were
important for reducing poverty, population control was necessary (Wicksell
1999a: 95).
For Wicksell, the population views of Drysdale, Malthus, and Mill, as well
as those of contemporary Scandinavian writers such as Ibsen, were
reinforced by the social upheavals of the 1870s and 1880s in Sweden. These
included mass emigration and the rise of social reform movements, as shown
by temperance societies, labor unions, worker societies, womens rights
groups, and increased activism of religious societies. Concern for social
conditions and a desire to eect change led Wicksell to study economics as a
way to understand systematically and precisely what was happening in
Swedish society. More detailed discussions of the role of neo-Malthusianism
and the lasting importance of the population problem in Wicksells work can
be found in Ackerman (1933), Uhr (1962), Gardlund (1996), and Lundahl
(2005).
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WICKSELLS UNANIMITY RULE

Wicksells most enduring contribution to public economics is found in the
second essay of Finanztheoretische Untersuchungen, A New Principle of Just
Taxation (1896 [English translation 1967]). This essay provided an
economic justication of the use of the benet principle for evaluating tax
proposals and developed the unanimity voting rule for parliamentary
decision making. While Wicksell never published another major work on
public nance, he nevertheless continued to work on related topics, most
with specic applications to Sweden. These projects, published as pamphlets,
government documents, or articles in Ekonomisk Tidskrift, provide valuable
insights into Wicksells view of the practicality of the unanimity rule and
illustrate how it formed part of his broader program of social reform.
In A New Principle, Wicksell (1967a: 72) argued that taxation based on
the benet principle was most consistent with modern tax administration,
specically the parliamentary approval of taxes; previous theories of public
nance were largely awed because they relied on the assumption of the
now outdated political philosophy of absolutism (Wicksell 1967a: 82). In
contrast, the unanimity rule derived directly from Wicksells consideration of
parliamentary organization and understanding of constitutional law.
Operation of the unanimity rule required that all new expenditures be
paired with tax schemes for consideration by parliament. Representatives
would then vote on successive expenditure-tax pairs, until one received
unanimous consent. It will always be theoretically possible, and approximately so in practice, to nd a distribution of costs such that all parties
regard the expenditure as benecial and may therefore approve it
unanimously (Wicksell 1967a: 8990). Individuals or groups would have
little incentive to misrepresent their preferences, since by doing so, they
would risk that the service may not be provided at all. Further, this approach
would guarantee that any new governmental expenditure was really worth
making. For each social group, indeed each member of the community, if
possible, should be able to feel that his annual tribute is not money wasted
but is something which will bring real additional benet (Wicksell in
Gardlund 1996: 157). A variation of the tax-expenditure pairings could be
used to evaluate and modify existing government expenditures. Thus, this
system could work for nearly all governmental expenditures, excepting
certain special cases such as previously incurred national debts (Wicksell
1967a: 9395).
Recent archival and translation work has made available writings that
provide additional insight into how Wicksell viewed the unanimity rule
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within the broader context of his social reform programin particular, how
parliamentary reform and extension of the franchise were necessary steps for
creating a modern society and tax system. What is not commonly understood
is that Wicksell never abandoned the idea of the unanimity rule. He returned
to it periodically over the twenty-seven years following the publication of
Finanztheoretische Untersuchungen, and was consistently unhappy with the
reception it received. In a review of Walras Etudes DEconomie Sociale,
Wicksell complained that Walras ignored his previous work on the necessity
of considering tax-nancing decisions in the context of democratic
governments. Whereas Walras approach was to operate passively outside
the parliamentary mechanism to gain a predetermined social idea, Wicksell
(1999b: 174) emphasized the importance of working though cooperative
decision-making processes.
More informative is an unpublished response by Wicksell to a late
criticism of A New Principle. Addressing complaints that the unanimity
rule was impractical, as minority groups would always see incentives to exact
more favorable tax treatment, Wicksell stated that my claim is now only
that the degree of justice, which characterizes voluntary exchange, namely
that nobody needs to pay more for a commodity than he believes it to be
worth, should be adopted in public taxation (translated by Jonung 1988:
509). As in A New Principle, Wicksell argued that if individuals felt
themselves fairly treated in the tax-expenditure process, they would have no
incentive to veto pairings that yielded them positive net benets. Here, as
elsewhere, Wicksell placed great faith in the fairness and rationality of people
who had, themselves, been fairly treated. Thus, one crucial step for political
reform was to nd a mechanism that guaranteed fairness of treatment in a
democratically organized decision-making processes.
In 1922 in The Concept of Income as Regards Taxation, Wicksell again
defended the practicality of the unanimity rule:
Theoretically speaking, if the measure at issue entails any benet to the community,
it must necessarily be possible for the distribution of the additional (or disappearing)
sum of taxes to be organized in such a way that the result also entails an increased
benet for each individual member of society who pays any taxes at all. In practice,
of course, we shall have to accept something less satisfactory, namely, a certain
degree of protection for the rights of minorities, which can probably be achieved
most simply by requiring a qualied majority when decisions are made. This is what
I have urged in my earlier writings. (Wicksell 1997c: 218)

Wicksell returned to benet taxation and the unanimity rule the next year
(Ekonomisk Tidskrift 1923); here Wicksell sought to correct David
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Davidsons misunderstanding about the voluntariness of tax payments.

Wicksell claried that he viewed only the ratifying of tax-expenditure pairs
as voluntary. Once tax-distributions have been accepted, the payments
themselves should be compulsorily (Wicksell 1997d: 242). Incidentally,
formally speaking, according to the constitution this process is already
founded on voluntarism or self-taxation; what I have demanded is that it
should be so in reality too, so that the rights of minorities are also
protected (Wicksell 1997d: 242). More strongly than in A New
Principle, Wicksell argued that the unanimity rule is in fact practical
and complained that Davidson (among others) failed to grasp the essence
of Wicksells proposal: In my earlier writings I have attempted to show
that there are no theoretical limits to the extent that this must be possible,
as long as the issues of taxes and appropriations are treated as a connected
whole, and I do not see why it should not be possible in practice, too
(Wicksell 1997d: 242).
Later economists also characterized the unanimity rule in its absolute form
as impractical, but recognized its signicant theoretical interest (Brems 1956;
Lindahl 1958; Musgrave 1959; Buchanan and Tullock 1962).4 More recently,
economists have argued that Wicksells unanimity rule (or at least a modied
version of approximate unanimity or minority veto) can provide practical
insights into public choice analysis (Escarraz 1967; Wagner 1988; Wickman
and Lingle 2005). The reaction of Wicksells contemporaries to A New
Principle, and the subsequent rethinking of the unanimity rule can perhaps
be better understood if we examine Wicksells idea as a piece of his broader
program of social reform.
POLITICAL REPRESENTATION, VOTING, AND UNANIMITY
For Wicksell, part of the solution to alleviating poverty lay in reform of the
political system, incorporating the working and poorer classes through
universal surage and guaranteeing that they received fair treatment in the
parliamentary decision-making processes. This was not merely a political
issue, but part of a broader social issue, for As soon as we begin seriously to
regard economic phenomena as a whole and to seek for the conditions of the
welfare of the whole, consideration for the interests of the proletariat must
emerge (Wicksell 1967b: 4). However,

4 The major objection to the Wicksell proposal [marginal cost pricing] is, of course, its impracticality. His
whole theory of government nance, which is conceived as a system of voluntary exchange between the
government and taxpayers, is subject to criticism on the same grounds (Buchanan 1951: 178).

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As things are at the moment, there is hardly a country in the world where,
notwithstanding universal and equal surage, the lower ranks of the population can
secure parliamentary representation in proportion to their numbers . . . in these
circumstances, the arrangements which we have suggested would mostly serve to
protect the mass of the poorer classes against excessive tax burdens and therefore in
fact to defend the majority against the minority. (Wicksell 1967a: 95)

While a strong supporter of universal franchise and parliamentary rule,

Wicksell understood that simple majority rule decision-making may do
nothing to guarantee that all who pay taxes receive benets commensurate to
their tax payments. Further, it was entirely possible under majority rule that
newly proposed programs, which may yield signicant benets to a small
group of citizens, could fail to secure a majority of votes under many taxdistribution funding schemes. However, Wicksell (1958: 60) strongly
preferred parliamentary reform to the revolution advocated by the Marxists,
as history rescues us from throwing away in a rash t of reforming zeal,
things which although concealed by old forms, may still be full of life and
perhaps too precious to lose.
Wicksells public lectures often included discussions of surage and
expansion of the franchise as eective ways to engender political and social
reforms, for a worker was excluded from every means of control over the
use of public funds, from every decision related to whether he would always
receive satisfactory value for his sacrice (Wicksell 1896: 349; translated in
Sandelin 1988: 169). The reforms of the Swedish tax system, including the
unanimity rule, suggested by Wicksell depended on universal surage and
proportionate representation of all social classes in parliament: taxation in
the modern state has come more and more to depend upon the legislative
assembly, which is nothing if it be not the representation of the interests of
the taxpayers. It would be strange indeed if taxation by interested parties
should not result in taxation according to interest (Wicksell 1967a: 77).
In an early social reform pamphlet, Our TaxesWho Pays Them and
Who Ought to Pay Them, Wicksell laid the ground work for A New
Principle by observing that those with little representation in the political
system were bound to get the short end of the stick when it came to taxation,
for Of course in this as in everything else, it goes without saying that the
interests of those absent will be poorly served (Wicksell in Gardlund 1996:
159).5 The key was to design a parliamentary mechanism that could
5 When faced with a new tax on beer, in a letter to his friend Hjalmar Ohrvall Wicksell states I
become wild with indignation when I think about our present taxation policy . . . It is no less than robbery
of the poorer classes, carried out, so they say hypocritically, in the cause of temperance (Gardlund 1996:
233).

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accomplish fairer treatment. In a letter to a friend, Wicksell explained his

approach: I am glad you liked my pamphlet [Our Taxes]: I have recently
nished another similar one for Verlandi (dealing more particularly with
income tax) and now I shall set to work on my longer book covering the
whole subject of taxes (Wicksell in Gardlund 1996: 158159). This work
formed the base of Wicksells dissertation, On the Theory of Tax
Incidence, which he published together with A New Principle, and a
history of the Swedish tax system as Finanztheoretische Untersuchungen
(Wicksell 1896).6
Even regarding the rather theoretical and abstract subject of tax incidence,
Wicksell was driven by his desire to achieve social reforms. In On the
Theory of Tax Incidence, Wicksell (1997a) demonstrated how indirect taxes
predominantly fall upon the poorer classes despite their being a majority of
the population. It is quite clear that originally the incidence of taxation
interested [Wicksell] for political reasons (Gardlund 1996: 160). However,
tax justice and tax incidence were dierent things. Wicksell (1967a: 73)
argued: the latter, there is little doubt concerning the principles to be
applied since they coincide with the basic laws of economic theory. Only the
deciencies of economic theory itself made a practicable and realistic
solution of incidence questions dicult. Justice in taxation is an outcome
that parliamentary reform could best secure, both through scal transparency (e.g. a thorough understanding of tax incidence), and by guaranteeing
each person should not have to pay for public goods and services in excess of
the benets received.
Reform of the legal and economic structure of society was necessary to
guarantee the greatest possible social gain (Wicksell 1967b: 5). However,
while absolute unanimity may achieve justice universally, practically-speaking, approximate unanimity, or a minority right of veto, were not bad
alternatives (Wicksell 1967a: 92, 108).7 Things would be entirely dierent if,
in tax legislation, the minorities possessed the right to veto any public
expenditure the utility of which they did not expect to correspond to the
outlay required of them (Wicksell 1967a: 96).8
6 Henrikkson (1991) argued that the last essay of Finanztheoretische Untersuchungen was, in fact, historical
evidence that tax burdens would be shifted onto those with limited political power or representation. The
purported goal of the essay was to show that the tax system evolved over time, and that current or past
injustices could be corrected. Nothing in the tax system was sacred by its existence, as the system came into
being through a series of negotiated compromises.
7 Justice must be done to all. I can see no better and indeed no other way of accomplishing this than to
insist upon approximate parliamentary unanimity of decisions (Wicksell 1967a: 108).
8 Wicksell (1967a: 91n) stated, It is implicitly assumed here that the legislative assembly is truly
representative of all interest groups within the people. We shall presently discuss the conditions for this

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It is implicitly assumed here that the legislative assembly is truly representative of all
interest groups within the people. We shall presently discuss the conditions for this
goal to be fully attained. Existing legislative bodies are mostly far removed from this
ideal. But this does not invalidate our conclusions. On the contrary, the veto right of
the minority clearly is the more necessary the less the so-called representative body
reects the true interest groupings of the population. (Wicksell 1967a: 91n)

In the third essay of Finanztheoretische Untersuchungen, Wicksell built his

case for unanimous decision-making on historical grounds, for, in Sweden,
while farmers were generally not represented [in the parliament], they
maintained the most important right: new taxes could not be forced on them
against their will (Wicksell 1896: 181; translated by Wager 1988: 158). Based
on a detailed analysis of the evolution and legality of minority veto Wicksell
concluded: I believe I have shown suciently that such a right can be put
into eect for every class, without hurting anyones rightful interest
(Wicksell 1896: 350; translated by Wagner 1988: 160).
INCOME REDISTRIBUTION AS PREREQUISTE TO SOCIAL
REFORM
Social reform was a multi-step process for Wicksell. He argued that an
equitable distribution of income and wealth was a necessary prerequisite to
adoption of the unanimity rule. Otherwise, power asymmetries would
undermine the results, as justice in taxation presupposes justice in the
existing distribution of property and income (Wicksell 1967a: 108).9 For
Wicksell, the solution lay in the steeply progressive taxation of inheritances.
Wicksell planned to transfer capital raised through the taxation of
inheritances to the young of societythe funds to be used to reinvest in
the capital stock through homeownership, the starting of a business, or the
funding of higher education. As early as the 1893, Wicksell argued in favor of
this scheme, as wealth could never endure beyond the lifetime of one man;
each new generation would see a redistribution of property, and it could
easily be arranged that everyone had share (Wicksell in Gardlund 1996:

goal to be fully attained. Existing legislative bodies are mostly far removed from this ideal. But this does
not invalidate our conclusions. On the contrary, the veto right of the minority clearly is the more necessary
the less the so-called representative body reects the true interest groupings of the population.
9 This is no small matter for Wicksell who articulates the requirement nearly identically some twenty years
later: the very concept of taxation presupposes that all incomes are equally justied (Wicksell 1997d:
243). And, as Lindahl paraphrased Wicksell: I agreed that justice in taxation is inextricably linked with
justice in distribution of property, since it would obviously be nonsense to speak of a just portion of an
unjust whole (Lindahl in Silvestre 2003: 531).

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149). That a leveling out of wealth precedes tax reforms ultimately became a
hallmark of the Scandinavian public nance literature.10
The particular appeal of conscatory inheritance taxation for Wicksell was
that it conformed with the protection of property by taxing it in the
transition between owners.
To achieve a complete radical reform the only point of attackprovided we still
want to keep an individualistic economywould have to be at the laws of
inheritance. Any violation of a previously established right would necessarily be
odious. The time to correct social injustice is at the moment when property, in the
ordinary course of nature, becomes ownerless. (Wicksell in Gardlund 1996: 156)

This did not necessarily violate existing property rights. The inheritance tax
is a portion of the property left by the deceased that belongs to the
community . . . the society asserts a right of possession (Wicksell 1997b: 121).
Society is able to claim this right, as inheritance exists only by the sanction of
the state.
However, while Wicksell was open to the redenition of property rights, he
felt that such a process should be undertaken cautiously. The dicult
question [is] of how far the taxing authority should go in meeting
the demands not only of political but of social justice. This is the question
of the extent to which one should follow the explicit purpose of modifying
the existing income distribution, which is taken as given in the context of
political justice (Wicksell 1967a: 73). Wicksell felt it was important to
preserve a desirable stability in social relationships by limiting changes to
property rights to only those legally and historically justiable:
Society has both the right and the duty to revise the existing property structure. It
would be obviously asking too much to expect such revision ever to be carried out if
it were to be made dependent upon the agreement of the persons primarily involved.
It is nevertheless clear that one can scarcely proceed cautiously enough in such
matters . . . no measure should be carried out unless it have the prior unanimous or
at any rate overwhelming support of the whole people. (Wicksell 1967a: 109)

To proceed, the revision of property rights ought to be independent of taxnancing decisions, for it was one thing to abrogate certain property rights
once and for all, and another to interfere with them arbitrarily.
10 Groves (1939: 754) stated, In taxation literature, their [Scandinavians] outstanding works are Knut
Wicksells Finanztheoretische Untersuchungen (1896) and Erik Lindahls Gerechtigkeit der Besteuerung
(1919). Both of these are abstract marginal studies in taxation equity; Lindahl reaches the conclusion that
just taxes are impossible without a just distribution of wealth and political power.

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Wicksell was genuinely cautious of free market outcomes, as they depended

on the distribution of wealth and power in society. He believed that social
leveling of opportunity would yield greater overall utility for society than free
competition (Wicksell 1967b: 7679). This was in addition to a leveling of
wealth, previously discussed. Wicksell explained his position in Alliances
between Workers and Employers (1902):
As a matter of fact, all arguments in favor of free competition rest on one tacit
assumption, which, however, corresponds but little to reality, namely that from the
beginning all men are equal. If that were so, everyone would be equipped with the
same working power, the same education, and, above all, the same economic
assets . . . but if all conditions are basically unequal, if some people have good hands
from the beginning and other hold only low cards, free competition does nothing to
stop the former from winning every trick while the latter pay the table. (Translated
in Gardlund 1996: 208209)

Similar views of competition are found throughout Wicksells work. In his

Lectures on Political Economy, Wicksell (1967b) argued that public enterprise
could better achieve distribution of societys resources than private
monopoly. Wicksells notes also show signs of a critical attitude towards
the laissez-faire doctrine . . . After reading Cairnes Political Essays (1873), he
condemns the idea that social institutions spontaneously arrange themselves
to the general good as a pretentious sophism lacking any scientic base
(Gardlund 1996: 105).
Thus, Wicksell was not adverse to recommending regulations or protective
taris, depending on the social and economic conditions of those concerned.
In addition to such strategically-targeted government interventions in the
economy, Wicksell supported a number of specic social policy reforms
designed to secure a more even distribution of opportunity and income
(Lindahl 1958: 36). Many of these were laid out in Wicksells (1905) essay,
The Socialist State and Contemporary Society. Of primary importance
was ensuring access to education through public elementary schools and a
superstructure of continuation schools, trade schools and academic
institutions, available to all (Wicksell in Gardlund 1996: 210). Wicksell
also advocated creating social security and national health insurance
programs (Wicksell 1905; see translation in Uhr 1951: 835; Wicksell 1967a:
98). While a naturally impatient personality, Wicksell was very concerned
that a socialist economy be built gradually with the support of the general
population, rather than imposed by government (Uhr 1991: 84).
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An ingenious application of the unanimity rule was Wicksells plan to price

public services such as rail transport or the sending of telegraphs at marginal
cost to achieve better social use of resources. Building on the arguments in
favor of the benet principle and unanimity rule, Wicksell suggested dividing
the costs of public utilities into two categories: xed and maintenance costs
and direct user costs. In these cases, marginal costs were quite small
compared with overall costs. Wicksell proposed that the xed and
maintenance costs would be paid through application of the unanimity rule,
pairing tax-expenditure decisions for parliamentary vote. The marginal costs
would be paid directly by users. By covering xed costs through taxdistributions identied through the unanimity rule, and then charging a
usage fee equal to marginal cost, many public goods and services such as rail
transportation and telegraph and postal services, would be more accessible to
the working and poorer classes. Wicksell (1967a: 100) believed This
procedure would nearly always lead to a considerable, and often enormous,
increase in the use and hence in the total utility of the public service, to the
advantage not only of the national economy as a whole but also of the
economic condition of each individual.
The specic aim of such recommendations was improvement of the
situation of impoverished and working-class families. However, Wicksell
recognized that marginal cost pricing may also result in many goods and
services being brought under the umbrella of the government that had
previously been supplied privately, and felt this corresponding expansion
would be socially and economically benecial (Wicksell 1967a: 99105).
Certainly, marginal-cost pricing would secure wider participation, especially of the working classes, in the various welfare activities of the state and
specically a greater utilization of the means of transportthis would, in my
opinion, represent a cultural mission of the rst order . . . where such benets
can be attained without any sacrice to anyone, no means to achieve them
should remain untried (Wicksell 1967a: 105). Buchanan later argued that
Wicksells scheme had additional theoretical benets, avoiding interpersonal
utility comparisons and the necessity for redistribution. This made Wicksells
scheme superior to those put forward by Pigou and Marshall (Buchanan
1951).
THE UNANIMITY RULES PLACE WITHIN WICKSELLS SOCIAL
FRAMEWORK
The unanimity rule formed an integral part of Wicksells broader plan of
social reform, accomplishing specic policy objectives and contributing to a
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more just and equal society. For Wicksell, social justice and economic justice
went hand-in-hand under the umbrella of the unanimity rule. Wicksell
believed that poverty was a drain on society and a hindrance to progress:
most people barely do more in their entire lifetime than to earn bread for
themselves and their families, and if the progress of civilization depended on
their activities, it could certainly not have come far. The world does not
advance of its own accord; instead, if it is to go forward at all, it must be
driven on (Wicksell 1999: 97). Reform required action and individuals
willing to undertake such action.
Optimistic that the future could hold better things for the poor of society,
Wicksell remained concerned about Swedens transition from a government
controlled by the economic and political elite to a more democratic
parliamentary system, where the working and poorer classes would form
the majority. Wicksells greatest fear was that in the transition to universal
surage, workers may seek to redress centuries of oppression.
If once the lower classes are denitely in possession of the power to legislate and tax,
there will certainly be a danger that they may behave no more unselshly than those
classes which have so far been in power . . . there will be a danger that the poorer
classes in power may impose the bulk of taxes upon the rich and may at the same
time be so reckless and extravagant in approving public expenditures . . . that the
nations mobile capital may soon be squandered fruitlessly. This may well break the
lever of progress. (Wicksell 1967a: 95)

One way to avoid this would be through the adoption of the unanimity rule for
parliamentary decision making; unanimous decision-making or minority veto
rights therefore operated as both a transitional mechanism and one of lasting
eectiveness. While ostensibly established to protect the lower classes from
regressive indirect taxation, the unanimity rule or right of minority veto, once
established, would protect society from abuses of power on all sides, for the
only certain guarantee against . . . abuses of power lies in the principle of
unanimity and voluntary consent in the approval of taxes (Wicksell 1967a:
95). Unanimity therefore guaranteed justice in that the minority was always
protected from the majority. In terms of practical political considerations, it
may be pointed out that the arrangements here proposed are equally suitable
for protecting the interests of the politically defenseless classes at the upper and
lower end of the scale (Wicksell 1967a: 95).
As intimated, the secondary and very practical implication of the
unanimity rule was that Swedens capital stock would be protected,
particularly if such reforms were coupled with Wicksells inheritance tax
scheme. Uhr (1962) has argued that it was not Wicksells goal to protect the
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wealthy or propertied classes with the unanimity rule. Rather, Wicksell

sought to enshrine Swedens capital stock through the creation of a capital
fund, protected by unanimity decision making, for there is no doubt that
revenues from the inheritance tax should not be consumed by the community
for its current expenses, but should rather be invested in order to preserve
their status as wealth (Wicksell 1997d: 220).11 Without a rmly established
mechanism in place, there was no reason to expect the lower classes to refrain
from heavy taxation (or conscation) of the capital stock, to the serious
detriment of Swedens long run economic potential.
CONCLUSION
In a New Principle of Just Taxation, Wicksell envisioned the mechanisms
of a tax system created through universal franchise and designed to promote
justice in taxation. Wicksell also proposed specic reformsfree public
education, social and health insurance programs, marginal cost pricing of
trains and telephones, progressive taxation of income, and steeply
progressive taxation of inheritances to create a fund for students and young
workers to draw upon in order to establish themselves in life. These ideas
appear repeatedly in his public lectures and newspaper articles, as well in his
academic and government writings until his death in 1926. The recent
publication in English of many Wicksell writings allows us to take into
account a wealth of additional information, when trying to understand his
unanimity rule.
Certainly, we can conclude that Wicksell was an innovative social thinker
who had an enormous amount to say about social policy, public nance, and
political voting schemes. Much of the essential argument of A New
Principle is that theories of taxation must take into account the decision
mechanisms of representative parliamentary government and voting
strategies.
The science of public nance should always keep these political conditions clearly in
mind. Instead of expecting guidance from a doctrine of taxation that is based on the
political philosophy of by-gone ages, it should instead endeavor to unlock the
mysteries of the spirit of progress and development. The movement that is afoot
cannot be stopped, but it might be guided in a direction such that the desired goal is
fully attained to the satisfaction of all. (Wicksell 1967a, p. 87)

11 Lindahl makes a similar claim about Wicksell: he believed that inheritances comprised part of the nations
capital stock; the governments share of an inheritance should be treated as such and not spent on current
consumption (Lindahl 1958: 36; see also Wicksell 1997c: 219).

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Thus, despite Wicksells claim that his proposal may be classied as armchair
speculation,and which Ohlin (1926: 505) described as evidence of
Wicksells lack of contact with the actual worldthe unanimity rule can
be considered a practical solution to the problem of justice in taxation, and it is
closely linked with the development of Wicksells social reform policy. It was
not, as it has been come to be understood by some, a mechanism to protect the
status quo and status quo distribution of income, wealth, and power.
Much can be gained from examining Wicksells unanimity rule as part of
his broader social reform program, rather than treating Wicksells
contributions as piecemeal or as clever solutions to disjointed puzzles. What
we can conclude from a more thorough examination of Wicksells writings
are that, rst, Wicksells presentation of the unanimity rule in Finanztheoretische Untersuchungen was meant as the starting point for a debate on
parliamentary reform in Sweden. That no one took him up on the debate is
unfortunate, especially from the view of future public nance and public
choice scholars. However, Wicksell never abandoned the idea of the
unanimity rule, continuing to defend its practicality throughout his life.
Second, the unanimity rule and Wicksells public nance recommendations
were meant to address specic public sector shortcomings in a practical way.
Considered as a wholeparliamentary reform, universal franchise, the
unanimity rule, schemes such as marginal cost pricingWicksell suggested a
way to overhaul the Swedish public sector system that would reduce poverty,
improve the chances of the poor and working class for competing in a
competitive society, and yet at the same time, protect Swedens capital stock
and property rights structure. Third, the veto rule has implications today for
the design of governmental decision-making, and is perhaps underconsidered in the public choice literature. And fourth, Wicksell believed
that social change could be eected in a way that conformed to a guiding
principle of both social and economic justice for all citizens.

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