Karl Gustav Cassel (20 October 1866 – 14 January 1945) was a
Swedish
Swedish or ' may refer to:
Anything from or related to Sweden, a country in Northern Europe. Or, specifically:
* Swedish language, a North Germanic language spoken primarily in Sweden and Finland
** Swedish alphabet, the official alphabet used by ...
economist
An economist is a professional and practitioner in the social sciences, social science discipline of economics.
The individual may also study, develop, and apply theories and concepts from economics and write about economic policy. Within this ...
and
professor
Professor (commonly abbreviated as Prof.) is an Academy, academic rank at university, universities and other post-secondary education and research institutions in most countries. Literally, ''professor'' derives from Latin as a "person who pr ...
of
economics
Economics () is the social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services.
Economics focuses on the behaviour and intera ...
at
Stockholm University
Stockholm University ( sv, Stockholms universitet) is a public research university in Stockholm, Sweden, founded as a college in 1878, with university status since 1960. With over 33,000 students at four different faculties: law, humanities, so ...
.
Work
Cassel's perspective on economic reality, and especially on the role of interest, was rooted in
British neoclassicism and in the nascent Swedish schools. He is perhaps best known through
John Maynard Keynes
John Maynard Keynes, 1st Baron Keynes, ( ; 5 June 1883 – 21 April 1946), was an English economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. Originally trained in ...
's ''
A Tract on Monetary Reform
''A Tract on Monetary Reform'' is a book by John Maynard Keynes, published in 1923. Keynes presented an argument in favor of a policy that would try to stabilize the domestic price level. He argued that the Bank of England had the policy tools avai ...
'' (1923), in which he raised the idea of
purchasing power parity
Purchasing power parity (PPP) is the measurement of prices in different countries that uses the prices of specific goods to compare the absolute purchasing power of the countries' currency, currencies. PPP is effectively the ratio of the price of ...
.
"Cassel was beyond doubt one of the outstanding figures in economic science during the inter-war period. His authority was second only to that of Lord
Keynes
John Maynard Keynes, 1st Baron Keynes, ( ; 5 June 1883 – 21 April 1946), was an English economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. Originally trained in m ...
, and his advice was eagerly sought on many occasions by his own Government and by foreign Governments."
He was also a founding member of the Swedish school of economics, along with
Knut Wicksell
Johan Gustaf Knut Wicksell (December 20, 1851 – May 3, 1926) was a leading Swedish economist of the Stockholm school. His economic contributions would influence both the Keynesian and Austrian schools of economic thought. He was married to th ...
and
David Davidson. Cassel came to economics from mathematics. He earned an advanced degree in mathematics from
Uppsala University
Uppsala University ( sv, Uppsala universitet) is a public university, public research university in Uppsala, Sweden. Founded in 1477, it is the List of universities in Sweden, oldest university in Sweden and the Nordic countries still in opera ...
and was made professor at
Stockholm University
Stockholm University ( sv, Stockholms universitet) is a public research university in Stockholm, Sweden, founded as a college in 1878, with university status since 1960. With over 33,000 students at four different faculties: law, humanities, so ...
during the late 1890s but went to Germany before the turn of the century to study economics, publishing papers spanning just under forty years.
Following the end of WWI Gustav Cassel was actively involved in discussions on possible ways of restoring the
gold standard
A gold standard is a monetary system in which the standard economic unit of account is based on a fixed quantity of gold. The gold standard was the basis for the international monetary system from the 1870s to the early 1920s, and from the la ...
, which would automatically restore the system of
fixed exchange rates among participating nations. The stability of exchange rates was widely believed to be crucial for restoring the international trade and for its further stable and balanced growth. The question, which Gustav Cassel tried to answer in his works written in the context of those discussions, was how to determine the appropriate level at which exchange rates were to be fixed during the restoration of the system of fixed exchange rates. His advice was to fix exchange rates at the level corresponding to the
purchasing power parity
Purchasing power parity (PPP) is the measurement of prices in different countries that uses the prices of specific goods to compare the absolute purchasing power of the countries' currency, currencies. PPP is effectively the ratio of the price of ...
, as he believed that this would prevent trade imbalances between trading nations. PPP doctrine proposed by Cassel was not really a positive theory of exchange rate determination (as Cassel was perfectly aware of numerous factors that prevent exchange rates from stabilizing at PPP level if allowed to float), but rather a normative policy advice, formulated in the context of discussions on returning to the
fixed exchange rates system.
He also worked on the German reparations problem. He was a member of many committees dealing with matters of state in Sweden and devoted much labour to the creation of a better system of budget exposition and control (1905–21). He was one of the Swedish representatives at the
International Chamber of Commerce
The International Chamber of Commerce (ICC; French: ''Chambre de commerce internationale'') is the largest, most representative business organization in the world. Its over 45 million members in over 100 countries have interests spanning every s ...
meeting in
London
London is the capital and largest city of England and the United Kingdom, with a population of just under 9 million. It stands on the River Thames in south-east England at the head of a estuary down to the North Sea, and has been a majo ...
in 1921. He became a member of Svenska Vetenskapsakademien and correspondent for Sweden to the
Royal Economic Society
The Royal Economic Society (RES) is a professional association that promotes the study of economic science in academia, government service, banking, industry, and public affairs. Originally established in 1890 as the British Economic Association, ...
.
In addition to his books in
Swedish
Swedish or ' may refer to:
Anything from or related to Sweden, a country in Northern Europe. Or, specifically:
* Swedish language, a North Germanic language spoken primarily in Sweden and Finland
** Swedish alphabet, the official alphabet used by ...
, he published the following works in other languages: ''Das Recht auf den vollen Arbeitsertrag'' (1900), ''The Nature and Necessity of Interest'' (1903), ''Theoretische Sozialökonomie'' (1919). His ''Memorandum on the World's Monetary Problems'', published by the
League of Nations
The League of Nations (french: link=no, Société des Nations ) was the first worldwide intergovernmental organisation whose principal mission was to maintain world peace. It was founded on 10 January 1920 by the Paris Peace Conference that ...
for the International Financial Conference in
Brussels
Brussels (french: Bruxelles or ; nl, Brussel ), officially the Brussels-Capital Region (All text and all but one graphic show the English name as Brussels-Capital Region.) (french: link=no, Région de Bruxelles-Capitale; nl, link=no, Bruss ...
in 1920, attracted widespread attention.
Some of his notable students include
Nobel Prize in Economics
The Nobel Memorial Prize in Economic Sciences, officially the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel ( sv, Sveriges riksbanks pris i ekonomisk vetenskap till Alfred Nobels minne), is an economics award administered ...
laureates
Bertil Ohlin
Bertil Gotthard Ohlin () (23 April 1899 – 3 August 1979) was a Swedish economist and politician. He was a professor of economics at the Stockholm School of Economics from 1929 to 1965. He was also leader of the People's Party, a social-liberal ...
and
Gunnar Myrdal
Karl Gunnar Myrdal ( ; ; 6 December 1898 – 17 May 1987) was a Swedish economist and sociologist. In 1974, he received the Nobel Memorial Prize in Economic Sciences along with Friedrich Hayek for "their pioneering work in the theory of money a ...
, and the future
Moderate Party
The Moderate Party ( sv, Moderata samlingspartiet , ; M), commonly referred to as the Moderates ( ), is a liberal-conservative political party in Sweden. The party generally supports tax cuts, the free market, civil liberties and economic liber ...
leader
Gösta Bagge
Gösta Adolfsson Bagge (27 May 1882 – 3 January 1951) was a Swedish professor of economics and a conservative politician, and leader of the National Organization of the Right from 1935 to 1944.
Biography
Bagge was born in Stockholm and en ...
.
Notes
External links
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{{DEFAULTSORT:Cassel, Gustav
1866 births
1945 deaths
Uppsala University alumni
Stockholm University faculty
Swedish economists
Monetary economists
Stockholm University alumni
Financial economists
Macroeconomists