Great Economists Since Petty and Boisguilbert
Edited by Gilbert Faccarello and Heinz D. Kurz
Chapter 82: Gunnar Myrdal (1898–1987)
When Gunnar Myrdal (born 1898) had passed away in 1987, the New York Times wrote: Mr. Myrdal has been called the leading economist and social scientist of his epoch. Statesman, reformer, dissenter, pacifist and foe of inequality, an architect of the Swedish welfare state, he literally left his mark in a footnote to history – the famous footnote 11 to the United States Supreme Court’s 1954 ruling that segregation in public schools was unconstitutional. (New York Times, 18 May 1987) It might be disputed that Myrdal was the leading economist in his epoch, which lasted for almost half a century from the early 1930s onwards. Yet he was certainly one of the most prominent representatives and critics of his discipline. His success derived largely from applying the principle of circular and cumulative causation to different economic and social contexts. Myrdal was a student of Gustav Cassel, whom he succeeded as professor of political economy and public finance at the University of Stockholm in 1933. In his doctoral dissertation on “price formation and changeability”, Myrdal (1927) attempted to transform Cassel’s static framework of general equilibrium analysis into a dynamic theory. Myrdal’s innovation was to include expectations in the set of data that determine prices, in addition to tastes, technology and factor endowments. Various constellations of expectations and their interaction in the markets lead to different disequilibria and to multiple equilibria. This became a recurrent theme in Myrdal’s later work, and it was the first step towards the conceptualization of circular and cumulative...
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