Davidson, David

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Davidson, David

The Swedish economist David Davidson (1854–1942) established his reputation with the publication of his dissertation, Bidrag till Iäran om de ekonomisha lagarna för kapitalbildningen (“Contributions to the Doctrine of the Laws of Capital Formation” 1878). Written at the completion of his law studies at the University of Uppsala (1871–1877), the book made him, with Gustav Cassel and Knut Wicksell, one of the founders of neoclassical economics in Sweden.

Although the main part of the book is devoted to an analysis of the concept of capital along classical lines, the second part is an attempt to base an economic theory upon the structure of wants. Thus the main part of the book continues the tradition of Turgot, Adam Smith, F. B. W. Hermann, and others, whereas the second part shows the strong influence of Carl Menger. Davidson accepted Menger’s theory of subjective value, a doctrine implying that wants are measurable, that the wants of individual consumers are comparable, and that economic activity represents a striving to maximize utility (“the value of things”). There is also a trace of marginalistic reasoning in the book.

Davidson’s discussion of capital formation emphasizes the factors that determine saving, whereas investment is given little attention. Among the factors that influence saving, he mentioned provision for one’s family, provision for old age, the size of one’s income, and the efficiency of credit institutions. He did not treat the rate of interest. His views on capital have certain similarities with those of Eugen von Bohm-Bawerk, who was also a student of Menger’s.

Davidson’s next book, Bidrag till jordranteteoriens historia (“Contributions to the Theory of Rent” 1880), attempts to show, among other things, that the classical form of the doctrine of rent was developed before Ricardo (for example, by West). This book was responsible for stimulating Davidson’s strong interest in Ricardo, and his theoretical work after this point was, to a large extent, involved with analyses of Ricardo. Davidson also published works on monetary and fiscal theory (1886; 1889).

In 1899 he made his major contribution to the development of economics with the founding of the Ekonomisk tidskrift, Sweden’s first scientific economic journal. He served as editor of the journal until 1939, and from 1900 on published almost all his own writings in it. Davidson was often involved in controversies with Cassel and Wicksell; Wicksell acknowledged the extent to which his own ideas were developed as a result of sharpening his wits against Davidson’s.

Davidson’s writing was characterized by its analytical rigor. An example of the kind of analytical work identified with him is his concept of “stable money value.” He saw stable money as something that could be achieved by decreasing the price level during times of increasing productivity. Later, he also developed the idea of an “absolute money value,” but this does not seem to have been a fruitful one.

Davidson was appointed professor of economics and public finance at the University of Uppsala in 1890. One of his students was Per Jacobsson, later president of the International Monetary Fund.

Karl Gustav Landgren

[For the historical context of Davidson’s work, see the biographies ofCassel; Menger; Ricardo; Smith, Adam; Turgot; West; Wicksell.]