Wicksell, Pareto and Public Choice

Abstract

No individual in the history of public economics has been subject to more contentious discussion than Knut Wicksell – and perhaps no concept subjected to more diverse interpretation than Wicksell’s unanimity rule. The story begins in 1896 with the publication of Wicksell’s public finance treatise, Finanztheoretische Untersuchungen, and starts to take shape in 1906 with the publication of Pareto’s Manual of Political Economy. The crux of the matter hinges on the relationship between Wicksell’s unanimity rule and Pareto’s optimality. This article examines Knut Wicksell’s one-sided debate with Vilfredo Pareto on issues in welfare economics and considers the trajectory of their economic ideas that led to an eventual convergence in public choice.