Benny Carlson

In 1962, the first thorough investigation into the expansion of the Swedish public sector was presented as a doctoral dissertation by Erik Höök. This article investigates the origin and reception of this thesis. Höök’s work has been consid ered a standard work of financial statistics. However, it attracted heavy criticism in the media and from other academics for having explained the public sector expansion as being almost exclusively driven by demand, neglecting the supply side and the role of politicians. Liberals, Conservatives and Social Democrats all reacted – although for different reasons – against the idea that an ever-growing welfare state was fated. The debate thus revolved around what would eventually, by James Buchanan, be designated as responsive (demand-driven) and excessive (supply-driven) public sector expansion. Höök was furthermore optimistic about the prospects of increased public sector productivity and sceptical towards Ingvar Svennilson’s ‘Iron Law of Costs’, a precursor of William Baumol’s Cost Disease.