Wagner's Law
Encyclopedia
Wagner's law, also known as the law of increasing state spending
, is a principle named after the German economist
Adolph Wagner
(1835-1917). The law predicts that the development of an industrial economy will be accompanied by an increased share of public expenditure in gross national product:
Wagner's law suggests that a welfare state
evolves from free market capitalism due to the population voting for ever-increasing social services. Neo-Keynesians and socialists often urge governments to emulate modern welfare states like Sweden
. In spite of some ambiguity, Wagner's statement in formal terms has been interpreted by Richard Musgrave
as follows:
Government spending
Government spending includes all government consumption, investment but excludes transfer payments made by a state. Government acquisition of goods and services for current use to directly satisfy individual or collective needs of the members of the community is classed as government final...
, is a principle named after the German economist
Economist
An economist is a professional in the social science discipline of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy...
Adolph Wagner
Adolph Wagner
Adolph Wagner was a German economist and politician, a leading Kathedersozialist and public finance scholar and advocate of Agrarianism...
(1835-1917). The law predicts that the development of an industrial economy will be accompanied by an increased share of public expenditure in gross national product:
Wagner's law suggests that a welfare state
Welfare state
A welfare state is a "concept of government in which the state plays a key role in the protection and promotion of the economic and social well-being of its citizens. It is based on the principles of equality of opportunity, equitable distribution of wealth, and public responsibility for those...
evolves from free market capitalism due to the population voting for ever-increasing social services. Neo-Keynesians and socialists often urge governments to emulate modern welfare states like Sweden
Sweden
Sweden , officially the Kingdom of Sweden , is a Nordic country on the Scandinavian Peninsula in Northern Europe. Sweden borders with Norway and Finland and is connected to Denmark by a bridge-tunnel across the Öresund....
. In spite of some ambiguity, Wagner's statement in formal terms has been interpreted by Richard Musgrave
Richard Musgrave
Richard Abel Musgrave was an American economist of German heritage. His most cited work is The Theory of Public Finance , described as "the first English-language treatise in the field."-Life:...
as follows: