Irving Fisher
Irving Fisher was one of the most prolific economists of the 20th century, both because of the magnitude of his contribution and his ability to relate his ideas to readers with a comprehensible and pithy writing style. Says the author of the article “…graduate economics students, who to this day still study [Fisher’s Theory of Interest, one of his most important works], often find that they can read - and understand - half the book in one sitting.”
According to the article, Fisher’s contributions to economics lie in his work on money and interest, and also in his sensible use of mathematics to sharpen his analysis. In the book just mentioned, Fisher’s Theory of Interest, he fleshed out what continues to be the mainstream conception of interest rates - that they are indexes “‘of a community’s preference for a dollar of present [income] over a dollar of future income.’” Furthermore, the value of capital is the income it produces - net of initial costs and depreciation - vis a vis the interest rate. Finally, with respect to interest rates, Fisher was the first to make a clear distinction between the real and nominal interest rates and to show that the former was equal to the latter less inflation. All of these notions are central to how economists conceptualize interest and the relationship between capital and income.
Fisher was also one of the first to construct and utilize price indices, and no doubt this was empirically useful in his work on the quantity theory of money, laying the groundwork that allowed the monetarists like Friedman and his ilk to interrogate Keynesianism to near-revolutionary effect in the 1960s. The equation of exchange is a very useful identity, formulated by Fisher, that can be used to ‘check the math’ on a variety of statements about economic policy effects. It states that MV = PT, where M is the stock of money, V the velocity (or circulation rate) of money, P is the price level, and T is the total volume of transactions (we now use y instead of T, where y is stands for real income). If any one variable is changed, at least one of the others must change to maintain the equality.
From the author’s description, Fisher was something of a jack-of-all-trades and a man of many firsts. He earned the first PhD in economics from Yale before the ivy league school even had an economics program. He had a somewhat dubious social agenda, being a supporter of eugenics, Prohibition, and “peace.” He also lost some face when, during the Great Depression, he insisted that recovery was imminent for several years. (Incidentally, Fisher himself lost a great deal of wealth in the crash of 1929).
Overall, the article was interesting but too much of a gloss to glean too much information. I was, however, intrigued by the suggestion that he was a good writer, and since Fisher’s work is older, it is generally available for free on the internet. For instance, you may find Fisher’s Theory of Interest here.
Source: “Biography of Irving Fisher.” The Concise Enyclopedia of Economics. Liberty Fund, Inc. Ed. David R. Henderson. Library of Economics and Liberty. 18 January, 2008. http://www.econlib.org/library/Enc/bios/Fisher.html
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