Great Economic Thinkers from the Classicals to the Moderns by Schefold Bertram;

Author:Schefold, Bertram;
Language: eng
Format: epub
Publisher: Taylor & Francis Group
Published: 2016-11-08T16:00:00+00:00

p.216

Irving Fisher’s The Nature of Capital and Income

By the end of the Second World War, at the very latest, the United States had assumed a stance of global economic supremacy. In the majority of areas, technological superiority corresponded to scientific primacy. Only in specific fields do American universities find it necessary to follow new publications in French, German, or Italian and to take account of the research conducted in languages which – combined with Latin and Greek – had formed the European canon of language during the eighteenth and nineteenth centuries.

Shortly before the end of the nineteenth century, the United States had joined the ranks of the great powers with its victory over Spain in the Cuban war. The dynamic of economic growth, the inventiveness of technicians, and even American science gradually began to command Europe’s respect. An upheaval in ways of thinking and living was here beginning, which would increasingly determine the character of modern development in the twentieth century. European ideas about education and artistic forms of expression which American students brought back from European universities and academies came to conflict with ‘the American way of life’.

Institutionalism, related to and connected with the German Historical School, was one of the strongest tendencies in the United States. Irving Fisher was prominent among those who rejected this trend, placing theoretical and applied economics resolutely on a quantitative basis and thus establishing the modern form of economics.

Some view the victory which theoretical economics achieved at the beginning of the twentieth century to be too complete. I regret that despite such an extended period of study, many German students no longer receive any introduction to the methods and procedures of the humanities; often, they also lack the linguistic and cultural-historical background which is indispensable for understanding the particular economic organization of specific countries and eras. However, even in America, an older generation remains aware that there was a price to be paid for the development of modern theory and related fields of economics; that, in accord with the law of creative destruction, space first of all had to be created for them. Fisher himself symbolised the transition by becoming president of the American Economic Association in 1918, when Ely and other founder members who had studied in Germany still controlled it, and embodied the connection between American Institutionalism and the German Historical School.

Although Fisher was very versatile and also had literary interests, he was primarily inclined to a natural scientific and technical way of thinking. He had an excellent knowledge of mathematics and physics, which he cultivated his entire life – even in advanced age, he discussed the Theory of Relativity with Einstein. In his well-known dissertation from 1892 (Mathematical Investigations in the Theory of Value and Prices), he hit upon the original idea of representing the magnitudes of a general equilibrium, hence quantities, prices, marginal utilities, and so on, for different producers and consumers in an apparatus which functioned as a kind of analogue computer involving the basic laws of economic

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