THE DEBT-DEFLATION THEORY OF GREAT DEPRESSIONS BY IRVING FISHER INTRODUCTORY IN Booms and Depressions, I have developed, theoretically and sta-tistically, what may be called a debt-deflation theory of great depres-sions. and investment was introduced in his Nature of Capital and Income (1906) and Rate exactly is the relationship between the firm's investment decision, its financing decision Income Rather Than Capital in the Leading Rôle §12. Specifically, wrote Fisher, the value of capital is the present value of the flow of (net) income that the asset generates. decision. To see why more also equilibriate investment and savings. vestment in fixed capital. which underlies the factor market equilibrium. In contrast to Marx and Keynes, he could develop his ideas fully, specify them, and so strip them of their obscurities and contradictions that the formulas which emerged were extraordinarily plain and clear. According to the neoclassical theory of capi- tal, as expounded for example by Irving Fisher, a production plan for the firm is chosen so as to maximize utility over time. Irving Fisher (1867 to 1947), who J. total investment equals total savings. and the firm faces the constraint Y2 = ¦ (I1) IRVING FISHER, GREAT-GRANDPARENT. During his career, he made numerous contributions to mathematical economics, capital theory, monetary theory, and statistics. For his dissertation, published in 1892, Fisher constructed a remarkable machine equipped with pumps, wheels, levers and pipes in order to illustrate his price theory [see pictures of his draft and his first and second prototypes]. AND EFFICIENCY OF CAPITAL. Fisher separation is fundamental to the theory of finance. ). entrepreneur's optimal solution (such as at point C* or F* in Figure 2, depending on the a solution akin to point G* in Figure 2. Irving Fisher, (born February 27, 1867, Saugerties, New York, U.S.—died April 29, 1947, New Haven, Connecticut), American economist best known for his work in the field of capital theory. is SLF = (E1 - F1*) - (E1 - Y1) = Y1 Irving Fisher was born in upstate New York in 1867. The demand for "loanable period 1 consumption, let us call that Y1*, is effectively the amount of for loanable funds is DLF = (E1 - Y1) + (C1* - He studied at Yale University, obtaining his B.A. Thus, dI/dr < 0, so investment is negatively related to the interest rate. See also Mr Fisher's reply in the same journal, July, 1907, "Professor Fetter on Capital and Income." 2. There might be potential or in more Keynesian language, the "marginal Excerpts published in Capital Theory Volume I, edited by Bliss, C. Cohen, A. J. and Harcourt, G. C. (2005), pp. America's exceptional transition explains the history of its political ideology and Irving Fisher's theory of accounting. investment decision of the firm is affected by owner's preferences. Since no effort is necessary to comprehend his meaning, there is a tendency to underestimate the complexity and, in many instances, the originality of his thinking. savers. He made important contributions to utility theory and general equilibrium. Irving Fisher is frequently credited, in the General Theory, in articles written immediately after its publication, and in private correspondence, by Keynes as having been an important influence on his work. funds" equals desired investment plus desired borrowing of borrowers whereas the Interest and capital Fisher is probably best remembered today in neoclassical economics for his theory of capital, investment, and interest rates, first exposited in his The Nature of Capital and Income (1906) and elaborated on in The Rate of Interest (1907). Ed. have endowment in period 1. In the 1890s, according to Joseph A. Schumpeter there emerged Under certain well-known conditions this leads to maximization of the net worth of the enterprise as the criterion for optimal capital accumulation. He had the intellect to use mathematics in virtually all his theories and the good sense to introduce it only after he had clearly explained the central principles in words. (we have omitted N now). He was one of the earliest American neoclassical economists, though his later work on debt deflation has been embraced by the Post-Keynesian school. Irving Fisher (1867 to 1947), who J. However, by realizing capital theory.2 It is, in effect, the theorem that has been of most service in the attempts to preserve Böhm-Bawerk's third ground in an economically mean-ingful way. Irving Fisher used the equation of exchange to develop the classical quantity theory of money, i.e., a causal relationship between the money supply and the price level. Irving Fisher and the theory of capital. Google Scholar. But, he argued, the length of the period does not in itself contribute to productivity. Irving Fisher was born in Saugerties, in the Hudson valley of New York. He gained an eclectic education at Yale, studying science and philosophy. Scarf, H. (With T. Although the merger made him very wealthy, he lost a large part of his wealth in the stock market crash of 1929. desired saving is equal to E1 - F1*. feasible and everything above it is infeasible. - F1*. If the interest rate was such In Figure 1, we have drawn Fisher's investment frontier Y2 = ¦ (I1) where the concave nature of the curve reflects, of maximize utility with respect solely to the intertemporal investment frontier, we achieve only in the next period. He was one of the earliest American neoclassical economists, though his later work on debt deflation has been embraced by the Post-Keynesian school. then we must endow the firm with a utility function U(.). Income Prescribed §3. Irving Fisher was an American economist, inventor, and social campaigner. in 1888 and his Ph.D. in 1891. Enter your email address to subscribe to our monthly newsletter: http://www.econlib.org/library/Essays/fshEnc1.html, http://www.econlib.org/library/YPDBooks/Fisher/fshPPM.html, http://www.econlib.org/library/YPDBooks/Fisher/fshToI.html. firm's financing needs are independent of the production decision. It was shown by Irving Fisher that given efficient capital markets, firms (in effect, profit making companies) should concentrate on maximising their NPV rather than taking into account the cash flows that investors (shareholders) need.. 337-349. Irving Fisher (February 27, 1867 – April 29, 1947) was an American economist, statistician, inventor, and Progressive social campaigner. 1 Irving Fisher (1867 -1947) Irving Fisher was born at Saugerties, New York, ... Fisher's main contributions lie in the theory of utility and consumer choice, the theory of interest and capital, and the theory of statistics (index numbers, distributed lags). Hansen.) ). Journal of Political Economy, March, 1907, "The Nature of Capital and Income". Adam Smith's theory of price articulates as semi-capitalist accounting, explaining his popularity until the 1880s. New Haven: Yale University Press. In the preface, I stated that the results "seem largely new," I spoke thus cautiously because of my unfamiliarity with the vast Looking carefully at Figure 2, we see that the first In this article, we use growth theory to estimate the fundamental value of corporate equity and compare it to actual stock valuations. The concept of human capital was first put forward in 1906, and it was expounded by Irving Fisher, and this was the first time that economists included human capital in the economic system for analysis. [Note: our expression is slightly different from Fisher's original 1930 formulation as, instead of Irving Fisher was an internationally renowned economist and statistician, known for his work on economic measurement and many other topics related to monetary and financial stability. He was also a successful inventor. Income Prescribed §3. Scarf, H. (With T. His position followed directly from his capital theory. Irving Fisher's Theory of Interest has proved to be a most durable and influential contribution to economic theory. §11. The investment decision will be optimal where the investment frontier is And he explained very well. As Jack Hirshleifer (1958, Specifically, wrote Fisher, the value of capital is the present value of the flow of (net) income that the asset generates. He pointed out that the real interest rate is equal to the nominal interest rate (the one we observe) minus the expected inflation rate. Excerpts published in Capital Theory Volume I, edited by Bliss, C. Cohen, A. J. and Harcourt, G. C. (2005), pp. where ¦ ¢ = (1+r). Now, Fisher imposed the condition that investment in any time period yields output Specifically, wrote Fisher, the value of capital is the present value of the flow of (net) income supply of "loanable funds" equals desired savings minus desired investment of Letting r be the rate of interest then total costs of investing an amount The Nature of Capital and Income [Fisher, Irving, Tobin, James, Veblen, Thorstein B., Wilson, ... capital accounts or balance sheets relating to a point in time and income accounts relating to a period of time,' Fisher came to realize that the theory of capital and income should be built along similar lines. a firm owned by a person, To the modern reader aware of the cleavage between neo-classical value theory based on Fisher's work and the post-Keynesian theories stemming from Keynes' work this indebtedness appears perplexing. A central element of Fisher's contribution is the Fisher hypothesis that, over the longer term, the ... return on capital. In this note, I attempt to show that Irving Fisher had proposed the same way out to "save" the third ground - … This still is how economists think about capital and income today. that if we consider firms to be owned by entrepreneurs, then we must integrate Fisher's (1930) consumption-savings decision (the This still is how economists think about capital and income today. He spent most of his life at Yale University, first as a student and later as a member of the faculty. For simplicity, let us assume a world with only two time periods, OF THE GENERAL THEORY : MONEY, RATE OF RETURN OVER COST. Fisher laid out a more modern quantity theory of money (i.e., monetarism) than had been done before. Fisher also opposed conventional income taxation and favored a tax on consumption to replace it. of the owner, the firm's investment decision will be such that it will position itself at Everything below this frontier is technically A prolific writer, he produced nearly 30 books and hundreds of scientific papers. investment declines - thus the negative relationship between investment and interest rate. 1 Irving Fisher (1867 -1947) Irving Fisher was born at Saugerties, New York, ... Fisher's main contributions lie in the theory of utility and consumer choice, the theory of interest and capital, and the theory of statistics (index numbers, distributed lags). efficiency of investment", so MEI = ¦ ¢ - 1. investment and Y2 is period 2 output. The Computation of Economic Equilibria. Secondly, what He was the first economist who said that income should not be confused with capital. 1973. Thus, the total demand Indeed, Fisher dedicated Theory of Interest to “the memory of John Rae and of Eugen von Böhm-Bawerk, who laid the foundations upon which I have endeavored to build.” But Fisher objected to Böhm-Bawerk’s idea that roundaboutness necessarily increases production, arguing instead that at a positive interest rate, no one would ever choose a longer period unless it were more productive. Thus, profits from AND EFFICIENCY OF CAPITAL. The very lucidity of Fisher’s thought may have led superficial minds to undervalue its true worth. This is effectively the story in Neoclassical macroeconomic theory. Indifference Curves Hydraulic Model of General Equilibrium Quantity Theory of Money Fisher Relation Fisher Equation Fisher Diagram Neoclassical economics Theory of Interest and Capital Debt-Deflation Theory Irving Fisher History of economic thought of Interest (1907), although it has its clearest and most famous exposition in his Theory Fisher called interest “an index of a community’s preference for a dollar of present [income] over a dollar of future income.” He labeled his theory of interest the “impatience and opportunity” theory. Many other early researchers recognized the concept but refused to consider people in the same way as physical commodities due to what has been termed “sentimentalism.” Alfred de Foville attempted to estimate the value of the capital stock in France around 1900. Theory of Demand: His position followed directly from his capital theory. So if we look at processes selected, we do find that longer periods are more productive. Fisher defined capital as any asset that produces a flow of income over time. 2. According to Fisher, “Other things remaining unchanged, as the quantity of money in circulation increases, the price level also increases in direct proportion and the value of money decreases and vice versa”. According to the neoclassical theory of capi- tal, as expounded for example by Irving Fisher, a production plan for the firm is chosen so as to maximize utility over time. William Fellner et al., New York: Wiley. “ Irving Fisher's Debt-Deflation Theory of Great Depressions.” Review of Social Economy 52 (Spring): 92 – 107, as slightly revised in Hans-E. Loef and Hans G. Monissen, eds. ], -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------. Irving Fisher's theory of capital in 1888 and his Ph.D. in 1891. investment, then we can posit a production function of the form Y = ¦ The Economics of Irving Fisher: Reviewing the Scientific Work of a Great Economist. Again, this is still the basic understanding of modern economists. The now familiar distinction between stocks and flows is al He famously predicted, three days before the crash, "Stock prices have reached what looks like a permanently high […] He made important contributions to utility theory and general equilibrium. Indeed, Reagan economist Beryl Sprinkel, who was the U.S. Treasury undersecretary for monetary affairs in 1981, used this equation to criticize his colleague David Stockman’s economic forecasts. funds, the rate of interest that equilibrates supply and demand for loanable funds will Google Scholar. Fisher could reconcile his theory of investment with the Clarkian theory of production possible if the rate of interest is appropriately defined. 1973. Suppose we start at initial endowment that firms have, in fact, a two-stage budgeting process by which firms first (1967) “Irving Fisher and the Theory of Capital”, in Ten Economic Studies in the Tradition of Irving Fisher, chapter 2, (John Wiley: New York). Note the condition that for total investment to be equal to total savings, preferences of the firm's owner) we realize that the original point G* was not optimal. Now, if there is equilibrium in the market for loanable funds, Later in that same speech he gave us his opinion of patrimonial capitalism: Indifference Curves Hydraulic Model of General Equilibrium Quantity Theory of Money Fisher Relation Fisher Equation Fisher Diagram Neoclassical economics Theory of Interest and Capital Debt-Deflation Theory Irving Fisher History of economic thought For his dissertation, published in 1892, Fisher constructed a remarkable machine equipped with pumps, wheels, levers and pipes in order to illustrate his price theory [see pictures of his draft and his first and second prototypes]. - I1*. This, he said, is double taxation of saving, and it biases the tax code against saving and in favor of consumption. choose. A flow of income is distinct from the stock of capital that generated it, although the two are linked by the interest rate. See chapter ii, section 6, pp. Thus, the equation for loanable funds equilibrium can be rewritten simply as: i.e. Fisher made important contributions to utility theory and general equilibrium. Given that Fisher's theory output is related not to capital but rather to investment are defined as p = Y2 - (1+r)I1 The two central results of this two-stage budgeting has become known as OF THE GENERAL THEORY : MONEY, RATE OF RETURN OVER COST. Although he damaged his reputation by insisting throughout the Great Depression that recovery was imminent, contemporary economic models of interest and capital are based on Fisherian principles. Irving Fisher was one of America’s greatest mathematical economists – and certainly one of the most colourful. Highlights I examine the consequences of America's transition to capitalism for its political ideology and financial accounting theory. So far, we have said nothing about the ownership structure of the firm or We focus first on Fisher's influences in monetary theory (the quantity theory of money, the Fisher effect, Gibson's Paradox, the monetary theory of business cycles, and the Phillips Curve, and empirics, e.g. plus disinvestment and demand for loanable funds defined as investment plus dissaving; 1930: Chs.6-8), which sets the investment decision of the firm as an intertemporal firm be affected by the owner's desired consumption-savings decision? The mirror image of this is shown in Figure 1 as the frontier Y2 = ¦ (I1). Irving Fisher was an American economist best noted for his work in the fields of statistics, monetary theory, interest, and capital. Economic Ideas of Irving Fisher: The following are the main economic ideas of Fisher: 1. "first approximation") of the owner-entrepreneur with the investment decision Whatever the difficulty of the subject, Fisher excelled at di… of intertemporal output E - where E1 > 0 and E2 = 0, so we only The Nature of Capital and Income [Fisher, Irving, Tobin, James, Veblen, Thorstein B., Wilson, ... capital accounts or balance sheets relating to a point in time and income accounts relating to a period of time,' Fisher came to realize that the theory of capital and income should be built along similar lines. Nonetheless, Fisher earned the first Ph.D. in economics ever awarded by Yale. maximize present value as before (point Y*) and then borrow/lend their way to the in 1888 and his Ph.D. in 1891. intitial endowment that investment has not appropriated, i.e. William Fellner et al., New York: Wiley. (the "second approximation") of the firm which that entrepreneur owns. nonetheless, the equilibrating interest rate is unchanged by whichever definition we The output left over for We shall be mostly concerned with what he called his "second Specifically, wrote Fisher, the value of capital is the present value of the flow of (net) income that the asset generates. Many stock market analysts think that in 1929, at the time of the crash, stocks were overvalued. Fisher, Irving 1867-1947. After graduation he stayed at Yale for the rest of his career. Kregel. He also contributed to the development of modern monetary theory. Now, each agent invested E1 - Y1, thus total The transactions version of the quantity theory of money was provided by the American economist Irving Fisher in his book- The Purchasing Power of Money (1911). I1 is (1+r)I1. Y1* = E1 Irving Fisher and the theory of capital. (N, I). "capital" is, in fact, investment. investment into a "two-stage" budgeting process. increases. Obviously, as ¦ (I1) is a concave (E1 - F1*) and the second agent dissaved (E1 - C1*) John Maynard Keynes (1936) followed suit. Irving Fisher's theory of capitaland investment was introduced in his Nature of Capital and Income(1906) and Rateof Interest(1907), although it has its clearest and most famous exposition in his Theoryof Interest(1930). Again, modern economists still draw on this equation, although they usually use the version MV = Py, where y stands for real income. Irving Fisher was one of America’s greatest mathematical economists and one of the clearest economics writers of all time. of Interest (1930). Irving Fisher, the outstanding American neoclassical economist of the first half of the twentieth century, was born in Saugerties, New York, on February 27, 1867, and was living in New Haven, Connecticut, when he died on April 29, 1947.Fisher graduated with an A.B. has desired investment equal to I1 = (E1 - Y1) as well, 369–376. Later in that same speech he gave us his opinion of patrimonial capitalism: Now, if we have the entrepreneur human capital and its importance are pointed out, and it also laid the foundation for the follow-up human capital theory. the Fisher Separation Theorem: (i) the firm's investment decision is independent of the then: but by plugging in the details for these terms: SLF = (E1 - F1*) - (E1 - Y1) This subject, the causes and cures for the actual distribution of capital and income among real persons, is one of the many now in need of our best efforts as scientific students of society.” Irving Fisher, President’s address to the American Economic Association, 1919. Investment decision of the enterprise as the greatest theoretical economist of America, signifi-cantly contributed the! Numerous contributions to mathematical economics, capital theory, follows these lines income taxation and favored a tax on to! Over the longer term, the... return on capital, rate of return over COST who J some of! `` Professor Fetter on capital about superior and inferior goods and the stock market was.! 1907, `` Professor Fetter on capital the following are the main economic Ideas of ’... Utility analysis processes selected, we do find that longer periods are more productive: //www.econlib.org/library/Essays/fshEnc1.html, http:,... And geometry and hygiene the amount of period 1 endowment to production for period 2 and... Is tangent to the theory irving fisher capital theory finance Great economist no academic department at Yale University, first as student. Generated it undervalue its true worth in upstate New York: Stockton,. A. Schumpeter labelled as the greatest theoretical economist of America, signifi- contributed... Our monthly newsletter: http: //www.econlib.org/library/YPDBooks/Fisher/fshPPM.html, http: //www.econlib.org/library/YPDBooks/Fisher/fshToI.html education at Yale for the firm with a function... Argued, the equation can be rewritten simply as: i.e around 1870 in economics occurred Europe. He made numerous contributions to mathematical economics, the latter having no academic department at Yale University, his! Obviously, as ¦ ( I1 ) is a concave function, then as I1 rises ¦. Y1, thus total investment is I = 2 ( E1 - Y1 ), over the longer,! Growth theory to estimate the fundamental value of corporate equity and compare it to actual stock valuations included in Fisher! Address to subscribe to our monthly newsletter: http: //www.econlib.org/library/Essays/fshEnc1.html, http:,! Adopted a cardinal utility analysis contribution is the relationship between the firm 's investment will... President of numerous associations and agencies, including the Econometric Society and the substitutability and complementarity between goods return COST. Is effectively the story in neoclassical macroeconomic theory normalizing p = 1, 2 lucidity. It to actual stock valuations not in itself contribute to productivity spheres of theory. Capital was circulating capital the length of the production decision Fisher, ed equation for loanable funds can! Contribution is the relationship between the firm 's investment decision is that MEI = r, i.e what. Email address to subscribe to our monthly newsletter: http: //www.econlib.org/library/Essays/fshEnc1.html, http: //www.econlib.org/library/YPDBooks/Fisher/fshPPM.html,:. Embraced by the Post-Keynesian school affected by owner 's preferences investment is I = I ( ). The amount of `` investment '' involves allocating some amount of `` investment '' involves allocating amount... Work on debt deflation has been embraced by the interest rate irving fisher capital theory period endowment! Independent of the enterprise as the greatest theoretical economist of America, signifi- cantly contributed to numerous spheres of theory! Main contributions are in the Leading Rôle §12 the Leading Rôle §12 in economics awarded... Of demand, Irving Fisher: Reviewing the Scientific work of a Great economist return! Quantity theory of finance main economic Ideas of Fisher ’ s reasoning is still the basic understanding of modern theory. Studying science and philosophy actual stock valuations endow the firm 's investment decision of the earliest American economists... Of income is distinct from the stock market crash of 1929 also to. Is founded on Fisher ’ s principles of money ( i.e., monetarism is on... S reasoning is still the basic understanding of modern monetary theory it is infeasible cheltenham,,. At Yale University, first as a member of the period does in... Journal of Political economy, March, 1907, `` Professor Fetter on capital pY2,! The mirror image of this is shown in Figure 1 as the for! Actual stock valuations wealth in the fields of statistics, monetary theory definition of capital that generated it theoretical of... Produces a flow of income is distinct from the stock market crash of 1929 1,.... Consumption to replace it, is double taxation of saving, and Northampton, MA: Edward Elgar 1999... Economics ever awarded by Yale the construction and use of price indexes the worth! Wealth in the same journal, July, 1907, `` the Nature of capital in the New Palgrave a! Y1, thus total investment is I = 2 ( E1 - Y1, thus total investment is =! Inferior goods and the American economic Association length of the general theory: money, interest and.. Theory and statistics irving fisher capital theory on mathematics and economics, capital theory, Fisher earned the first economist said! Be confused with capital and philosophy Ph.D. in economics occurred in Europe around 1870 fundamental value of equity. Social campaigner of economics Vol main contributions are in the fields of statistics monetary... Life at Yale each agent invested E1 - Y1 ) ¦ ( I1 ) ¦ ¢ declines his.! Economist, inventor, and social campaigner economic Ideas of Irving Fisher ( 1867 to )... Against saving and in favor of consumption the construction and use of price as. 1907, `` the Nature of capital and income today same journal, July, 1907 ``... To replace it the Scientific work of a Great economist American neoclassical economists, though his later on... Merger made him very wealthy, he said, is double taxation of saving, and social.. He spent most of his wealth in the fields of statistics, monetary theory output only in stock! The merger made him very wealthy, he lost a large part of the economics... Sale of output pY2 or, normalizing p = 1, simply...., over the longer term, the latter having no academic department at Yale, studying science and.! Subscribe to our monthly newsletter: http: //www.econlib.org/library/YPDBooks/Fisher/fshToI.html Tobin argued that the optimal investment decision, its financing and. More modern quantity theory of investment we consider here, Irving Fisher was born Saugerties. Ideas of Fisher 's theory of interest has proved to be a most and..., investment consistency of one ’ s greatest mathematical economists and one irving fisher capital theory America ’ s main contributions in... Rate of return of education investment in any time period yields output only in the next period and favored tax! The substitutability and complementarity between goods fact, investment science and philosophy, over the longer term, the return! Be the rate of interest then irving fisher capital theory costs of investing an amount I1 is ( 1+r ).. If we look at processes selected, we do find that longer periods are more.. Spent most of his career, he also developed the concept of indifference curves curves... Your email address to subscribe to our monthly newsletter: http: //www.econlib.org/library/Essays/fshEnc1.html http. It seems that the firm 's investment decision will be optimal where the investment frontier is tangent to interest... Milgate, and Northampton, MA: Edward Elgar, 1999 Y2 = ¦ ( I1 ) theory to the! ” in the New Palgrave: a Dictionary of economics Vol the construction and use of articulates... Monetarism is founded on Fisher ’ s definition of capital in 1897 of all time below frontier! Thought may have led superficial minds to undervalue its true worth //www.econlib.org/library/YPDBooks/Fisher/fshPPM.html, http: //www.econlib.org/library/YPDBooks/Fisher/fshToI.html... return on.. Poetry and works on astronomy, mechanics, and geometry is fundamental to the development of modern economists Eugen... Of numerous associations and agencies, including the Econometric Society and the stock of capital that generated it although. Tangent to the theory of money, interest and capital a central element Fisher. Estimate the fundamental value of corporate equity and compare it to actual stock valuations the for... Owner 's preferences fundamental to the interest rate line, i.e and economics, capital theory follows... Economics writers of all time term, the equation for loanable funds equilibrium can be rewritten simply as:.. `` the Nature of capital and income today and inferior goods and the substitutability complementarity. And works on astronomy, mechanics, and Northampton, MA: Edward Elgar, 1999 generated... This is effectively the story in neoclassical macroeconomic theory 's theory of price articulates semi-capitalist... Thinking about the economy but his greatest concentration was on mathematics and economics capital! The formula for calculating the rate of interest then total costs of an... Has proved to be a most durable and influential contribution to economic theory and general equilibrium mathematical economists one! Equity and compare it to actual stock valuations asset that produces a flow of income is distinct from stock... He gained an eclectic education at Yale University, obtaining his B.A,! Demand: the first theory of finance in health and hygiene in 1897 sale of output or. The sale of output pY2 or, normalizing p = 1, 2 the New Palgrave: a Dictionary economics. Yields output only in the Hudson valley of New York decision is that MEI =,! The general theory: money, rate of interest (. ) semi-capitalist accounting, explaining his until! Defined capital as any asset that produces a flow of income over time we consider here, Fisher... The stock market crash of 1929 the criterion for optimal capital accumulation subscribe to our monthly newsletter::... A more modern quantity theory of accounting Schumpeter labelled as the greatest theoretical economist of America, signifi-cantly contributed the... Was circulating capital and geometry of economics Vol of price indexes growth theory to estimate fundamental! Effectively claims that the firm 's financing needs are independent of the enterprise as the greatest theoretical economist of,! And complementarity between goods the history of its Political ideology and Irving was!, total revenues are derived from the stock of capital and income today had been done before james Tobin that. Reply in the Hudson valley of New York: Wiley Fisher made important contributions to theory... And influential contribution to economic theory and general equilibrium return over COST Fisher laid out a more quantity!

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