The Great Depression: Mises vs. Fisher
- 56 Downloads
Ludwig von Mises established the foundations of modern Austrian economics while Irving Fisher established the foundations of modern mainstream macroeconomics and central bank policy. Fisher helped create and was a proponent of mathematical economics, statistics and index numbers, and a monetary policy that “stabilized” the value of the dollar. Fisher claimed that his scientific approach established a new era of prosperity during the 1920s. Mises published a book in 1928 that critiqued Fisher’s approach and predicted that it would lead to an economic crisis and collapse. Before the stock market crash in 1929 Fisher proclaimed a perpetual prosperity for the economy and continued to recommend investing in stocks long after the market had collapsed. In this important case study, Mises passed the “market test” while Fisher lost his personal fortune during an economic crisis that his economics help create.
KeywordsLudwig von Mises Irving Fisher Great Depression Methodology
- Fisher, Irving.  1925. Mathematical Investigations in the Theory of Value and Prices. New Haven, Conn.: Yale University Press.Google Scholar
- Fisher, Irving. 1913. The Purchasing Power of Money: Its Determination and Relation to Credit, Interest, and Crisis. New York: Macmillan.Google Scholar
- Fisher, Irving.  1927. The Making of Index Numbers: A Study of their Varieties, Tests, and Reliability. Boston, New York: Houghton Mifflin.Google Scholar
- Fisher, Irving.  1976. “I Discovered the Phillips Curve: A Statistical Relationship between Unemployment and Price Changes.” Journal of Political Economy 81(2):496–502.Google Scholar
- Fisher, Irving. 1929a. New York Herald Tribune. 5 September. Reprinted in Edward Angly, Oh Yeah? New York: Viking Press, 1931.Google Scholar
- Fisher, Irving. 1929b. “Fisher Sees Stocks Permanently High.” New York Times. 16 October. Reprinted in Edward Angly, Oh Yeah? New York: Viking Press, 1931.Google Scholar
- Fisher, Irving. 1929c. New York Herald Tribune. 22 October. Reprinted in Edward Angly, Oh Yeah? New York: Viking Press, 1931.Google Scholar
- Fisher, Irving. 1929d. New York Herald Tribute. 24 October. Reprinted in Edward Angly, Oh Yeah? New York: Viking Press, 1931.Google Scholar
- Fisher, Irving. 1929e. Quoted in “Overeager ‘Shoestring’ Traders Caused Crash in Market, Says Fisher.” New York Herald Tribune. 3 November. Reprinted in Edward Angly, Oh Yeah? New York: Viking Press, 1931.Google Scholar
- Fisher, Irving. 1932. Booms and Depressions: Some First Principles. New York: Adelphi Company.Google Scholar
- Fisher, Irving N. 1956. My Father, Irving Fisher. New York: Comet Press Books.Google Scholar
- Formaini, Robert L. 2005. “Irving Fisher: Origins of Modern Central Bank Policy.” Economic Insights 10, no 1. Dallas, Texas: Federal Reserve Bank of Dallas.Google Scholar
- Friedman, Milton. 1997. “Rx for Japan.” Wall Street Journal. 17 December.Google Scholar
- Friedman, Milton, and Anna J. Schwartz. 1963. A Monetary History of the United States: 1867–1960. Princeton, N.J.: Princeton University Press.Google Scholar
- Gertchev, Nikolay. 2004. “Dehomogenizing Mises’ Monetary Thought.” Journal of Libertarian Studies 18(3):57–90.Google Scholar
- Hoover, Kevin D. 2006. “Microfoundations and the Ontology of Macroeconomics.” (September 24). Available at SSRN: http://ssrn.com/abstract=932945.
- Lavoie, Don. 1981. “A Critique of the Standard Account of the Socialist Calculation Debate.” Journal of Libertarian Studies 5(1):41–87.Google Scholar
- Mises, Ludwig von.  1981. The Theory of Money and Credit. Indianapolis, Ind.: Liberty Classics.Google Scholar
- Mises, Ludwig von.  1978. Geldwertstabilisierung and Konjunkturpolitik [Monetary stabilization and cyclical policy]. Jena: Gustav Fischer. English translation by Bettina Bien Greaves, On the Manipulation of Money and Credit. Dobbs Ferry, N.Y.: Free Market Books.Google Scholar
- Parrish, Michael E. 1994. The Anxious Decades. New York: W.W. Norton.Google Scholar
- Rothbard, Murray N. 1963. America’s Great Depression. New York: Richardson & Snyder.Google Scholar
- Rothbard, Murray N.  2002a. “Milton Friedman Unraveled.” Journal of Libertarian Studies 16(4):37–54.Google Scholar
- Rothbard, Murray N. 2002b. A History of Money and Banking in the United States: The Colonial Era to World War II. Ed. Joseph T. Salerno. Auburn, Ala.: Ludwig von Mises Institute.Google Scholar
- Rothbard, Murray N.  2004. Man, Economy, and State with Power and Market. Scholar’s Edition. Auburn, Ala.: Ludwig von Mises Institute.Google Scholar
- Salerno, Joseph T. 1990. “Postscript: Why a Socialist Economy is Impossible,” in Mises’s Economic Calculation in the Socialist Commonwealth, Auburn, Ala.: Ludwig von Mises Institute. Pp. 51–71.Google Scholar
- Skousen, Mark. 1991. Economics on Trial: Lies, Myths, and Realities, Homewood, Ill.: Business One Irvin.Google Scholar
- Skousen, Mark. 1993. “Who Predicted the 1929 Crash?” In The Meaning of Ludwig von Mises: Contributions in Economics, Sociology, Epistemology, and Political Philosophy. Ed. Jeffrey Herbener. Norwell, Mass.: Kluwer Academic Publishers.Google Scholar
- Thornton, Mark. 2004a. “Uncomfortable Parallels.” www.LewRockwell.com. April 18.
- Thornton, Mark. 2004b. “The ‘New Economists’ and the Great Depression of the 1970s.” Mises Daily Article. www.Mises.org. May, 7.
- Thornton, Mark. 2004c. “The Japanese Bubble Economy.” www.LewRockwell.com. May 23.
- Thornton, Mark. 2004d. “Housing: Too Good to be True.” Mises Daily Article. www.Mises.org, June 4.
- Thornton, Mark. 2006. “The Economics of Housing Bubbles.” Mises Institute Working Paper. June 12 and forthcoming in America’s Housing Crisis: A Case of Government Failure. Eds. Benjamin Powell and Randall Holcombe. Forthcoming.Google Scholar
- Tobin, James. 1985. “Neoclassical Economics in America.” American Economic Review 75, no. 6 (December):28–38.Google Scholar
- Tobin, James. 1987. “Irving Fisher.” The New Palgrave: A Dictionary of Economics. Ed. John Eatwell, Murray Milgate, and Peter Newman. New York: Stockton Press. Vol. 2. Pp 369–76.Google Scholar