Irving Fisher and the Quantity Theory of Money: The Last Phase

Abstract

Frank Steindl poses a surprising question in the title of his 1997 article, “Was Fisher a Practicing Quantity Theorist?” and reaches the conclusion that, “Clearly, with the decade of the Great Depression, Fisher was no longer a practicing quantity theorist” (Steindl 1997, p. 259). Such a change in Fisher's monetary economics would sharply revise the view of Irving Fisher generally prevailing in the history of monetary economics, which is based primarily on The Purchasing Power of Money (Fisher with Brown 1911). Fisher's photograph (along with photographs of Marshall and Wicksell) appears on the cover of The Golden Age of the Quantity Theory (Laidler 1991). As Mark Blaug (1995, p. 3) put it, “isn't Irving Fisher the quintessential quantity theorist if there ever was one [?]” Perhaps the most striking tribute to Fisher in the quantity theory tradition is from Milton Friedman, who, addressing the American Economic Association on the question “Have Monetary Policies Failed?” and having quoted from Fisher's 1910 exchange with J. L. Laughlin, remarked “And now I must cease quoting from Fisher, with whom I am in full agreement, and proceed instead to plagiarize him—albeit with modifications to bring him down to date” (Friedman 1972, p. 12).