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Published online by Cambridge University Press: 27 July 2016
In examining the mathematical models, theories of value, and price statistics wielded by leading economist and social reformer Irving Fisher, this article explores the overlooked impact that Neoclassical Economics had on Progressive Era reform and thought. By offering a neoclassical theory of marginal utility that claimed that market prices reflected subjective value, Fisher formalized, legitimized, and popularized the use of price statistics in progressive political discourse, teaching the American people that if they wanted to argue over the nature of progress or the worthiness of a certain reform, they would have to price it first. The article argues that such a “pricing of progressivism” served as an important foundational precursor to the rise of neoliberal thought in the 1980s. In light of such a significant intellectual legacy, it seems imperative that intellectual historians of the Progressive Era turn their attention away from the usual suspects of this period, such as Pragmatists William James and John Dewey, and shift their analytical focus away from the “Metaphysical Club” and toward a neoclassical one.
1 “What the Baby is Worth as a National Asset,” New York Times, Jan. 30, 1910.
2 For the pricing of everyday life in the Progressive Era see Eli Cook, The Pricing of Progress: Economic Indicators and the Values of American Capitalism (Cambridge, MA: Harvard University Press, forthcoming).
3 Joseph Schumpeter, Ten Great Economists from Marx to Keynes (New York: Oxford University Press, 1951), 223; Two biographies, both useful, have been written on Fisher. See Irving Norton Fisher, My Father Irving Fisher (New York: Comet Press Books, 1956); Robert Loring Allen, Irving Fisher: A Biography (Cambridge, MA: Blackwell Publishers, 1993). For Fisher's role in the rise of neoclassical economics see Philip Mirowski, More Heat Than Light: Economics as Social Physics, Physics as Nature's Economics (New York: Cambridge University Press, 1989); Persky, Joseph, “The Neoclassical Advent: American Economics at the Dawn of the 20th Century,” Journal of Economic Perspectives 14 (Winter 2000): 95–108 CrossRefGoogle Scholar; Tobin, James, “Neoclassical Theory in America: JB Clark and Fisher,” American Economic Review 75 (Dec. 1985): 28–38 Google Scholar; and “Irving Fisher (1867–1947),” American Journal of Economics and Sociology 64 (Jan. 2005): 19–42 CrossRefGoogle Scholar; Breslau, Daniel, “Economics Invents the Economy: Mathematics, Statistics and Models in the Work of Irving Fisher and Wesley Mitchell,” Theory and Society 32 (June 2003): 379–411 CrossRefGoogle Scholar.
4 For a sampling of Fisher's New York Times articles that range from banking reform, Prohibition, labor strikes, and eugenics to health insurance, school hygiene, tariff policy, and electoral politics see Irving Fisher, “Gold Inflation Makes Living High,” July 1, 1917; “Wartime Prohibition,” May 27, 1917; “Prof. Fisher's Advice,” Aug. 30, 1916; “Novel Suggestion to Curb the High Cost of Living, Jan. 7, 1912; “Empty Cradles Worst War Horror,” July 25, 1915; “War is Teaching us not to Waste Human Life,” Aug. 20, 1916; “Roosevelt Failed to Get Radical Democratic Vote,” Jan. 5, 1918; “Some Probable Economic Effects of the War,” Aug. 30, 1914; “Fisher Assails Protection,” Nov. 6, 1916. For his economic forecasting see Walter Friedman, Fortune Tellers: The Story of America's First Economic Forecasters (Princeton, NJ: Princeton University Press, 2013), 51–86. For Fisher and health insurance see Dan Bouk, How Our Days Became Numbered: Risk and the Rise of the Statistical Individual (Chicago: Chicago University Press, 2015), 124–40.
5 For Fisher's pricing of progressivism see, for instance, “School Hygiene as Profitable Investment,” New York Times, June 22, 1913; “The Money Value of Human Beings,” New York Times, Mar. 19, 1916.
6 Irving Fisher, “National Vitality: Its Wasters and Conservation,” 61st Cong., 2nd sess., Senate Document 419 (Washington D.C.: Government Printing Office, 1910): 634. Fisher devoted chapter 12 in his report to measuring “the money value of increased vitality.” For the New York Times in-depth coverage of this report and Fisher's pricing of human lives see “Measuring the Nation's Vitality in Dollars and Cents,” Oct. 31, 1909; “Can Easily Add Fifteen Years to Our Average Life,” Mar. 5, 1911. On history of cost-benefit analysis see Theodore Porter, Trust in Numbers: The Pursuit of Objectivity in Science and Public Life (Princeton, NJ: Princeton University Press, 1995), 148–90.
7 Theodore Roosevelt to Irving Fisher, May 8, 1907, box 2, Irving Fisher Papers, Yale University Library Manuscripts and Archives, New Haven. For the Progressive Era efficiency movement see Samuel Haber, Efficiency and Uplift: Scientific Management in the Progressive Era 1890–1920 (Chicago: University of Chicago Press, 1964).
8 Irving Fisher, A Clear Answer to President Taft, the Most Prominent Anti-National Prohibitionist (Boston: Massachusetts Anti-Saloon League, 1918), 4–5; “National Vitality,” 623, 742, The Costs of Tuberculosis in the United States and Their Reduction (New Haven, CT: Yale University Press, 1909); Memorial Relating to the Conservation of Human Life as Contemplated by Bill Providing for a U.S. Public Health Service (Washington, D.C.: Government Printing Office, 1912); Irving Fisher and Eugene Lyman Fisk, How to Live: Rules for Healthful Living, Based on Modern Science (New York: Life Extension Institute, Inc., 1916). On Fisher's activities in regards to Prohibition see Irving Fisher to William Elliot, December 8, 1915; Mar. 3, 1916, box 3, Fisher Papers.
9 The quote appears in an exhibit of the American Eugenics Society at the Sesquicentennial Exposition in Philadelphia in 1926. For images of the exhibit see the Fitter Families Collection, American Philosophical Society, Philadelphia, PA, Image number 1565. For a good overview of Fisher's thoughts on Eugenics see Fisher, Irving, “Impending Problems of Eugenics,” The Scientific Monthly 13:3 (Sept. 1921): 214–31Google Scholar. For the intersection of eugenics and economics in the Progressive Era see Leonard, Thomas C., “Eugenics and Economics in the Progressive Era,” Journal of Economic Perspectives 19:4 (Fall 2005): 207–24CrossRefGoogle Scholar.
10 James Tobin, “Fisher, Irving,” The New Palgrave: A Dictionary of Economics, Vol. 2 (E to J), ed. John Eatwell et al. (New York: Macmillan Press, 1987), 369–76. On Fisher and neoclassical economics see Persky, “Neoclassical Advent,” Tobin, “Neoclassical Theory in America”; Breslau, “Economics Invents the Economy.” For an overview of “neoliberalism” see David Harvey, A Brief History of Neoliberalism (Oxford: Oxford University Press, 2007); Brown, Wendy, “Neo-Liberalism and the End of Liberal Democracy,” Theory & Event 7:1 (2003)Google Scholar.
11 For conservative support of Fisher as well as his impact on Milton Friedman's monetarism see Michael Bordo and Hugo Rockoff, “The Influence of Irving Fisher on Milton Friedman's Monetary Economics, NBER Working Paper No. 17267 (Aug. 2011); David Lynch “Economists Evoke the Spirit of Irving Fisher,” Bloomberg Business, Jan. 12, 2012; For the liberal lovefest see Tobin, “Neoclassical Theory in America” and “Irving Fisher (1867–1947);” Paul Samuelson, “Irving Fisher and the Theory of Capital” in Ten Economic Studies in the Tradition of Irving Fisher, ed. William Fellner (New York: J. Wiley, 1967); Paul Krugman, “Irving Fisher Rules,” New York Times, Dec. 3, 2011. For Fisher's hydraulic model, see Irving Fisher, Mathematical Investigations in the Theory of Value and Prices (New Haven, CT: Yale University Press, 1892), 24–38. For more on the historiography of the liberal/conservative binary see Eli Cook, “Gabriel Kolko's Unfinished Revolution,” Jacobin Magazine, June 25, 2014.
12 For the Pragmatic social self and its progressive links to the rise of the American welfare state see Daniel Rodgers, Atlantic Crossings: Social Politics in a Progressive Age (Cambridge, MA: Harvard University Press, 2000); James T. Kloppenburg, Uncertain Victory: Social Democracy and Progressivism in European and American Thought, 1870–1920 (Oxford: Oxford University Press, 1986); Louis Menand, The Metaphysical Club (New York: Farrar, Straus and Giroux, 2001). James Livingston also sees the rise of a social self as a generally positive development but for a very different set of reasons. James Livingston, Pragmatism and the Political Economy of Cultural Revolution (Chapel Hill: University of North Carolina Press, 1997). For those that have traced the rise of the social self but are far less enthusiastic about it see the “corporate liberal” historiography in general but most importantly Jeff Sklansky, The Soul's Economy: Market Society and Selfhood in American Thought, 1820–1920 (Chapel Hill: University of North Carolina Press, 2002). Jeffrey Lustig, Corporate Liberalism: The Origins of Modern American Political Theory, 1890–1920 (Berkeley: University of California Press, 1986). For others in the “Neoclassical Club” of the era such as Frank Fetter, John Bates Clark, Herbert Davenport, Sidney Sherwood, and David I. Green see Joseph Dorfman, The Economic Mind in American Civilization Vol. 3 1866–1918 (New York: The Viking Press, 1949), 243–52, 359–90.
13 On the Marginalist Revolution see Maurice Dobb, Theories of Value and Distribution Since Adam Smith (Cambridge: Cambridge University Press, 1973) 166–212; Blaug, Mark, “Was there a Marginal Revolution?,” History of Political Economy 4:2 (1972): 269–80CrossRefGoogle Scholar; Mirowski, More Heat Than Light; Margaret Schabas, A World Ruled by Number: William Stanley Jevons and the Rise of Mathematical Economics (Princeton, NJ: Princeton University Press, 1990); Dorothy Ross, The Origins of American Social Science (New York: Cambridge University Press, 1991), 172–219.
14 Fisher, Mathematical Investigations, 19.
15 The Encyclopedia Britannica: A Dictionary of Arts, Sciences, and General Literature, 9th ed., vol. 19, ed. Thomas Spencer Baynes (New York: Samuel L. Hall, 1885), 399. This comment appears at the end of the John Kells Ingram entry on “Political Economy.” Ingram was not alone in his critique. See also John Cairnes, The Character and Logical Method of Political Economy, 2nd ed. (London: MacMillan and Co.,1875), vi. Cairnes was arguably the most respected economist of the era. For a neoclassical view of the problem of utility measurement see George Stigler, “The Development of Utility Theory,” which appeared in two parts in the Journal of Political Economy. First part 58, no. 4 (Aug. 1950): 307–27; second part –58, no. 5, (Oct. 1950): 373–96. For more on the problem of measuring utility see Dorfman, The Economic Mind 3, 243–52.
16 See Francis Y. Edgeworth. Mathematical Psychics: An Essay on the Application of Mathematics to the Moral Sciences (London: Kegan Paul, 1881) 101. See also Colander, David, “Retrospectives: Edgeworth's Hedonimeter and the Quest to Measure Utility,” The Journal of Economic Perspectives 21:2 (Spring 2007): 215–26CrossRefGoogle Scholar.
17 Encyclopedia Britannica, 386.
18 Fisher, Mathematical Investigations, 5; Elementary Principles of Economics (New York: Macmillan, 1911), 13, 534.
19 William Stanley Jevons, The Theory of Political Economy, 2nd ed. (London: Macmillan, 1879, ca. 1871), 12. On Jevons and the rise of mathematical economics see also Schabas, A World Ruled By Number.
20 See for instance Charles Darwin, The Descent of Man (London: John Murray, 1871), 76–77; Henry Sidgwick, The Methods of Ethics (London: Macmillan and Co., 1874), 29–42. See also Viner, Jacob, “The Utility Theory and Its Critics,” Journal of Political Economy XXXIII (1925): 369–87CrossRefGoogle Scholar.
21 Fisher, Mathematical Investigations, 11.
22 James quoted in Livingston, Pragmatism, 142; John Dewey, “Reconstruction in Philosophy” in The Middle Works of John Dewey 1899–1924, vol. 11, ed. Jo Ann Boydston (Carbondale: Southern Illinois University Press, 2008), 193. Veblen, Thorstein, “Why Isn't Economics an Evolutionary Science?,” Quarterly Journal of Economics 12:4 (1898): 373–97CrossRefGoogle Scholar.
23 Maurice Dobb, Theories of Value, 38–65. For a similar treatment of classical vs. neoclassical economics see Ross, American Social Science, 122.
24 Fisher, Elementary Principles, 478.
25 For the homogenizing powers of neoclassical economies see Breslau, “Economics invents the Economy.”
26 For Fisher's criticism of labor unions see his letter to the New York Times, Sept. 1,1916 against railroad strikes. Fisher was also against Populist monetary reforms. See Kreitner, Roy, “Money in the 1890s: The Circulation of Politics, Economics and Law,” UC Irvine Law Review 1:3 (2011): 975–1013 Google Scholar.
27 Fisher, Irving, “Economists in Public Service: Annual Address of the President,” The American Economic Review, 9:1 (Mar. 1919): 10Google Scholar; Irving Fisher to Bert Fisher, Aug. 17, 1890, box 1, Fisher Papers. On the classless nature of neoclassical economics see Marglin, Stephen, “What Do Bosses Do? The Origins and Functions of Hierarchy in Capitalist Production, Part I,” The Review of Radical Political Economics 6:2 (1974): 60–112 CrossRefGoogle Scholar.
28 Mankiw, Gregory, “Defending the One Percent,” Journal of Economic Perspectives 27:3 (2013): 21–34 CrossRefGoogle Scholar.
29 Irving Fisher, “An Address on the Irving Fisher Foundation, Sept. 11, 1946” in Works of Irving Fisher, Volume 1, 29. On Fisher and income inequality see Fisher, “Economists in Public Service.”
30 Schumpeter, Ten Great Economists, 223.
31 Fisher, “An Address on the Irving Fisher Foundation,” 23.
32 Fisher, Irving, “Why Has the Doctrine of Laissez Faire Been Abandoned?” Science 25 (Jan. 4, 1907): 20CrossRefGoogle ScholarPubMed; For the role of elites in the shaping Progressive Era policies see David Huyssen, Progressive Inequality: Rich and Poor in New York, 1890–1920 (Cambridge, MA: Harvard University Press, 2014), 89–150.
33 Evening Public Ledger, Mar. 3, 1916
34 “The Money Value of Human Beings,” New York Times, Mar. 19, 1916.
35 For the politics of Progressive Era reform see Rodgers, Atlantic Crossings, 235–67; On the impact of the National Civic Federation see also James Weinstein, The Corporate Ideal in the Liberal State, 1900–1918 (Boston: Beacon Press, 1968).
36 For an example of how Fisher sought to get the Carnegie Foundation on board with his reforms see Fisher to Elliot, Jan. 16, 1908, box 3, Fisher Papers. For his use of price statistics as a lobbying point see Fisher to Elliot, Dec. 9, 1909, box 3, Fisher Papers.
37 Fisher to Mr. Graham, Summer of 1889, box 1, Fisher Papers.
38 For a sampling of his different policy initiatives and reforms see Irving Fisher, The Works of Irving Fisher: Crusader of Social Causes, vol. 14, ed. William J. Barber (London: Pickering and Chatto, 1997).
39 “Extracts from biography,” box 6, Fisher Papers. Fisher's health fanaticism following a bout with tuberculosis and a visit to John Harvey Kellogg's Battle Creek Sanitarium is well documented in both biographies. He did not drink alcohol, coffee, or tea nor did he eat chocolate, pepper, refined sugar, or bleached white flour.
40 Daniel Rodgers, Age of Fracture (Cambridge, MA: Belknap Press of Harvard University Press, 2011), 3.
41 Rodgers, Age of Fracture, esp. 41–111. On the role that neoclassical economics has come to play in legal thought see Duncan Kennedy, “Law-and-Economics from the Perspective of Critical Legal Studies,” The New Palgrave Dictionary of Economics and the Law, ed. Peter Newman, 3 vols. (New York: Macmillan, 1998), 466–73. For the impact of rational and public choice theory on political science see Susan Lohmann, “Rational Choice and Political Science,” and Gordon Tullock, “Public Choice,” The New Palgrave Dictionary of Economics, 2nd ed., eds. Steven Durlauf and Lawrence Blume (New York: Palgrave McMillan, 2008).
42 Brown, Wendy, “Neo-Liberalism and the End of Liberal Democracy,” Theory & Event 7:1 (2003): 3–4 Google Scholar.
43 Venugopal, Rajesh, “Neoliberalism as Concept” Economy and Society 44:2 (Apr. 2015): 165–87CrossRefGoogle Scholar.
44 For the hands-on nature of the neoliberal state see The State After Statism: New State Activities in the Age of Liberalization, ed. Jonah D. Levy (Cambridge MA: Harvard University Press, 2006).
45 For the establishment of the Federal Reserve, which does not usually receive the same attention from Progressive Era historians as worker's compensation, income tax, prohibition, or women's suffrage, see James Livingston, Origins of the Federal Reserve: Money, Class and Corporate Capitalism, 1890–1913 (Ithaca, NY: Cornell University Press, 1989).
46 Fisher, , “A Remedy of the Cost of Living: Standardizing the Dollar, The American Economic Review 3:1 (Mar. 1913): 23Google Scholar; “A Compensated Dollar,” The Quarterly Journal of Economics 27:2 (Feb. 1913): 213–35CrossRefGoogle Scholar; The Purchasing Power of Money: Its Determination and Relation to Credit, Interest and Crises (New York: MacMillan, 1926); The Money Illusion (New York: Adelphi, 1928). On Fisher's writings on stable money see also reel 2:5, Fisher Papers.
47 For a “roundtable” of seven economists surrounding Fisher's plans see “Standardizing the Dollar—Discussion,” American Economic Review 3:1 (Mar. 1913): 29–51 Google Scholar; For Fisher and the Fed see Cargill, Thomas, “Irving Fisher Comments on Benjamin Strong and the Federal Reserve,” Journal of Political Economy 100:6 (Dec. 1992): 1273–77CrossRefGoogle Scholar. Fisher quoted on page 1274.
48 Milton Friedman and Anna Schwarz, The Great Contraction, 1929–1933 (Princeton, NJ: Princeton University Press, 1965); Bordo and Rockoff, “The Influence of Irving Fisher on Milton Friedman's Monetary Economics.” The goal of “stable prices” was added to the Federal Reserve Act on November 16th, 1977.
49 In 1981, Reagan passed Executive Order 12,291, which mandates cost–benefit analysis for all major environmental and health-and-safety regulations. Bohm, Peter and Henry, Claude, “Cost Benefit Analysis and Environmental Effects,” Ambio 8:1 (1979): 18–24 Google Scholar; Yoni Applebaum, “As U.S. Agencies Put More Value on Life, Businesses Fret,” New York Times, Feb. 16, 2011.
50 Viscusi, W. Kip, “The Value of Risks to Life and Health,” Journal of Economic Literature 31 (Dec. 1993): 1912–46Google Scholar.
