Frank Albert Fetter – USA History

Frank Albert Fetter, USA Economic History

Frank A. Fetter (1863-1949) is recognized as an original thinker, and one who has a sufficiently fundamental and consistent theory of economics to have become the basis for a distinct group or " school." In his earlier thought, he adopted substantially the Austrian theory; but, while he remained highly subjective and "psychological," he sought to free his thought of materialism and hedonism. Adopting the volitional psychology, he made valuation a matter of free choice rather than of calcu lation of utility. At the same time, he came to oppose chrema-tistics, or "price economics," thus running counter to both Fisher and Davenport. He set "welfare economics" against "price economics," arguing that economics must help man to attain some goal. Nevertheless, while rejecting hedonism and criticizing marginal utility, Fetter recognized the importance of value theory, and developed a theory of value and distribution which is not greatly dissimilar to those of such economists as Pigou or Liefmann. In this respect, the chief points are that he tends to ignore physical limitations, and to minimize the significance of cost. For example, he considers interest as due entirely to difference in the present valuations of present goods and future goods, and criticizes Fisher and Bohm-Bawerk for mixing "productivity" with this. His doctrines of "psychic income," and "time value" (unconnected with productivity and rent) became well known.

Quite different from the foregoing are the views of the two former Harvard professors, F. W. Taussig and T. N. Carver.

In addition to his books on the tariff question and Wages and Capital, Professor Taussig (1859-1940) published Principles of Economics (1911), which is valuable as a restatement or revision of the Classical theories by one who is generally recognized as having been America's greatest teacher of economics. The doctrines of Bohm-Bawerk, Fisher, and others are on the whole skillfully merged into those of Mill and Marshall. The most notable features are the treatment of profits as a form of wages, and the peculiar theory that wages are determined by the dis­counted marginal product of labor.