Volume 8, Issue 2

An interesting puzzle in 20th century economics is that in her magnum opus , The Accumulation of Capital (Robinson, J. 1956.  The Accumulation of Capital . London: Macmillan.), Mrs. Joan Robinson made no mention of the name Irving Fisher. Zero, none. In my view, Mrs. Robinson was the greatest British economist since Alfred Marshall, and Irving Fisher was the greatest economist ever lived. Yes, with a great diversity of subject matters, Fisher in economics was a Mozart in music, a Rembrandt in art, or a Darwin in biology. In short, Fisher was a genius.

To decide how to buy or sell a private good is a task for an individual in the standard economics model. It would be better to amend even this simple case because the terms of a trade are seldom left entirely in the hands of the individual traders involved. Haggling about the terms for a single trade is uncommon in most economies today. Yet it is the staple of beginning economics courses. It portrays an individual free to buy a bundle of commodities, each available at a given price and in any amount at the pleasure of the buyer. A student is told consumers choose what to buy in order to maximize their utility subject to a budget constraint. Any objection to this picture raised by a student is typically brushed aside by saying it is a model not a realistic picture of consumer behavior. Evidence to test the model rarely comes up.