The Debt-Deflation Theory of Great Depressions: On Irving Fisher’s Use of Medical Metaphors

Abstract

Fisher’s early 1930s “debt-deflation theory of depressions” is characterized by one central epistemic feature: the role held by medical analogies throughout the description and analysis of economic booms and depressions—, both as epistemic analogy, carrying a transfer from the analytical treatment of medical diseases to the analytical treatment of economic diseases, and as structural analogies, implying a transfer from the design of medical treatments to the design of economic policies. After presenting Fisher’s “debt-deflation theory of depressions” (section 1), the paper focuses on the “two major economic maladies,” the debt disease and the dollar disease (section 2), and offers an interpretation of these metaphors in terms of a new frontier between what Georges Canguilhem named “the normal” and “the pathological” (section 3).

Keywords

• Fisher (Irving)
• Canguilhem (Georges)
• rhetorics
• medical metaphors
• depressions
• business cycles