Donald Swisher

Donald Swisher was an economist who worked at Yale University in the early 20th century. Swisher was interested in the natural laws that governed worker’s wages. His research is considered a response to the theories of Irving Fisher.

In 1907, Irving Fisher documented a strong connection interest rates and inflation. When inflation rose, so did the rate of interest. Fisher argued that this pattern was indicative of a natural law. Evidently market forces caused interest rates to gravitate towards some natural level — a level that preserved the income-earning capacity of creditors.

In 1909, Swisher published a corresponding theory. As with the rate of interest, Swisher found that wage growth tended to rise and fall with inflation. Indeed, the coupling was so tight that had all the hallmarks of a law of nature. Echoing Fisher, Swisher argued that market forces caused wages to gravitate towards a natural level — a wage rate that preserved the income-earning capacity of labor power.

Despite the fact that Swisher’s claim was based on equally compelling evidence, his theory of a ’natural wage rate’ was mostly ignored. In contrast, Fisher’s notion of a ’natural rate of interest’ became widely accepted by economists.

The reasons for this discrepant treatment are not well understood. It may be (and this is controversial) that the acceptance of economic theories is not based entirely on their empirical merit.