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Irving Fisher was one of several innovative American economists who 
learned, and in some respect actively promoted, the Austrian 
subjective value theory, which was introduced by Carl Menger in 1861 
and popularized by Eugen Bohm Bawerk and Friedrich Wieser beginning 
in the late 1880s. Other prominent Americans in this field and of 
this generation were Frank Fetter and Herbert Davenport. 
 
These writers took the Austrian lead in defining _value as price_. 
Thus, the subjective theory of value was not a theory about value or 
worth in some intrinsic sense but a theory of market prices and 
costs. The question they asked was: what causes the prices of final 
goods and the costs of the factors of production to be what they 
are? This is the same question asked by the classical economists. 
The difference is that whereas the classicals had separate theories 
of the price of wages, rent, interest, and profit, the latter sought 
what Menger called a _unified theory of price_. 
 
The most sophisticated answer given by the Austrians was that the 
prices of goods and factors are determined simultaneously by the 
consumer wants and entrepreneurs' knowledge of those wants along 
with their knowledge of the alternatives available for satisfying 
those wants. This famous doctrine of subjective opportunity costs 
(or subjective theory of value and costs) was expressed in writings 
by Wieser, Bohm Bawerk, Davenport, and David Green (another 
American) before the turn of the century. 
 
Bohm Bawerk was the first within this new framework to try to 
incorporate interest. But he was criticized for his notion that 
interest depends on the materialist idea of the physical 
productivity of production methods that involve different degrees of 
roundaboutness. I believe that Fetter was the first among the 
Americans to make this criticism. And he may have been the first, 
period. His criticism was followed by Fisher and Davenport, each of 
whom claimed to be "more subjectivist" than Bohm Bawerk on the 
matter. The argument made by Fetter and Fisher was that instead of 
physical productivity, it was value productivity that mattered. 
These writers benefitted, by the way, from the "great" capital 
controversy between Bohm Bawerk and John Bates Clark, who had 
independently produced his own version of what had come to be known 
as the Austrian theory (following Menger). 
 
I am not as clear on Fisher's contribution as I am on that of Fetter 
and Davenport. So I will mainly write about them. The subjectivist 
criticism of Bohm Bawerk by Fetter seems to have assumed that an 
interest rate already was in existence which reflected or which 
could be used to determine the value productivity of production 
methods of different degrees of roundaboutness. That is, it assumed 
the existence of a market which a more fundamental theory would 
presumably have had to explain. Thus, one could easily claim that 
even if Bohm Bawerk was incorrect, he had been concerned with a more 
fundamental question than that of Fetter. 
 
This was Davenport's view (a view, by the way, which Fetter did not 
seem to grasp). Davenport sought to construct the underpinnings of a 
market for loanable funds and therefore of interest. His theory was 
based partly on time preference and partly on entrepreneurship's 
knowledge of the methods of satisfying wants over time. He argued 
that these underpinnings enabled him to develop a much more general 
theory of the prices of goods and factors than had previously been 
produced. In other words, he believed that he solved the problem 
that Bohm Bawerk had set out to solve. 
 
To my knowledge, which I admit is incomplete on this issue, Fisher 
seems to have abandoned his concern with this more fundamental 
issue, preferring to deal with issues that were less in what we 
today call the microeconomic realm and more in what we call the 
macroeconomic realm. 
 
 
There is a lot of useful information on the history and theoretical 
issues in:  
 
Davenport, H. (1908). Value and Distribution. Chicago: University of 
Chicago Press. 
 
 
Davenport's more complete and sophisticated presentation of his own 
theory is in: 
 
Davenport, H. (1914). Economics of Enterprise. New York: Macmillan. 
 
As you probably know, Davenport has been very much neglected. 
  
Pat Gunning, Sultan Qaboos University, Oman 
http://www2.cybercities.com/g/gunning/welcome.htm 
 
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