The archive.

Every postwar slump revived the same dread, and by 1980, amid inflation, recession, a weak dollar, and a soaring gold price, it returned with fresh urgency. Whether another Great Depression could strike, Haberler answers by separating trigger from amplifier. The catastrophe of the 1930s, he argues, was largely homemade, a cumulative monetary contraction the Federal Reserve could have arrested, worsened by a fragile unit-banking system, rigid gold-standard parities, and beggar-thy-neighbor protection. Drawing on Friedman and Schwartz, he rejects the Marxist collapse theory, Keynesian secular stagnation, and the Austrian overinvestment account associated with Hayek and Robbins, noting that Robbins himself recanted. A deflationary depression on that model he judges almost inconceivable now, given deposit insurance and flexible exchange rates; the real modern danger is inflationary recession, policy panic, and the protectionism that once turned national rescues into collective ruin.

Money GNP fell by 16 percent, real GNP by 13 percent, industrial production by 32 percent and unemployment shot up from 11 percent in March 1937 to 20 percent in June 1938—all in the short span of 13 months.

Forty years after Schumpeter predicted that capitalism would perish of its own success, Haberler measures the prophecy against the postwar record. Schumpeter, he stresses, was no socialist: his forecast was diagnostic, resting on the claim that capitalism's economic triumphs corrode the cultural and political institutions that shelter it, from aristocratic leadership and the family firm to a bourgeois order steadily undermined by a rising class of resentful intellectuals. Haberler preserves that insight while pressing three corrections. Schumpeter oversold monopoly, much of which lives on state protection rather than creative destruction; his case for socialism's efficiency belonged to the 'logic of blueprints,' which paired comparisons of West and East Germany or Taiwan and China have since demolished; and his gloom about capitalist resilience underrated the growth the postwar decades delivered. The question, Haberler concludes, is how far public planning can go within democratic limits.

“Can capitalism survive? No. I do not think so.”

The fratricidal European war of 1914 ended a liberal international order of free trade, gold, open migration, and passport-free travel, and, in this survey prepared for the Antonio Feltrinelli Prize, becomes the starting point for sixty years of upheaval in the world economy, macroeconomic theory, and policy. Haberler reads the interwar catastrophe as the product of monetary destruction, delayed devaluations, and protectionism rather than any inherent flaw of capitalism; the postwar great surprise of prosperity he credits to sound finance, GATT liberalization, and Marshall Plan aid. Tracing the Keynesian revolution and the monetarist counterrevolution, he arrives at the stagflation of the 1970s, arguing that inflation is no permanent cure for unemployment and that monetary restraint must be joined to fiscal discipline and competitive, deregulated markets.

We now know that money had a lot to do with the Great Depression.

Grant a single ruler complete command of monetary and fiscal policy, insulated from parliaments and pressure groups: what would a credible cure for stagflation actually require? Haberler's benevolent and enlightened dictator is a methodological fiction, benevolent in respecting consumer sovereignty, enlightened in trusting competition and private property over the central planning of Lange and Dickinson. The prescription that follows binds monetary restraint, with money growth cut to potential real GNP growth, to fiscal discipline, tax reform against bracket creep and phantom profits, and above all the withdrawal of the privileges that keep wages and prices rigid: farm supports, the Davis-Bacon Act, minimum-wage laws, closed shops. Freer trade, he argues, is the most powerful discipline on domestic monopoly, and inflation the fons et origo of the whole malaise.

A 2 per cent reduction in real GNP is a shock, but it is not a crushing burden.

Assembled as the world economy emerged from the severest recession of the postwar period, this edited symposium gathers Haberler as framer and contributor alongside Michael Bruno, Robert Mundell, and others to debate what made the early-1980s slump so deep and how recovery might proceed. Haberler supplies the anti-catastrophic baseline: this was disinflation after the runaway 1970s, not a second Great Depression, since deposit insurance and central-bank activism made a wholesale monetary collapse unthinkable. Bruno presses the oil shocks and real-wage resistance; Mundell and other reformers warn of an unstable dollar and the absence of professional consensus. Against calls for coordinated intervention and fixed rates, Haberler defends floating as an imperfect but durable second-best in a world of divergent national policies.

The world economy is sinking, yet the profession is unable to reach any consensus on what should be done.

That devaluing a currency must worsen a country's terms of trade was, in 1952, an assumption widely taken for granted, and this compact theoretical note, reprinted here, sets out to dismantle it. Haberler's thesis is deliberately asymmetrical: in the normal case, where depreciation improves the balance of payments, the terms of trade may move either way and cannot be predicted a priori; only in the perverse case, where the balance of payments worsens, must they deteriorate. Working through demand and supply curves priced in dollars, he shows that a depreciation lowers both export and import prices measured in dollars, so one cannot pair dearer imports with cheaper exports and infer a loss. Against Joan Robinson's presumption that supply elasticities generally exceed demand elasticities, he denies that any broad generalization holds.

We have, then, the result that export and import prices move in the same direction.

Ever since serious discussion of the international monetary system began, economists have worried whether the world holds enough reserves, and this exchange pits Haberler against Robert Triffin over whether that worry still makes sense once currencies float. Haberler traces the anxiety through bimetallism, Marshall's symmetallism, commodity-reserve schemes, and Keynes's Clearing Union, arguing that nearly every such proposal presumed fixed or adjustable parities. Under Bretton Woods, defensible but revisable par values made speculation rational and enlarged the appetite for reserves; under generalized floating, the master problem of reserve control simply dissolves. Reserves matter, he insists, only through national choices such as monetary restraint, sterilization, and intervention, so the IMF should practice surveillance rather than act as a world central bank. Triffin's reply presses the opposite case, keeping dollar-centered reserve creation in view.

Under the Bretton Woods system, in contrast, "complete confidence" in the existing rates was no longer possible.

Regional integration schemes like the European Common Market are new, this presidential address contends, only in a narrow institutional sense; the deeper story spans two centuries of world economic history. Haberler discerns three great waves of integration that dwarf the postwar regional projects: the internal unification of national markets (the German Zollverein, the U.S. Constitution, Italian unification), the nineteenth-century movement toward freer world trade under British leadership and the gold standard, and the post-1945 restoration of multilateral exchange after the disintegration of 1914 to 1945. That interwar collapse he blames on monetary destruction and institutional failure, not on any contradiction internal to capitalism. His closing warning is pointed: regional blocs such as LAFTA and the EEC may themselves endanger the wider multilateral order they claim to advance.

It was mainly due to the wholesale destruction of money, which in turn was largely the consequence of institutional weaknesses and incredibly poor policies, on the national and international level.

When Washington suspended the dollar's convertibility into gold in August 1971, it exposed how deeply American inflation had become the world's problem, the theme of this 1973 essay, collected in Haberler's volume on inflation and business cycles. Because the dollar served as reserve and intervention currency, U.S. price rises under Vietnam and Great Society financing were transmitted abroad in amplified form, forcing Germany, Switzerland, and Austria to resist inflation they had not created. Haberler distinguishes a pure dollar crisis from a mark or yen crisis, locates the fundamental defect in the adjustable peg, and defends greater exchange-rate flexibility through managed floating. Only domestic monetary restraint, he insists, can end inflation itself, but floating spares the system disruptive one-way speculation.

But let me repeat, the compulsion to submit to imported inflation arises only under a regime of fixed exchanges and convertibility.

Delivered as three lectures in Cairo against the postwar tide of import substitution, the Singer-Prebisch thesis, and Myrdal's backwash pessimism, these essays defend trade as an engine of development while conceding narrowly bounded exceptions. Haberler refuses to equate development with industrialization, Switzerland and Denmark being advanced without it, and reframes comparative advantage as a dynamic channel supplying capital goods, technical knowledge, foreign investment, and competitive discipline. He denies that classical theory ever promised income convergence, and dismantles the claim that primary exporters face a secular deterioration in their terms of trade, faulting its reliance on British price series, freight costs, and quality bias. Disguised unemployment he treats as low productivity, not a free resource; infant-industry protection he allows only as a costly, temporary investment, preferring education, health, and infrastructure to trade restriction.

The underdeveloped countries are not exempt from the general law of scarcity—they least of all, unfortunately.

At the heart of Schumpeter's theory of capitalist development lies a startling doctrine: a stationary circular-flow economy would have a zero rate of interest, and the positive rate observed under capitalism springs entirely from innovation financed by newly created bank credit. Haberler weighs this extreme version against a milder one and finds the extreme untenable, since it demands both the absence of time preference and zero marginal productivity of capital, assumptions he doubts once routine investment and ordinary impatience are admitted. Yet he defends Schumpeter's larger dynamic account, ranking its disequilibrium approach above the excessively static equilibrium theory of Mises and Hayek, who deny that credit expansion can permanently enrich the capital stock. The comparative question of whether dynamics raises or lowers interest, he concludes, is a comparatively unimportant detail.

The extreme version of his theory is hardly acceptable.

Trade theory has been weakened, this Nobel Symposium survey argues, by a set of artificial oppositions: Ricardo against Heckscher-Ohlin, theory against empirics, factor proportions against technology. Read properly, Haberler insists, the tradition running from Ricardo through Mill and Marshall to Ohlin and Samuelson is continuous and plural, for Ricardo belongs not to the labour theory of value but to opportunity cost within a general price system. He faults the textbook shrinking of Heckscher-Ohlin into a two-factor capital-labour model, restores natural resources and their heterogeneity to theoretical importance, and reads the modern literature on skills, R&D, technological gaps, and product cycles as, in his phrase, pure Schumpeter. What emerges is not a single predictive law but a disciplined mosaic of overlapping models, with general equilibrium preserved as an indispensable ideal type.

No sophisticated theory is required to explain why Kuwait exports oil, Bolivia tin, Brazil coffee and Portugal wine.