During the first week of July in 1936, an international conference on the "Problems of Economic Change" was held in Annecy, France. It brought together such notable economists as Ludwig von Mises, Wilhelm Ropke, Oskar Morgenstern, Bertil Ohlin, Lionel Robbins, Dennis Robertson, Charles Rist, William Rappard, John B. Condliffe, John Van Sickle, Alvin Hansen, John Maurice Clark, and Jan Tinbergen.
They had come to this attractive French city south of Lake Geneva to discuss the problem of business cycles and their effect on the world economy. Little agreement was reached over the three days during which these leading economists met. But there was a single consensus among the attendees. One of the other participants at the conference, Gottfried Haberler, had set an example and standard for how research on the subject of business cycles should be undertaken. According to the official summary of the conference:
There was throughout the whole conference one matter which secured the wholehearted support of all those present, namely the new technique in research which has been followed during the last two years in the study of the theory of the business cycle by Dr. Haberler. It will be recalled that he was appointed to a special post on the staff of the Economic and Financial Section of the League [of Nations]. . . . He was charged with the duty of examining the present state of knowledge in the theory of the business cycle and was to draw up a report on this subject . . . [T]here can be no doubt that everyone present was greatly impressed by the very valuable results that had been achieved by the procedure followed in the case of Dr. Haberler's work. Indeed, "Haberler-like methods" became a catch-phrase of the entire conference.1
Haberler had spent two years carefully researching and consulting on the various competing theories of the causes and consequences of business cycles and formulated a "synthetic" alternative, the result of which was published in early 1937 under the title Prosperity and Depression: A Theoretical Analysis of Cyclical Movements.2 For over 60 years it has been considered the classic summary and critical evaluation of the literature on this subject. Indeed, Joseph A. Schumpeter referred to it as a "masterly presentation of the modern material" for which he had the greatest "admiration.."3 And one of America's leading Keynesian economists, Paul A. Samuelson, hailed it as "the definitive study of business cycles, both pre- and post-Keynesian."4 Austrian economist F A. Hayek drew attention to Haberler's "excellent exposition" criticizing some of the fundamental assumptions and concepts of Keynesian economies.5
But this work was only one of Gottfried Haberler's many important contributions to economic theory and policy. In an economic career that spanned seven decades in the twentieth century, he made original contributions to monetary theory and policy, the theory of wages and union power, international trade theory, and the theory of economic development and growth.
Haberler was born on July 20, 1900, in Purkersdorf, near Vienna, Austria; the centenary of his birth offers the opportunity for an appreciation of his writings and his defense of the free market.
Haberler studied at the University of Vienna with three of the leading figures of the Austrian school of economics in the years immediately after the First World War: Friedrich von Wieser, Ludwig von Mises, and Hans Mayer. At the university his closest friends were three other students who, like himself, were to become internationally renowned economists in the decades to come: Hayek, Morgenstern, and Fritz Machlup. After Haberler earned his degrees in political science (1923) and law (1925), Mises helped arrange for him to receive a Spelman Fund (later Rockefeller Foundation) grant that enabled him to have two years of further study in the United States and Great Britain.
After returning to Austria, Haberler became a privatdozent (an unsalaried lecturer) at the University of Vienna, teaching a joint seminar with Hayek and Morgenstern. …