Haberler, Gottfried von

▪ 1996

      Austrian-born U.S. economist and educator (b. July 20, 1900, Purkersdorf, Austria—d. May 6, 1995, Washington, D.C.), was an expert on international trade and a staunch advocate of free-market principles. Haberler was educated (B.A., 1923; Ph.D., 1925) at the University of Vienna, where he adopted an "Austrian" school of thought that was identified with a generation of top economists who attended that university. Haberler sought to dispel the notion that governments and politicians should serve as guardians of economic life and set forth in his writings that methodological individualism—which examines all human conduct as a result of personal instincts, judgments, and decisions—was the proper approach to the study of government, its bureaucracy, and the political processes that influence economics. He studied in London and the U.S. before returning to the University of Vienna to teach (1928-36) economics and statistics. Haberler also served as consultant (1935-36) to the League of Nations and wrote the classic Prosperity and Depression (1937) for that organization. From 1936 to 1971 he taught at Harvard University, and from 1971 until his death he presided as resident scholar at the American Enterprise Institute, Washington, D.C., a think tank devoted to free-market approaches to public policy issues. Haberler was also noted for his reformulation of the theory of comparative costs in terms of opportunity cost, for helping to revive the influence of the purchasing power parity doctrine, and for such works as The Theory of International Trade (1937), Money in the International Economy (1965), and Inflation and the Unions (1972).

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▪ American economist, writer, and educator

born July 20, 1900, Purkersdorf, Vienna, Austria-Hungary [now in Austria]

died May 6, 1995, Washington, D.C., U.S.

      Austrian-born American economist, writer, and educator whose major field of expertise was international trade.

      Haberler studied economics at the University of Vienna under Friedrich von Wieser (Wieser, Friedrich von) and Ludwig von Mises (Mises, Ludwig von), receiving his doctorate in 1925. After further study in England and the United States, he taught economics and statistics at the University of Vienna from 1928 to 1936. He also served as consultant to the League of Nations during his last two years in Vienna. In 1936 he became a professor of economics at Harvard University, a post he held until 1971, when he joined the American Enterprise Institute in Washington, D.C.

      Haberler became famous chiefly as a writer on international trade, and his major work, The Theory of International Trade (1937), is considered a classic. Particularly influential was his reformulation of the theory of comparative (comparative advantage) costs in terms of opportunity cost. He introduced the production substitution curve (now referred to as the production-possibility frontier), which offered a framework for considering the effects of multiple variables in the process of production. This led to major insights in the theory of international trade. Haberler also helped to revive the influence of the purchasing power parity doctrine, which states that relative price levels are major determinants of equilibrium exchange rates (exchange rate). He produced influential work on the flexibility and stability of exchange rates as well as on tariffs (tariff). Haberler was ahead of his time in advocating, in 1959, free trade as an effective policy for developing countries. His marked ability to synthesize the important elements in economic literature was also apparent in a classic study of business cycle theory that he wrote for the League of Nations, Prosperity and Depression (1937).

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