ABSTRACT
Two pioneers Business cycles rarely ever stop at national frontiers. Cyclical impulses are transmitted across borders by drastic changes in the trade of goods and assets, and by reversals of money flows. The spreading of cyclical fluctuations throughout the world economy is affected by the structures of the international division of labour, by different varieties of institutional frameworks and by the policies pursued by national governments. All this has been known since the heydays of mercantilism. However, the large literature on business cycle theory that developed between the mid-nineteenth and mid-twentieth centuries contains hardly any systematic treatment of its international aspects.1 When Gottfried Haberler, in 1937, published Prosperity and Depression, his authoritative survey and synthesis of business cycle theories, he could not make many references to theoretical work on “the international complications”. The only book that he found to “deal expressly” with the subject was Hans Neisser’s Some International Aspects of the Business Cycle of 1936 (Haberler [1937] 1964, p. 407). Haberler’s own chapter on “International Aspects of Business Cycles” ([1937, ch. 11] 1964, ch. 12) is one of the few other attempts at systematic analysis made in the same period. This chapter compares Neisser’s and Haberler’s early approaches to international business cycle analysis, setting them in perspective of mid-twentieth century international economics. Their approaches differ strongly in content and style, despite some similarities in the backgrounds of their authors. Both Neisser and Haberler had started their careers in the German language area, but made their contributions in highly visible publications in English. Neisser published his book with the University of Pennsylvania Press in late 1936, having come to work at the Wharton School after his escape from Nazi Germany. The treatise reflects his theoretical background in the Kiel School, with its classical perspectives on the long-term dynamics of capital accumulation, technical progress, growth and (un)employment, as well as Neisser’s empirical orientation. Haberler’s Prosperity and Depression featured as a report to the League of Nations, only few months after Neisser’s book. It was a synthetic exposition of the most relevant business cycles theories of the time, including some elements
of Neisser’s approach to business cycles in the closed economy. For lack of theoretical blueprints, Haberler’s chapter on international aspects of business cycles differs. It provides an independent analysis of the role that imperfections in the mobility of goods and capital and different exchange rate regimes play in the cross-border spreading of cyclical movements of economic activity. The following section outlines Haberler’s approach before it is Neisser’s turn in the third section. The fourth section compares the two inter-war views on international aspects of the cycle, and the final section discusses their impact on developments of post-war international economics.
