Gottfried Haberler, “Integration and Growth of the World Economy in Historical Perspective”

This file is a single-author presidential address/article. Haberler’s scope is deliberately large: he places the postwar fashion for regional integration, especially the European Common Market, within two centuries of world economic history. His central thesis is that modern integration is not novel except in a narrow institutional sense; the more important story is the long movement toward, interruption of, and post-1945 restoration of worldwide multilateral exchange.

Haberler begins by defining integration as a matter of degree rather than as a single institutional form.

We mean by integration closer economic relations between the areas concerned.

That conceptual move allows him to compare national unification, free commodity trade, factor mobility, monetary arrangements, and policy coordination on one continuum. He refuses to reserve the phrase “true integration” for any one stage, thereby shifting attention away from legal forms and toward actual economic interdependence.

Looking over the evolution of the world economy during the last two hundred years or so, we can clearly discern three big waves of integration—preceding and dwarfing the regional integration movements of the last ten years.

The essay’s structure follows these waves. First came internal national integration: Britain, France, the United States, Germany through the Zollverein, Italy, and other nation-states created domestic free-trade areas that made modern development possible. Second came the nineteenth-century movement toward freer world trade, led by Britain and extended through tariff reductions, liberalized shipping, colonial “open door” policies, migration, capital flows, and the gold-standard payments system. Haberler stresses that even after tariffs began rising after the 1870s, technological change and factor movements kept world trade expanding.

The interruption is the period 1914–45, which Haberler treats not as proof of inherent capitalist breakdown but as a historically singular catastrophe produced by war, protectionism, monetary collapse, and policy failure.

The period from 1914 to 1945, bordered by two world wars and bisected by a catastrophic depression, can surely be described as one of disintegration of the world economy and declining world trade, under any reasonable definition of these terms.

His account of the Great Depression is sharply anti-Marxian and anti-secular-stagnationist. He rejects explanations based on deep structural contradictions, arguing instead that policy and institutional failure turned recession into disaster.

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.

The third wave is postwar reintegration. Haberler emphasizes the removal of wartime controls, restoration of convertibility, dismantling of quotas, and revival of the price mechanism. He argues that this worldwide liberalization mattered more than celebrated regional schemes.

This wave of world-wide integration has had more powerful and beneficial effects than the much more advertised and talked-about series of regional integrations.

A major section addresses less developed countries. Against Marxian and Myrdalian pessimism, Haberler argues that postwar industrial growth did spread benefits outward through export demand, aid, capital flows, and technology. He concedes uneven terms-of-trade movements and heterogeneity among developing economies, but rejects the claim that a stagnant world market is their central obstacle.

The most important fact is that the volume of trade of the less developed countries has grown and is growing at a substantial rate.

The concluding outlook is conditional rather than prophetic. Continued integration depends on growth and employment in industrial countries, further trade liberalization, and avoidance of balance-of-payments protectionism. Haberler’s final warning is that regional integration can undermine the wider multilateral order it is often said to advance.

Paradoxically, attempts at regional integration in various parts of the world constitute an imminent danger to world-wide integration and further growth of multilateral trade.

The work remains relevant as a liberal-internationalist interpretation of globalization before the term became common. Its core moves are historical periodization, scalar definition of integration, monetary reinterpretation of depression, defense of multilateral trade, and skepticism toward protectionist regional blocs.