Gottfried Haberler, Die Kredittheorie der Cambridger Schule (1929)

Haberler’s critical essay examines D. H. Robertson’s Banking Policy and the price level as a statement of Cambridge monetary and business-cycle theory, developed in close association with Keynes and interpreted by Pigou. Its opening frames monetary theory as an unfinished inquiry:

Keynes wird der Ausspruch zugeschrieben, daß die Geldtheorie die tieferen Probleme der Geldwirtschaft noch kaum berührt habe.

English translation: Keynes is credited with the remark that monetary theory has as yet scarcely touched the deeper problems of the money economy.

Haberler admires Robertson’s analytical precision but questions whether his assumptions justify expansionary banking policy. The essay proceeds from industrial fluctuations to credit-financed capital formation, exposing the importance of resource allocation, saving, and interest.

The first section reconstructs Robertson’s account of “appropriate” fluctuations: changes in output that producers could rationally undertake in response to changing economic conditions. Beginning with barter and industries collectively owned by their producers, Robertson considers changes in costs, wants, and exchange ratios. Haberler asks whether these factors explain cyclical movements or merely describe responses to a cycle already under way. His objection to one proposed explanation is concise:

Mir will es scheinen, daß wir da ganz klarer Weise eine Folgeerscheinung des Produktionszyklus vor uns haben.

English translation: It seems to me that we have here, quite plainly, a consequence of the production cycle before us.

This distinction between cause and consequence structures the criticism. Rising costs during prosperity may check expansion without explaining its origin. Likewise, identifying circumstances in which greater output would be advantageous does not establish why fluctuations recur.

A central dispute concerns Robertson’s “elasticity in terms of efforts.” In his wheat-and-iron example, increased agricultural productivity encourages industrial producers to expand output. Monetary expansion supposedly assists this adjustment because rising money earnings stimulate effort more effectively than falling living costs. Haberler treats that behavioral premise as unproven and questions its combination with assumptions of idle productive capacity.

His alternative emphasizes transfers of capital and labor between industries. Adjustment depends on relative profitability, not simply increased exertion. Maintaining wheat prices after agricultural productivity rises could retain or attract resources in agriculture when their movement toward industry is required. Generalized across commodities, Robertson’s prescription risks preventing price declines precisely where real production costs have fallen most.

The transition to monetary analysis therefore carries a substantial burden:

Robertson untersucht hier, wie sich jene Umstände, die in der Naturalwirtschaft eine Ausdehnung der Produktion hervorrufen, in der Geldwirtschaft auswirken und durch die Geldpolitik beeinflußt werden.

English translation: Robertson here investigates how those circumstances which in a barter economy bring about an expansion of production take effect in a money economy and are influenced by monetary policy.

For Haberler, conditions established under simplified barter assumptions cannot automatically determine appropriate banking policy. Once production takes time and depends on accumulated resources, the analysis must account for saving and capital finance.

The second section values Robertson’s distinctions between voluntary and forced saving, including consumption reduced directly by inflation and saving undertaken to restore cash balances. Haberler nevertheless rejects a rigid association of long-term saving with fixed capital and short-term saving with circulating capital. Durable savings can finance circulating capital; its dependence on bank-created credit must be demonstrated rather than assumed.

Robertson’s account of inflation follows successive adjustments in expenditure, prices, and cash reserves. Haberler finds the eventual proportional adjustment of prices to money less revealing than the elaborate analysis suggests, while its transitional sequence rests on restrictive assumptions about goods flows, anticipation, and equilibrium. He grants the conditional validity of Robertson’s theorem linking circulation time, production time, and the circulating capital required by additional workers, but disputes its policy implications. Voluntary saving and technical progress can also provide capital, and continuous population growth does not adequately model the sudden absorption of unemployment during a boom.

The decisive omission is interest. Credit expansion may lower interest rates and temporarily render new enterprises profitable; the question is whether those enterprises remain viable when expansion ends and financing again reflects actual saving. Haberler distinguishes credit creation offsetting productivity-driven price declines from expansion that raises prices, whose lasting productive benefits are more restricted. His qualified engagement with Cambridge theory thus shifts attention from price-level management to the durability of the productive structure: increased output alone does not establish that the credit policy supporting it is sustainable.