Gottfried Haberler, Some Remarks on Professor Hansen’s View on Technological Unemployment (1932)

Haberler’s short theoretical intervention challenges a specific objection to the reemployment of workers displaced by technical improvements. Its scope is deliberately narrow: he seeks to correct an argument that exaggerates technological disruption, without denying the losses involved in reallocating labor. The essay proceeds from Hansen’s criticism of Paul H. Douglas through a monetary-circulation example, then tests Hansen’s position against his concessions concerning credit and demand elasticity.

Douglas maintains that labor-saving improvements reduce costs, allowing either lower consumer prices or higher profits; the resulting expenditure can absorb displaced workers. Hansen objects that consumers’ increased purchasing power is offset by the purchasing power lost by unemployed workers. Haberler locates the problem in an implicit monetary assumption:

Now it seems to me that Professor Hansen himself has become the victim of a fallacy because he overlooks that the above reasoning implies a decrease in the velocity of circulation of money.

The conceptual move is to treat demand as a flow of monetary expenditure per unit of time, rather than merely to balance gains and losses in purchasing power. In Haberler’s example, consumers initially pay workers producing one commodity, who subsequently purchase other goods. Once the first commodity becomes cheaper, consumers can spend their savings directly on those other goods. Money reaches their producers one period earlier: eliminating an intermediate payment releases purchasing power for additional demand.

Haberler then considers whether this increase lasts only until displaced workers exhaust their previous earnings. His answer turns on the continued circulation of the money already transferred:

This objection, however, overlooks that the additional money in the hands of W₂ is going on to circulate and causes therefore a permanent increase of demand in general per unit of time.

Consumers or displaced workers might hold money longer, but Haberler treats such behavior as an additional assumption requiring justification, not as an automatic consequence of technical change. Keeping both money quantity and velocity constant supplies his baseline and places the burden of proof on anyone predicting a change in velocity. His conclusion is correspondingly conditional:

It follows that ceteris paribus if the quantity of money and its velocity of circulation remain unchanged, after the unemployed workers have been absorbed, a new equilibrium will be reached with the same level of money wages.

The issue is therefore not simply whether employment eventually recovers, but whether recovery requires a fall in money wages. Haberler argues that Hansen’s own concessions undermine that requirement. Hansen acknowledges that cheaper production releases bank credit for other uses; Haberler replies that the same release occurs in a money economy without credit. On this account, the relevant credit policy is the avoidance of monetary contraction, not an additional expansion needed to compensate for technological progress.

Hansen also concedes that labor need not be displaced when unit-elastic demand keeps total expenditure on the improved commodity unchanged. Haberler interprets this as another use of the same released purchasing power: consumers purchase more of the cheaper good instead of spending their savings elsewhere. The destination of expenditure changes where labor is employed, but not his conclusion about the eventual wage level.

The closing distinction separates equilibrium reasoning from adjustment costs. Spending on other industries can require labor to move, whereas increased purchases within the original industry may permit it to remain. A final note qualifies even this contrast: an improved process may require a different quality of labor despite unchanged aggregate employment.

Nobody denies that this shift of labor might involve certain losses and frictions, from which we abstract when assuming mobility of labor and the other requirements of perfect competition.

The essay’s significance lies in separating technological displacement, monetary contraction, and transitional friction. Haberler defends the possibility of reabsorption without lower money wages under stated monetary and competitive assumptions; he does not claim that the transition is immediate or costless.