Gottfried Haberler: Review of Alvin Harvey Hansen’s Business-Cycle Theory (1929)

Gottfried Haberler’s review of Hansen’s Business-Cycle Theory. Its Development and Present Status (1927) assesses both its classification of cycle theories and its contribution to theoretical clarification. His judgment is favorable but discriminating: the book’s strength lies less in its organizing scheme than in its detailed arguments.

The review begins with Hansen’s departure from the monetary crisis theory he had supported on statistical grounds in his earlier book. Haberler endorses his new emphasis on the overlap between competing explanations:

In der vorliegenden Monographie vertritt er den Standpunkt, daß der Gegensatz zwischen den verschiedenen Konjunkturtheoretikern gar nicht so groß ist und daß sich auch zwischen den Anhängern der monetären Erklärung und den nicht monetären Theoretikern keine strenge Linie ziehen lasse — eine Behauptung, die mir sehr richtig zu sein scheint.

English translation: In the present monograph he takes the position that the opposition between the various business-cycle theorists is not nearly so great, and that no strict line can be drawn between the adherents of the monetary explanation and the non-monetary theorists either — an assertion which seems to me to be very correct.

This agreement establishes the review’s conceptual starting point: theories can be distinguished without sorting their advocates into mutually exclusive camps. Hansen accordingly assigns different theories to the same writer and classifies explanations by the feature of modern economic organization they identify as responsible for cyclical fluctuations.

Haberler reproduces the resulting three-part scheme. Explanations centered on capitalist organization emphasize distribution or the production process, including innovations and changes in consumption and demand. Those centered on exchange include Pigou’s error theory and Beveridge’s competition theory. Monetary explanations address relations among interest, profit, and the price level, or among prices, costs, aggregate profit, and capitalization. The scheme thus differentiates causal mechanisms within a shared understanding of cycles as a problem of the modern economy.

Haberler nevertheless questions its usefulness. Hansen places harvest theories under capitalist production because harvest fluctuations generate cycles only within a capitalist economy; Haberler asks whether that argument could be reversed. More generally, the recurrence of the same authors across sections weakens the classification’s clarity, although he concedes that a satisfactory arrangement is scarcely attainable.

Der Schwerpunkt und das Verdienst des Buches liegt auch nicht so sehr in der Anordnung des Stoffes, als in den Detailausführungen, die sich einer eingehenden Wiedergabe naturgemäß entziehen.

English translation: Nor does the centre of gravity and the merit of the book lie so much in the arrangement of the material as in the detailed expositions, which by their very nature elude any thorough reproduction.

This distinction between arrangement and substantive analysis governs Haberler’s final appraisal. He singles out Hansen’s extensive, persuasive criticism of Foster and Catchings, whose theory he regards as the culmination of an influential current in crisis theory. He does not reproduce that criticism, so the review establishes its importance rather than its argumentative details. The closing judgment presents Hansen’s demanding book as a significant contribution to clarifying business-cycle theory, intended for readers beyond the introductory level.