Prosperity and Depression

PREFACE TO THE 1941 EDITION

In the preface to the first edition of this book, I wrote that “our knowledge of the causes of depressions has not yet reached the stage at which measures can be designed to avoid them.” Anyone studying the 1939 edition, or more especially the new Part III which Professor Haberler has prepared for this edition, cannot fail to be struck by the exceptional advance which has been made in recent years in the particular branch of economic science with which this volume is concerned. Is our knowledge today sufficient to enable us to avert depressions? Will governments be able to use it successfully after the war? No one, I imagine, would reply to either of these questions with a categorical affirmative; but at least the categorical pessimism I expressed in 1936 would no longer be justified.

The interest that has been stimulated in this problem of the alternation of prosperity and depression and the abundant literature that has been published since the first edition of Professor Haberler’s book was issued have given rise to the need for these two enlarged editions. This edition contains no changes in Parts I and II. But a third part has been added, in which Professor Haberler deals successively with the theory of the multiplier; the foreign trade multiplier; the multiplier and the acceleration principle in dynamic models; the problem of the turning points; the so-called “Ricardo effect”; price inflexibility, wage rigidity and unemployment. He adds a final section which is directly concerned with certain problems of policy.

The analytical table of contents has been expanded, and supplementary name and subject indexes have been added to cover Part III. The manuscript of Part III was completed in June, 1941.

A. LOVEDAY      

Director of the Economic, Financial
and Transit Department        

Princeton, July 1941