Alexander Gerschenkron

Alexander Gerschenkron (Александр Гершенкрон; 1 October 1904 – 26 October 1978) was an American economic historian and professor at Harvard University, trained in the German Historical School of economics.

Born into a Jewish family in Odessa, then part of the Russian Empire, now in Ukraine, Gerschenkron fled the country during the Russian Civil War in 1920 to Austria, where he attended the University of Vienna, earning a doctorate in 1928.

In 1924, he enrolled in the University of Vienna's school of economics, graduating in 1928.

After graduation, Gerschenkron got married and had a child.

He found work in Vienna as a representative for a Belgian motorcycle firm.

He worked for the firm for three years, but then decided to commit himself to politics, in particular the Social Democrats.

He showed that the high rate of growth of Soviet industrial production was an effect of index number bias: a Laspeyres index calculated on the basis of 1926–1927 weights significantly overstates real expansion.

This "Gerschenkron effect" was a significant finding that deflated the announced superior Soviet growth.

The OECD website gives a more detailed description of the Gerschenkron effect:

The Gerschenkron effect can arise with aggregation methods that use either a reference price structure or a reference volume structure to compare countries.

For methods employing a reference price structure, a country's share of total GDP (that is the total for the group of countries being compared) will rise as the reference price structure becomes less characteristic of its own price structure.

For methods employing a reference volume structure, a country's share of total GDP will fall as the reference volume structure becomes less characteristic of its own volume structure.

The Gerschenkron effect arises because of the negative correlation between prices and volumes.

In other words, expenditure patterns change in response to changes in relative prices because consumers switch their expenditure towards relatively cheap products.

In this study, he constructed a series of dollar indexes of Soviet industrial output for the purpose of proving the deficiencies of the official Soviet index during that time (1927–1937).

However, in 1934 the party ceased to exist after the Austrian Civil War.

After the Anschluss in 1938, he emigrated to the United States.

Gerschenkron was born in Odesa, Ukraine (then a part of the Russian empire), into an elite Jewish family of the Russian intelligentsia.

When he was 16, he and his father left Russia during the period of the Bolshevik Revolution.

They eventually settled in Vienna, Austria.

There he taught himself languages including, German and Latin.

In 1938, Gerschenkron and his family emigrated to the United States after the annexation of Austria to the German Reich.

Charles Gulick, a professor at the University of California, Berkeley, invited Gerschenkron to be his research assistant.

Gerschenkron spent twelve months researching and writing to help produce Gulick's book, Austria: From Habsburg to Hitler.

He researched at the University of California, Berkeley, for five years and then in 1943 he moved to Washington, D. C., to join the Federal Reserve Board.

In 1944 he worked with the Federal Reserve in the Research and Statistics department.

During his time on the Federal Reserve Board, Gerschenkron established himself as an expert on the Soviet economy.

His knowledge was of vital importance to the Board, because it was during a time when the relationship between the Soviet Union and the United States was a central issue.

He worked on the Federal Reserve Board for four years, and was eventually promoted to the head of the International Section.

In 1945, Gerschenkron became an American citizen and in 1948, he left the Federal Reserve Board to accept a position as a tenured professor at Harvard University.

He was a professor of economics at Harvard for about 25 years.

There, he taught economic history and Soviet studies.

In a celebrated 1947 article, he found the Gerschenkron effect (changing the base year for an index determines the growth rate of the index).

His early work often pursued the statistical tricks of Soviet planners.

In 1954, Gerschenkron published a celebrated article, A Dollar Index of Soviet Machinery Output, 1927–1928 to 1937, in which he introduced what is now called the Gerschenkron effect (the difference between calculated Paasche and Laspeyres volume indexes).

Gerschenkron was an elected member of the American Academy of Arts and Sciences (1963) and the American Philosophical Society (1970).

In a 2012 research article, the Dutch social historian Marcel van der Linden demonstrates that Gerschenkron was a member of the Social Democratic Workers' Party of Austria, one of the two major political parties in Austria, which has ties to the Austrian Trade Union Federation (ÖGB) and the Austrian Chamber of Labour (AK); and, later, the Communist Party of Austria, both banned between 1933 and 1945 under both the Fatherland Front regime and the Third Reich control of Austria after the 1938 Anschluss.

Gerschenkron kept his former political affiliations a secret after he was able to immigrate to the United States.

Gerschenkron kept to his Russian roots—in his economics, history and as a critic of Russian literature.

His early work concentrated on development in the Soviet Union and Eastern Europe.