Gerschenkron was born in Odesa, Ukraine (then a part of the Russian empire), into a well-to-do Jewish family[1] from Bessarabia.
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.
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.
[2] 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.
In other words, expenditure patterns change in response to changes in relative prices because consumers switch their expenditure towards relatively cheap products.In 1951, Gerschenkron wrote an essay Economic Backwardness in Historical Perspective, a cornerstone of his career, and of significance to European economic history.
He also referred to a northwest-to-southeast axis within Europe, with Britain as the least backward, followed by Belgium, the Netherlands, France, Germany, Austria, Italy, and—the most backward—Russia.
He laid much of the blame for Austria's economic backwardness on Böhm-Bawerk's unwillingness to spend heavily on public works projects.
He defines the economic history of the problem as this: In 1879, Germany introduced a new tariff and formulated a definite policy, which protected domestic grain production against overseas competition.
This policy worked in favor of the big estate owners, the Junkers, who held important political positions in Prussia.
Gerschenkron arrives at this conclusion, "that democratic reconstruction of Germany... in insurance of world peace calls for a radical elimination of the Junkers as a social and economic group."
He believes the Germans should include this program of the agricultural adjustment plan in the peace treaties and entrust its execution and supervision to an international economic agency.
He also led evening seminars once a week in which his graduate students would discuss ideas for dissertations and evaluate quantitative techniques.
Many of his students went on to have productive careers, and a good number of them have attained presidency of the Economic History Association.
As one of his former students Deirdre McCloskey put it, "Alexander Gerschenkron was not the best teacher or the best economist or the best historian among these—nor even, I think, the best human being.
As an example of his facility with languages, Deirdre McCloskey tells of Gerschenkron's harsh evaluation of a Russian translation: "He wrote a devastating review of a translation from Russian of a book in economics, attacking in detail the author's apparently feeble command of the language.