THE APPOINTMENT of Arnold Harberger, chairman of the economics department at the University of Chicago, to head the Harvard Institute for International Development (HIID) would confirm Harvard's preference for the big name, even if the fame that comes with it means infamy. In appointing individuals to its various faculties, Harvard should not spurn those whose views are antithetical to the Harvard community's Diversity in a faculty is to be applauded.

But at the HIID, there is only one director; practically speaking, his job is to run the place. Subject to the approval of the governing board, he chooses the staff, including the permanent Institute Fellows, and decides which nations the Institute will help out. Because the HIID's budget is limited, he will have to make choices. Lester Gordon, the current director, said that the HIID is now "declining more aid requests and contract proposals than we're accepting."

The HIID claims to be an objective adviser to foreign governments, or in its own jargon, "to minimize the intrusion of external value judgements." But in helping to shape the economic policies of the Third World, which in turn shape the lives of people, the HIID is, in the words of one, "value ridden."

By selecting Harberger, Harvard would have made its value judgement. Arnold Harberger is academically and personally committed to a virulent brand of free market economics. He believes that business knows best.

In 1976, he and Milton Friedman flew to Chile to lobby for their panaceas. On his own steam, unpaid by the Chilean government, Harberger gave speeches and interviews in Chile to publicize his views. He has more than a little of the crusader in him.

His approach to development economics is one that appeals to generals. Because the policies required to carry it out--massive cutbacks both in government spending and regulation of business--result in soaring unemployment and a widening gulf between rich and poor, they are hard to carry through in democratic societies. In Chile, a nation ruled by a repressive military dictatorship, he has pushed his ideas where the people affected have no recourse against them. In effect, Harberger has used the Chilean people to test his own economic notions. He claims to be dedicated to the free market, yet he proselytizes his ideas in a country which has no free marketplace of ideas.

In choosing a director for its international development institute, Harvard should search for someone with an open mind, someone with heart. Arnold Harberger is not such a man.