Worldly Philosopher: The Odyssey of Albert O. Hirschman

by Jeremy Adelman

  By the mid-1950s, “balanced growth” was becoming a prevailing wisdom in the fledgling field of development economics. Poor countries suffered from a surplus of labor and shortage of capital, and the combination was a lethal, low-level “equilibrium trap”—too much poverty, not enough savings, low investments, emaciated infrastructures, and the resilience of obstreperous traditions. The central issue was “investment criteria”—coordinates for policy makers and lenders to allocate capital to pull societies out of their corner as exemplified in Ragnar Nurkse’s 1953 Problems of Capital Formation in Underdeveloped Countries. Balanced-growth theorists sketched how the dilemmas facing poor countries were interlinked: obstacles and hindrances transmitting themselves from one part of the system to another; chokepoints in one quarter could stymie advances elsewhere. This was so for two principal reasons. First, favoring one sector or industry would mean a surge in its output without enough demand to absorb it. The other main reason was that underdeveloped societies were short on capital, which had to be disbursed in a way that did not create scarcities in other sectors and industries that would choke off progress. Balanced growth was a way of breaking down the obstacles to development by hitting them all simultaneously and strategically to minimize dislocations like inflation or balance of payments troubles. Here was an approach aimed at avoiding as many conflicts as possible while changing the basic features of poor economies.

  Balanced growth was also a script tailor-made to feature one particular actor: the foreign economic advisor with panoptic powers. The economic missionary could grasp the larger picture and wield analytic tools to figure out how to calibrate the delicate balance and time interventions to minimize the frictions of an evolving system. There were several figures closely associated with the movement. They did not always see eye to eye, but they agreed on some essentials. One was Walt Rostow, a smart, ambitious, Yale-educated economic historian whose leanings grew more anti-Communist with the onset of the Cold War. At MIT, he cofounded the Center for International Studies as a nerve center for thinking about economic development and its political corollaries. Later he would go on to coin the term modernization and have an influence on US policy in Southeast Asia. His 1960 classic, The Stages of Economic Growth: A Non-Communist Manifesto, crystallized social scientific influences on Washington’s approach to containing radicalism abroad. The book offered a parable about how societies move through phases of development from “backwardness” to “maturity.”4

  The other main figure, also associated with MIT’s center, was Paul Rosenstein-Rodan, an émigré from Poland, who shared much of the anti-Communist concerns of his American peers. He too was concerned with backwardness and advocated a “big push” to drive an economy out of the sand of its peasant base by investing in several sectors at once. By the late 1950s, he advocated the use of heavy investment of foreign funds, aid, and investment to spur the process, which dovetailed with the growing sentiment in the United States that foreign economic policy had to do more than rely on a passive liberal trading order to contain the spread of radical anticolonial ideologies. W. Arthur Lewis’s 1955 book, The Theory of Economic Growth, synthesized the position. Lewis, who was Hirschman’s age, had some of the same practical background dealing with policy makers in decolonizing Ghana. His treatise focused above all on the obstacles to capital formation, especially in the restricted pool of savings in proportion to the yawning demand for across-the-board investment. To increase savings required a major overhaul of a society’s basic institutions and norms. While Lewis was less a fan of generalized planning than others of the “balanced growth” school, even though he did help blueprint Ghana’s first Five Year Development Plan, he nonetheless shared their fear of instability lest the price system throw the entire system into disorder and anarchy.

  The spectrum of thinkers among balanced growth advocates agreed on one thing. The crux of the problem lay in what underdeveloped societies were not: they were not developed. The circularity required that they had to be transformed without creating underlying imbalances that might throw a society off course—and fall prey to radical prophets. From one equilibrium state, planners had to create avenues to deliver societies to another equilibrium state. Against this backdrop, it is clear why Hirschman’s ruminations in 1954 at MIT did not go over well. Hirschman was skeptical of overarching models, he was less inclined to pathologize backwardness, and he was getting more interested in the role of disequilibria in history. So, it was a surprise to receive another overture from the United States two years later.

  At the time, the Department of Economics at Yale was a rebuilding powerhouse, largely the effects of Reynolds’ energies and vision—and Ford Foundation support. Once famous in the 1920s as the home of Irving Fisher, it had fallen behind Harvard, Chicago, and MIT. Reynolds was the kind of chairman with an eye for smart scholars with original turns of mind, like Schelling. He also spotted a hot new field, development economics. The institutional match was therefore a good one for Hirschman. Reynolds had secured support from the Ford Foundation to endow the Irving Fisher Visiting Professorship with the idea of promoting “problem-oriented research.” This was good for one year. Hirschman was the first holder.

  There were also significant affective ties at Yale. Some of Hirschman’s old colleagues from the Marshall Plan had moved there, such as Henry Wallich, who had worked on German reconstruction and later became a governor of the Federal Reserve Board and for whom Albert had a special affection; Robert Triffin, a former Fed colleague and soon-to-be critic of the Bretton Woods system; and Schelling, who had also served under the Marshall Plan. Wallich himself had launched Yale’s first course in the economics of underdevelopment and so was especially keen to learn from his friend’s extensive, firsthand experiences. This group wanted to “rescue” Hirschman from what they regarded as tropical oblivion. Schelling had been present at the MIT conference and was more enthusiastic about Hirschman’s insights than the hosts. The two had remained in touch over the years, swapping holiday cards; one year, the Hirschmans sent the Schellings a card bearing a cartoon of the family with Albert up a banana tree with Sarah and the girls looking up at him, bearing the caption “An excellent food is the banana, Let’s eat it today and plan it mañana!” The ironic take on economic orthodoxy was kindred with Schelling’s. At the time he was working on his own landmark book, The Strategy of Conflict, about bargaining and strategic behavior; never part of the mainstream, Schelling and Hirschman were natural companions—hence the grinning allusion to “a highly exploitable opportunity.” Little did Hirschman know that Schelling had played a hand behind the scenes. Intrigued by the MIT paper about Colombia’s successes and upon hearing of the last-minute Ford grant for the visiting professorship, Schelling urged Reynolds to contact his friend.5

  Fortuna struck more than once. By the middle of the academic year 1956–57, it was clear that Albert would not be able to complete his envisioned book. In March, Albert approached Norman S. Buchanan, who had taught at Berkeley when Albert arrived there as a refugee and in 1956 had become the director of the Social Science Division of the Rockefeller Foundation. Buchanan, whose work at the foundation was more and more involved with development issues in the Third World, saw an opportunity. He arranged to fund another year for Hirschman at Yale. Hirschman shared his glee with his sister. “I will be able to continue with this and other kinds of wisdom: about two weeks ago I was informed that the Rockefeller Foundation (I cannot burden Ford any longer) is going to finance my research … at the same time I am going to work as a consultant, in particular in connection with the foundation’s plan to support and create social science research projects and institutes in Latin America, Europe, and Asia.” He was also already aware of problems with his fit in the American academy. “Although the uncertainty concerning my future employment will continue to persist, I do not mind much, since I am still not sure I would really enjoy university life in the long run—although I am now tending toward it more than a few years ago. Still, I don’t
think I am suited as a professor—not confident or loquacious enough.”6

  So, a one-year fellowship evolved into two years.

  In return, Albert agreed to do some consulting work for the Rockefeller, which sent him to Brazil in August 1957 to participate in the International Economics Association meeting in Rio de Janeiro. Henry Wallich joined him. The trip to Rio turned into a formative fortnight because there was another purpose to the trip: the foundation had wanted Albert to spend a month looking into some of their funded projects and the prospects for social science research in Brazil and Colombia. This gave Hirschman an opportunity to get to know Latin American scholars in a way he never had while living in Bogotá and working on the margins of academic research circles. His analytical travelogue of impressions presaged a lifelong involvement with North American foundations behind development projects and social science research in Latin America.7

  The Rio conference was an eye-opener. Hirschman got his first real exposure to Latin American, especially Brazilian, social scientists, such as Celso Furtado (who was relatively silent, but “was really the éminence grise”), Roberto Campos, the “intellectually snobbish” Alexandre Kafka, and the more elder, “aristocratic,” and orthodox Eugenio Gudin, who presided over the Fundação Getúlio Vargas, the event’s cosponsor. Kafka’s paper at the conference was particularly illuminating for it offered a theoretical critique of economic development from a Latin American perspective, one that flew in the face of northern orthodoxies: it pointed not to vicious cycles of poverty and shortages of capital, but rather to fundamental structural shifts and tensions associated with the changes in capitalism within the region. Latin America was hardly poor and inert, the region’s economists insisted. Kafka pointed to the ways in which shocks created growth opportunities, which in turn spawned social inequalities and inflation; growth promoted structural disequilibrium, rather than resolving it. “Imbalance,” argued the Brazilian economist, “seems to be an interesting part of the explanation of the successful economic development of important Latin American countries.” It was change itself that was the challenge, not the lack of change. Here were eloquent, technically proficient economists who had no trouble seeing the problems of American social science. Rosenstein-Rodan made his case for the “big push” and generalized planning only to run into flak from Furtado, Kafka, and other Latin Americans present. Hirschman took this all in with amazement. This was, Hirschman quickly realized, “a remarkable convergence.”8

  In the wake of the conference, he worked his way through the university and think-tank circles of Brazil. These discussions only confirmed his impressions from the conference. After a long meeting at the Brazilian Institute of Economics with Kafka and others, he concluded that “this is obviously a remarkably competent group of people—almost uncomfortably so, for it is bound to be envied and denigrated by the far more ubiquitous incompetents.” Of course, it was a divided scene—largely between a figure like Celso Furtado, left-leaning, nationalistic, and the more conservative Roberto Campos on the other side. Hirschman was impressed by both, though he acknowledged that the latter tended to cluster some of the smarter younger economists. The School of Sociology at the University of São Paulo came in for similar praise. After almost three “fantastic” weeks in Brazil, Hirschman returned to Yale and feverishly rewrote the early, now lost, drafts of his manuscript. Of course, this was a risky move. With one year left on the clock of his fellowship, extensive revisions threatened to prolong the writing beyond his support. But the inspiration from Brazil could not be denied.9

  His impressions, a source of some loneliness and doubt when they were formed in Colombia, were now confirmed by what he encountered with these charismatic and original Latin American colleagues. They also ushered in a romance with Latin American, and especially Brazilian, social scientists, who seemed less disciplinarily constrained and more eclectic—without being any less serious about their economics.

  As he immersed himself, the news arrived that his mother, now 77 years old, had died in Rome in December 1956. It was a sign of how strained their relationship had been over the years that Hirschman was not so troubled by her illness. Indeed, his work had cut into his correspondence with Ursula—which elicited a sharp comment from his sister after Mutti’s death. “Many thanks for your letter with the description of Mutti’s last days,” he wrote contritely. “It was good to know that she was not alone and that she only suffered for a short time. How was it for our and your Eva? Was the relationship to your children in the end better?” Evidently, Mutti had the same ability to alienate her grandchildren as she did her son. But Albert had some patching up to do with his sister. “Please don’t be angry with me because I haven’t written. I cannot get myself to degrade our relationship to the level of writing post and Christmas cards.”10

  Albert’s embarking on a new career at midlife lifted the charmed halo that hung over the Hirschman family. Sarah found North Haven a hub of boredom, not unlike the suburban life she had endured in Washington. It would have spelled hardship had the girls not been enrolled in schools. Sarah could explore new horizons. She took courses at Yale, especially in anthropology. Sidney Mintz, whose pioneering work on Puerto Rico was itself shaping ideas of development from a different disciplinary standpoint, opened up the world of anthropology to Sarah, and thus to Albert. Mintz became a close friend, and he and Albert had affinities in their reservations about the orthodoxies of modernization theory. Another close friend was the professor of French literature, Victor Brombert. With time, Sarah’s hesitations about leaving Bogotá began to fade.

  It was Katia and Lisa who struggled most in the adjustment. Albert’s work would pull him more and more away from home in a way that the Bogotá routine never did; there is no memory of making up poems or weekend adventure. This coincided with the girls’ adolescence and their tribulations going to high school in suburban, 1950s America. The girls had had friends in Bogotá and preferred the more relaxed, tightly knit atmosphere of their Colegio, which was a close walk from the house. Now they faced junior high school and high school and the influences of peer pressure on two, culturally displaced girls. Katia, in particular, found the adjustment from the comforts of Bogotá trying. In her first autumn, the North Haven High School put on a dance. Anxious to fit in, she donned her fanciest dress, white socks, and patent leather shoes. The scene was mortifying. The gym was huge, the music loud, and all the girls wore silk stockings, the precursor to panty hose. No boy asked her to dance; Katia glued herself to a chair to wait for her parents to rescue her. Still, the girls tried hard to adjust. One day they returned from school with lipstick on. And the stockings! To Sarah, they looked dressed for Halloween. “What happened to you?” she exclaimed in horror. There was one consolation: a television in the basement of the rented house, and Albert and Sarah let the girls watch half an hour per day. While they missed their friends and life in Bogotá, they soaked up Zorro, Lassie, and the Lone Ranger. Perhaps it could not be helped, but looking back, Katia and Lisa associated the move to the United States with a loss of family adventure; Albert’s journey into an academic career was not one they could join.

  Even language became a thorny issue. At home, in Washington and in Bogotá, French was the family tongue. Tensions first surfaced in Washington, when the girls, uncomfortable with the schism between private and public ways, would return from school and ask their parents “not to speak French now.” This common-enough plight of immigrant families soon found a variety of compromises. By the time they moved to North Haven, French was the language for driving in the car, and since there was a lot of driving, rust did not develop on the girls’ vocal chords. Breakfasts, where, in spite of all the moving about, the Hirschmans always shared a proper meal, were also French time. But as the girls moved through adolescence, English edged out French. Sarah and Albert did not finally abandon French as the nuptial tongue until they moved to New York. One day, Albert returned from his office at Columbia University, having had to lecture in En
glish, to confess “you know, I really feel that it would be good for me to speak English at home.” Teaching had been so traumatic that he needed to find ways to alleviate the anxiety. The linguistic conversion began at once. To Sarah, shifting their relationship to English “was the most difficult thing I ever did in my life.”11

  Still, life in the United States was not without opportunities of its own—like schooling. And it was always clear, and accepted, what the underlying purpose of the relocation was: to allow Albert to reset his career through writing. He did not squander his side of the deal; the family’s support and Yale’s opportunity were gift horses whose mouths he was not about to inspect. Brimming with ideas and determined to compose something that garnered more attention than his first effort to join the republic of letters, he plunged into writing without hesitation. But the project was not, at the outset, a book. He began with a few articles, one on economic policy and another on investment decisions, which he submitted to the American Economic Review and Economic Development and Cultural Change. “I am under great moral pressure to be ‘creative,’ ” he told Ursula, explaining that he was furiously coming to terms with theories of economic development. “I am even about to create my own and am thinking about writing a book.”12

  In stages he moved toward the idea of a full book; by the spring it had some undergirding principles. One was that it be short on details and more deductive and conceptual in nature, based on Colombian lessons but without making them explicit. This did not mean that he diminished the significance of empirical fieldwork. It may have been that Hirschman worried that a single “case study” would pigeonhole the book. What is an “insight,” Hirschman wondered? Here, the influence of Schelling, his most influential manuscript reader, was subtle but important. Schelling, without knowing how prominent he would be, pushed Hirschman from the start to translate the lessons from his Colombian immersion into more general insights, to connect the observations of small, local changes to inform the broad view. Hirschman told his sister, after one of his chats with Schelling, that he found his friend “one of the most intelligent people that I know (almost scary)—he turned away from economics and is now more interested in questions of foreign policy and peace strategy.” What helped was a distinction between human strategies, a key word for both thinkers, and not theories, as motors of social processes. Moreover, they shared an affinity in dealing with the relationship between case studies and general insights. Neither bothered too much that a single case of multiple strategies would constrain conceptual innovation; Hirschman noted that Karl Marx wrote Capital based on observations of industrialization in one country without having to add “—A Case Study of England.”13