Worldly Philosopher: The Odyssey of Albert O. Hirschman

by Jeremy Adelman

  There is no cache of postcards to retrace the Hirschman peregrinations, just an abundance of field notes, catalogues of words conveying a strong impression of basic confusion. Hirschman’s witnesses, mainly managers—agronomists and engineers mostly, the kind of men who made projects work—spoke of the frustrations and complications in-variably spawned by their works. Their running theme—told in the vocabulary of water that didn’t flow the way it was supposed to, regions that felt relatively deprived, and industries with growing stockpiles—was that their projects had “failed.” How could these poster children of technocratic change from above, curated by ambitious and empowered engineers, seem to be turning on their makers? Before long, it was the awesome hubris and downright naïveté that became the nub of the public criticism. None of the projects generated more unease—great hopes coupled with prodigious complaints—than the colossal Damodar Valley Corporation in India. Based heavily on the New Deal flagship, the Tennessee Valley Authority, the DVC had become an umbrella for the transformation of West Bengal and Bihar. Indeed, it was a symbol of independent India: the DVC and India were born almost simultaneously. With its high expectations came heightened problems. At first, the plan was to control flooding. Then irrigation was added to the purpose, then hydroelectric power, and finally it was expanded to promote inland navigation. The DVC was the archetype of planned, top-down development, which ran afoul because some peasants did not get the water they were promised, the energy went to some customers and not others, and some regions griped that they were cut out. And everywhere, implementation was more complex and costly than had been envisioned. The atmosphere in India crackled with uncertainty. Jawaharlal Nehru, the DVC’s fountainhead and political emblem of postcolonial India, had died in May 1964. All of the latent schisms—regional, class, and caste—came to the fore. What had started out as an effort to spare people flooding and create a water source for farmers had become an emblem of all that was wrong with the economy. Meanwhile, India was embroiled in conflicts with its neighbors China and Pakistan. The consensus was growing that India’s planned development was a “failure.”9

  Lisa, Katia, Sara, and Albert at Katia’s graduation from Barnard, June 1966.

  Hirschman was no fan of big plans, but neither was he about to go to the other extreme. Never an admirer of strong convictions, especially when they were baseless or overdrawn, he was even more skeptical of the view that development failed if it did not go as planned. As the needle swung from the euphoria of the 1950s to disenchantment by the mid-1960s, Hirschman’s temper moved the opposite way. His notes reveal him questioning prejudgements even as he was making observations and recording them. Stepping back from all the noise surrounding the arguments about India’s future, what impressed him was how the DVC was in a narrow sense a failure. This was how many of the engineers and financiers were starting to regard the overwhelming venture of dams, sluices, canals, and hydroelectric plants. Their most self-incriminating conclusion was of having underestimated the demand for the project’s fruits. But in a more general sense, he observed successes—achievements that escaped the technicians’ grids. All around the dam he saw activities popping up. What is more, there was evidence of regional rivals undermining the hegemony of the DVC—smaller irrigators and competing power sources creating “a second growing point in Eastern India in addition to Calcutta.” He wondered to himself: Maybe a narrow failure was necessary for a project to have wider effectiveness? Maybe projects “fail” because they induce competitors and imitators? They themselves might not be very efficient, but they stimulated efficiency and entrepreneurship among others. Having created a surge in demand, the project was a constructive “pressure point” sparking more activity. This was exactly the kind of destabilizer he extolled in Strategy. The DVC had mobilized people—but not in the ways planners foresaw, never mind wanted. The story of the DVC did not unfold as had been scripted in advance, as the heroic summoner of the nation around one integrative project. Rather, it was the source of turmoil. It was bound to “step on so many toes to get its job done … that it inevitably makes enemies,” Hirschman noted. Here was a familiar theme: resistances propel further pressure to adapt and change.10

  Albert and Sarah in India, 1964.

  Seeing this required an eye for what was unexpected, not what was expected. We also see another facet of Hirschman at work while he was observing. He tended to be more hopeful than his witnesses, looking for evidence of things that did work despite the frustration—and when he could find it, because of the frustration. Identifying silver linings was becoming an occupational habit; they sometimes got harder to find when the travel got more difficult and social conflict heightened. His optimism met its match in Nigeria, where travel was bone-jarring. Not only did the Land Rover rides deep into countryside to interview palm oil farmers and mill managers leave Albert and Sarah feeling gelatinous, but the country was seething with discontent. The country scarcely five years out from under British rule, its veneer of postcolonial nationalism had worn off. Cleaved between east and west, north and south, between Igbo, Yoruba, and Hausa-Fulani, one response was to pull the country together with modern transportation systems. One of these big ventures was the World Bank–funded Bornu Railway Extension, which sent a long spur line running north and east toward Lake Chad, pulling the hinterlands closer to the coast and opening up districts to commercial farming. Nation building and capitalist development could move hand in hand. This was the theory. In practice, however, the Bornu Extension drove deep into the seedbed of a conflict that would culminate in a secessionist movement in the southeast and the invasion of the breakaway Republic of Biafra by Nigerian Federal troops in July of 1967, catalyzing three years of horrible civil war between Hausas and Igbos.

  Africa per se was not the worry, though the disenchantment with development in the continent was starting to spread. Before arriving in Nigeria, the Hirschmans had been in Ethiopia; Albert was “impressed by the ‘enormous progress’ accomplished in recent years.”11 He hoped to find the same in Nigeria. What he saw caused him to pause, but not for too long. Quickly, he looked for some organizing principle for the difference in this specific case. Maybe there were differences in the “personalities” of projects. Ethiopian irrigation was flexible. Railways, by contrast, only became economical the longer the haulage and the bulkier the cargo; with high fixed costs, they were rigid and prone to centralization, and thus vulnerable to charges of extortion. To compound matters, a direct competitor to the rail line appeared on the scene: the trucker. More nimble, informal, and bargain friendly, local truckers cut into the overland shipping business, especially getting groundnuts to the railhead. So, farmers hired truckers. Pretty soon they figured out ways to hire the truckers to go all the way to port with their harvest. This left the Bornu Extension, having expanded the groundnut frontier and induced the Mandrides Oil Mill at Maiduguri to process oil cakes, less welcome. The rail operators had to jack up rates to make up for losses, leading to a spiral of grievances.

  Hirschman resisted bleak conclusions, perhaps too obstinately. “Instead of asking: what benefits [has] this project yielded,” mused Hirschman, “it would almost be more pertinent to ask: how many conflicts has it brought in its wake? How many crises has it occasioned and passed through? And these conflicts and crises should appear both on the benefit and the cost side, or sometimes on one—sometimes on the other, depending on the outcome (which cannot be known with precision for a long time, if ever.).” Either Hirschman’s optimism blinded him to the simmering tensions, or the evidence of this tension was still muted. The latter is not plausible; Hirschman’s notes are filled with the grouchy testimonies of his witnesses. It is more likely that his wish for surprising, positive effects overwhelmed what he saw and heard. Either way, he failed to predict that this was one project that would have disastrous consequences and contribute to the devastating civil war in Nigeria not long after Hirschman toured the region; the war of words soon escalated into an all-out civil war whose carn
age took up to three million lives. When it did, Hirschman was shocked—and not a bit humbled. His personal failure to see the disasters of development and evaluate them in his World Bank study was the immediate reason for writing, several years later, his most famous book, Exit, Voice, and Loyalty (published in 1970).12

  As he travelled, Hirschman filled his notebooks with petites idées, insights he accumulated along the way: observe, infer, compare, generalize, and then check these generalizations against new observations—and wherever possible, aphorize. There was a thread in all this: tracing the hidden, unexpected, and sometimes surprisingly positive effects of projects often missed in cost-benefit calculus. Irrigation projects in India and Italy, he noted, induced farmers to install tube wells that carried water far away from its source. By contrast, this was not what he saw in electrical power—with which there were strong incentives to deliver as much energy as possible as far away as possible from the source and stop drainage en route. Hirschman uncovered two kinds of consequences that hardly figured in the project manifestos. The result was a “difficulty appraising the benefits: in case of some kinds of projects, benefits are not easily computed, quantified and hence they take the back seat even though they may be most productive [sic].” Typical of his increasingly recursive style, he found a new variation: “Ignorance and error affecting both income and outgo: You step into something misjudging the environment and the trouble it holds in store for you, and you change this environment once you find out about it.” And so on.13 Consider another, typed upon his return to New York:

  Irrigation. As long as nature is in charge of mishaps like floods they are acts of God; when men undertake to remedy one of nature’s ills, this remedy is expected to cure all ills.14

  There was a general thrust to this mode of following the twisting passage from cause to effects—some intended, some not. Running through his idées are the features and behaviors of projects that lend themselves to creating and reinforcing institutions; his eye was trained on a way of seeing development that inverted the expected story. The custom was (and remains) to think of institutions as the precursors of projects; good institutions promote healthy ventures, bad ones produce disasters. As one might imagine this often led to fatalistic thinking about the Third World, where institutions seemed so irrevocably bad. As we will see shortly, Hirschman considered this kind of fundamentalist storytelling at best unhelpful. For the time being, he concentrated on following the clues to his inverted narrative, one in which projects might shape institutions. And some projects were better at this than others. This was the secret key and the powerful underlying argument of his big report for the World Bank.

  Here’s an example of the story he spun. Irrigation projects, for instance, struck him as institution promoters, in large part because people had to organize systems of water distribution, extension services, and maintenance of the sluices and pipes. A good ditch and some pipes could make “a veritable school for bargaining, adjustment, etc.” By contrast, highways yielded minimal institutional dividends. There were few side effects and few fertile tensions. The result: some projects spawned conflicts and tensions that people could learn from. “Are there some projects that permit development of political skills of bargaining, agreement—engineering versus others that merely exacerbate or stimulate or make apparent tensions and conflicts?” This is why, for all the grief generated by the DVC, he resisted the “failure” syndrome. One formulation he invented for himself was the idea of “development through entrapment,” which he scribbled down while touring the ICICI factories in India. Then he added: “Dissonance: You step into something that is not congruent with your personality and change your personality as a result.”15

  All the flying around and frantic site visits eventually began to take their toll. Hirschman was careful to arrange pauses between intercontinental excursions to rest and gather his thoughts. But midway through the second leg, exhaustion crept in. Part of the problem was the physical displacement, the relentless hotel check-ins, money changing, and visas. The travel bug eventually wore off. While Albert and Sarah found India an astonishing country, it was there that they began to count their days on the road. He confessed to his sister that “I am starting to get a little tired of traveling, or before continuing traveling I’d like to be able to assess at least a bit whether anything useful at all will come of this—but no, I have to take in more and more facts.” He consoled himself with the fantasy that they might return from India via Rome. There was a month left on the leg, but “we should be able to depart from here on 1 March and the connections Bombay-Rome are excellent.”16

  Albert and Sarah taking a break in East Pakistan, 1964.

  But part of the problem was also the accumulation of information across dispersed cases. He struggled to make sense of his observations, wrestling constantly with a useful way to classify. Should they be ranged by revenue production (power generators make money; highways don’t), or quantifiable benefits versus nonquantifiable benefits (the benefits of railways can be measured with numbers, the impact of telecom projects are harder to)? By the spring of 1965, he was having difficulty keeping his endeavor clear. So many of the projects were idiosyncratic, and Hirschman was at pains to let peculiarities go in favor of some broad brush strokes. Lindblom had warned him of the perils of this kind of analytical narrative approach using increasing numbers of cases. Occasionally, he found ways to spin patterns out of details, their quirkiness and their ever-present surprises. Consider his observations of road crews in Ecuador: “There is one compulsion in road building and maintenance in the tropics: You have to get through before the rains come—this is a valuable organizing aid.”17

  Nonetheless, a pattern emerged, organized around the problem of how to measure trade-offs. There were several he considered: exchanging quality for quantity, sacrificing maintenance to new construction, and rigidity or malleability of the original plan in the course of construction. Roads, for instance, presented greater opportunities for flexibility and trade-offs whereas electrical power did not; either one got the power with a big dam and a complex grid, or one didn’t get the power. It was typical of the way he was laboring through his information that the detail fed the abstraction, and the abstraction would survive only as long as it could help illuminate personalities of the detail.

  As with Journeys, Hirschman wrote while he made his observations and plotted his insights. It is for this reason that he was able to write so quickly when he did finally plant himself in his study. By the time Hirschman was travelling in Africa, his notes began to take the form of lines that might appear in the narrative itself, and some of the off-the-cuff aperçus look like injunctions to himself about what to write when he sat down to compose the book. “Paraphrase Marx,” he told himself while in Uganda. “Mankind only takes up those problems it thinks it can solve—and then, once bitten, engagé, solves them—or fails.”18 By the end of the summer in Africa, Hirschman set down to write up some interim observations for the bank’s Economic Committee, composed of the heads of many of the main departments.

  What came to the fore were the less perceptible, indirect or side effects of development financing. These were so varied and embedded that they often escaped the notice of analysts. They were also often too slippery to fit the uniform criteria for assessment. So his first crack at a report emphasized the role of uncertainty. Some projects simply presented more uncertainty about the range and depths of its outcomes. These shaped their “behavioral characteristics” or “personality profiles.” Some, like electric power, were easier to blueprint and envision effects; others, like irrigation, were far less so. With more water available, what kind of crops would farmers choose to switch to? It was hard to say. This is important because a lot of the frustration with development—delays, detours, and doubtful payoff—stemmed from advocates having “an understandable tendency to clothe the prospects of all projects in an air of pat certainty.” Here was the big message for the bankers: for an enterprise such as the World Bank,
dedicated to putting money into projects that the private sector otherwise would not, there was a need not to “repress uncertainties” but to “acknowledge that some of the projects it finances are more certain and experimental than others.” The trick was not to be perfect predictors, but rather to be better at “envisioning” projects beyond the penny-in-the-slot-machine of benefit-cost analysis. It was important to keep specific projects’ behavioral profiles, and each project’s “voyage of discovery,” in mind when doing this kind of task.19

  This was hardly a gritty analysis gilded with practical recommendations. There were no numbers or tables, no flowcharts or process-tracing timelines; indeed, the data were largely kept in the vaults of his massive files. Hirschman chose a more elliptical set of narratives organized around morality tales with a common theme: have your eye open for unintended, positive side effects of projects, especially the ones that induce behavioral and institutional changes in the milieu. Try to spot projects with these potentials. At their harshest, Hirschman’s conclusions called for better monitoring. With a life of their own, long-term projects were the source of mysterious lessons that their planners could not always foresee, which meant watching them closely for the unexpected. So all investments should have “project evaluation” built into them. Compared to the intense heat that he would later train on the World Bank, Hirschman was polite if not solicitous. He could hardly be accused of bashing the bank.