Worldly Philosopher: The Odyssey of Albert O. Hirschman

by Jeremy Adelman

  Hirschman opted to write an essay that cannot be read as anything but an elegant obituary on the field. That it was to mark Lewis’ retirement was not uncoincidental. As he wrote to the organizer of the Lewis tribute, he was eager to have his essay appear also in his personal anthology—eventually called Essays in Trespassing: Economics to Politics and Beyond—“One reason why I am in a bit of a hurry to publish is that, like Sir Arthur, I am going to be 65 this year. So this will be my own Festschrift, all written in my own hand.”20 And with this, he brought closure on a field about which he had deeply ambivalent thoughts. With its origins in the belief that somehow “underdeveloped” countries needed their own analytical tools—either because they were bereft of the modern features that made capitalism work or because they were the miserable consequences of world capitalism—development economics came up with general models (Balanced Growth), laws of motion (development with Unlimited Supplies of Labor), or basic truisms (Unequal Exchange). To Hirschman’s mind, this was all misguided. In the crusade to “slay the dragon of backwardness virtually by itself,” the field derived policies from some dubious presumptions about backwardness—that it was mired, static, involuted. Then, the field drew from the wrong historical analogies, like the Marshall Plan, in search of grand solutions. How else to explain how so many people could “entertain such great hopes for economic development” while at the same time living in the “most calamitous ‘derailments of history.’ ” What had once made development economics so compelling in the 1950s—its overconfident ability to comprehend the problems of the Third World, coupled with its delight in drawing elegant, grandiose plans—were shattered. Then, to bury themselves, development economists, instead of dealing with the implications of the political messes to which they had contributed, they performed “a Freudian act of displacement” and “took out” their distress on their subjects and looked for noneconomic explanations for all the problems. In the course of absolving their theories and policy advice of any responsibility in the development game, they put themselves out of a job as the heroes of the day. The contempt that was sown into the view that the Third World was made up of “wind-up toys” that could motor their way through phases of development with the right “integrated development plan” was more than naïve. It was partly responsible for the calamities to which it had contributed. As a crowd filled the seminar room at the institute for members to hear Hirschman deliver his first take on “The Rise and Decline of Development Economics” in the shadow of the Nobel Prize decision, there was a recognition that he was delivering as much a heartfelt statement as an intellectual profile, one that left the air thick with feelings of disappointment, both in the discipline and for Hirschman personally.21

  If development economics had driven into the sand, economics most certainly had not. As a discipline, it was on a roll by the end of the 1970s, not least because leaders of the world economy were grappling with unemployment, inflation, and scarcity with an energy not seen since the gloomier 1930s. While many—like the president of the Ford Foundation—lamented what they saw as the overweening influence of economists, Hirschman was not among them. He agreed that too many of his peers had narrowed the scope of their queries to elicit the most predictable of answers. But there was a deeper problem. As he had discovered in the misunderstanding with Rothschild over the tunnel effect, the highly developed analytical armature of economics (which yielded to impressively developed tools, which Hirschman admired) made it more resistant to theoretical changes, especially if these changes emerged from outside the discipline. Moreover, the pragmatism of the discipline immunized it from more abstract philosophical thinking. The result was that formative books, such as Lionel Robbins’ Nature and Significance of Economic Science (which Eugenio Colorni had pressed upon Hirschman on the eve of the Second World War) or Paul Samuelson’s influential Foundations of Economic Analysis, were profoundly shaped by the positivist philosophy of the 1930s and 1940s. Latter-day economists were not aware of their philosophical moorings borne of a different era.

  It was not that the philosophical foundations were wrong; Hirschman admired the positivist and practical streak—and it was this that motivated his against-the-grain appeals to Latin Americans to break out of their elegant, poetic, but defeatist circles. The “good or bad” debate about economics he considered an arid one. But he always knew that the discipline was far more complex than its critics from outside it knew. And it was as much from inside as outside that he sought to pluralize it more and encourage alternative thinking. For several years, he stewarded the ongoing discussion about “new trends in economics” in the School of Social Science, which drew participants from Princeton and the University of Pennsylvania. Most notable were the fortnightly evening workshops aimed at critical appraisals of the prevailing theories of the rationality of homo economicus with his stable set of preferences.

  Some of what transpired in these evening discussions informed his involvement in projects to tackle the “crisis” of the 1970s. Through the Brookings Institution, Charles Maier put together a working group on inflation that would yield an edited volume. Jean-Jacques Salomon at the Science Policy Division of the Organization for Economic Cooperation and Development (OECD) enlisted Hirschman’s advice on the report “Science and Technology in the New Socio-Economic Context.” The idea was to respond to some prevailing wisdoms about the nature of the global economic malaise as a cyclical problem or as the conjunctural result of bad policies. Instead, Salomon wanted to index some of the structural and technological shifts that underlay the crisis. This led to some pleasant meetings in Paris—and an eventual long-term friendship with Emma Rothschild, who also became involved. It was a familiar way of framing the problem to anyone tracking Latin American worries about long-term transitions, crises, and employment—that short-term macroeconomic analysis was simply inadequate. But Hirschman was skeptical of some of the alarmist tenor. One OECD call included renewed attention to research and development in new technology “or else.” “Or else” what? Research and development made good sense, but surely the world economy was not doomed if it didn’t get full attention. Beside, Hirschman noted, some of the thinking about technology was pretty conventional and thus could hardly shoulder the responsibility of thwarting the “else.” Tone down the catastrophistic prose, he urged. “Maybe we lacked imagination on this and we should have had a fall-back or fail-safe position of the following sort: more technical progress might be good but if we do not have more we are not yet lost either.”22

  The compound effects of these discussions prompted him to lay out his response to the growing consensus on the Left and Right that the welfare state was in deep, intractable trouble. Not unlike the consensus about the “structural crisis” of industrialization in Latin America, there was a catastrophistic analogue in the postwar arrangement of the developed West contained under the label of “the crisis of the welfare state.” For the Left, capitalism was unable to keep the balance between supporting profits and keeping the system fair and legitimate. For the Right, the diagnosis was not all that different. It was the prescription—decontrol markets and let the bounty of the private sector take care of private, and therefore public, problems—that differed. At Robert Keohane’s urging, Hirschman joined a panel at the American Economic Association meetings in 1979, “The Recoil from Welfare Capitalism,” at which Hirschman offered his “non-structuralist” interpretation of the malaise. It was much like his appeal to Latin Americans and their obsession about “structural stagnation.” Social scientists, ever on the lookout for ominous signs of decline and their “fundamentalist” causes (which social scientists claim as uniquely poised to understand), were overshooting their mark and confusing a “systemic crisis” with “growing pains.” The trouble was not a fundamental incompatibility or “contradiction” (a word Hirschman felt was being debased from its original Hegelian formulation) of capitalism, but the complex, often hard-to-fathom, features of transitions and shifts in its history. One cannot help but h
ear the echoes of the debates of the 1930s over the nature of the crisis and the role of politics—with a teenage Hirschmann squarely in the camp that felt that there were more political and economic options than either the extreme Left, or the Right, would concede. “Being rather bored by both ideological camps,” he observed, “I tend to shift from one to the other depending on whom I am talking to. Given the complexity and ambiguity of the real world, a useful function may actually be served by such contrary behavior.” As he noted for the Left, where his sympathies lay, the inclination was utterly self-defeating, and this mistake he had seen before. Fatalism was “an ideological trap” that in the end would favor the other side.23

  In this regard, he was utterly prophetic. For all the hand-wringing on the Left, this was a debate they would lose, intellectually and politically.

  The determination to resist pessimism and heavily deterministic accounts of the crisis of the late 1970s brings us full circle to Mancur Olson. Early in the series on “new trends in economics” an untenured economist from Williams College who was a visiting fellow at Princeton University, Michael McPherson, joined the informal group. Without knowing it at the time, he was to help Hirschman find an alternative formulation to Olson’s “logic,” to pick up after the abandoned notion of “understood complexity.” McPherson, currently the president of the Spencer Foundation, recalled the day he wandered into the Princeton University bookstore and found copies of the recently published The Passions and the Interests; flipping through the pages, he was amazed to find so many of his own concerns being plumbed by the man who was about to be his colleague. But the book was expensive—in those days, junior faculty salaries were so low (even at Princeton) that a single hardback was a considerable investment. He dug into his pockets, bought the book, drove home and devoured it to inaugurate a long history of engagement between the two. Several years later, when McPherson joined the IAS as a visiting member and had an office next to Hirschman, someone knocked on his door. It was Albert, who’d just finished reading a draft of McPherson’s paper on ethics and economics, which argued that markets tend to create moral restraints on cooperation and on conflict more than people realize. Hirschman was excited; not only did he admire the paper, but it led him to a metaphor to challenge the one that was driving him to distraction, the “free-rider.” Hirschman’s parry was “oar-pulling”: by pitching in together, individuals would move faster with less effort.24

  Spurred by a metaphor, Hirschman went back to his notes. For the summer of 1978, Albert and Sarah rented a flat on the Île Saint-Louis in Paris, which reunited them with the city that, for all intents and purposes, had remained their spiritual home. Katia and her family lived there, and there were now more grandchildren. There were many friends, and Albert’s work was circulating in France. Each had Parisian memories of youth that they now had the time to share.

  It was also a period of intense reflection. They tracked the running commentary about how distant the upheavals of 1968 seemed a decade later. Hirschman wanted to place the gap in a larger framework—one that would spare the spirit of ’68 from being depicted as exotic and unique. “My dissatisfaction with both Olson and Scitovsky [whose 1976 book, The Joyless Economy, was another of Hirschman’s antitheses] as a source,” began his extended jottings, pointed to two simple alternatives. To Olson, Hirschman countered that “participation in public life can be something that is desired for itself.” To Scitovsky, who calibrated happiness to consumption (even if he thought most of what Americans bought was doomed to displease), he invoked Goethe’s idea of streben, “striving for something higher,” a notion drawn from the nest of his youth. The summer then had him meandering through a potpourri of readings. “Reread N. Ginzburg, Lessico familiare [sic] for the joys of dangerous political action in comparison to humdrum everyday existence.” What he made of Ginzburg’s moving memoir of growing up in a large family of Jewish antifascists in Turin is unclear. Readings meandered from Benjamin Constant and Chateaubriand’s Memoires (on the idea of the crown as an intérêt public) to a full two-page spread of an advertisement from the New York Times Magazine—“The Ultimate Driving Machine”—a BMW 528i, with a photo of a man driving through a bucolic setting, his hands wrapped around the steering wheel; the bold text reads: “MEETING THE DEMANDS OF SOCIETY IS NO EXCUSE FOR BUILDING A BORING CAR.” The vehicle defied its circumstances: “In a time of lowered expectations, amid increasing mediocrity, the engineers at BMW have actually improved the BMW 528i.” Hirschman’s fascination with automobiles (indeed, he and Sarah would start buying their cars in Europe, a Citröen one year, a Saab another) dovetailed with his insights on the ways in which people struggle “to hold disappointment at bay”—by washing their cars, simonizing them—in a “desperate attempt to stem normal decline (decay) of elations over having it.” Years later, the BMW ad would make a fleeting appearance in his next book.25

  Conversations with friends also appear in these notes. Hirschman circled back to Amartya Sen. While their families vacationed together in the summer of 1975 in Sabaudia, on the Central Italian coast, Albert was by then the “rich uncle” from America, treating everyone to ice cream. But he also made sure to go on long walks with Sen, who had recently published a landmark essay in Economica called “Behaviour and the Concept of Preference,” based on his inaugural lectures at the London School of Economics. Already en route to fame for his Collective Choice and Social Welfare (published in 1970, which would help earn him the Nobel Prize in economics in 1998), Sen was hard at work exposing the limitations of the prevailing dogmas about the narrowed self-interested homo economicus. A subsequent essay, “Rational Fools: A Critique of the Behavioural Foundations of Economic Theory,” was a chattier version of the complex Economica paper, but it was more accessible to Hirschman, for whom Sen’s mathematics was beyond reach. Albert wanted to know more and plumbed his nephew, Amartya, now married to his niece Eva. By 1978, his reflections on Sen were thickening. Note: “Amartya’s meta-preferences come in to play role when there is something wrong with actual preference—it’s not necessary to invent new set, there is always one waiting in the wings [sic].” Quentin Skinner appears throughout, from his point that Calvin’s idea was that “all citizens could do in the public realm was to obey the sovereign—he is not supposed to meddle (action for the public weal becomes meddling),” to, some pages later, “Quentin: In repressive regimes it’s up to individual how much he is going to get involved; in open societies it’s often a question of his ability, whether he is asked to ‘run’ for this or that office [sic].”26

  Hirschman was always eclectic in his sources. But the summer of 1978 brought a veritable explosion ranging across languages (English, French, German, Italian) and genres—classical literature to consumer-choice theories. It is no wonder, as he explained to Kenneth Arrow, that he found this the hardest project he had ever tackled. Indeed, to call it a “project” (which was his word choice) exaggerates his sense of direction. Exit, Voice, and Loyalty and The Passions and the Interests had the virtues of being able to start with a small idea and billow into a book, the first prompted by observations about responses to monopoly in Nigeria, the second to an enigma posed by Montesquieu. What he confronted now was much broader, more diffuse, an intellectual temper incarnate in ideas of “public choice.” One has a sense that the whole business was overwhelming him—and that his inability to find a way out was beginning to weigh him down. However, an invitation from the economics department at Princeton University to deliver the Eliot Janeway Lectures on Historical Economics in honor of the Austrian economist Joseph Schumpeter gave Hirschman the right motive to air his alternative to the impossibility theorem that he had ascribed to Olson. While he was wracking himself over “Public vs Private,” his tentative title, American television screens were flooded with scenes from Tehran, where radical students had seized the US embassy. That Thanksgiving, Albert and Sarah invited some friends over—the Brazilian literary scholar Roberto Schwarz and the Mexican novelist Carlos Fuentes a
nd their wives—for goose. They were riveted to the television and worried about the government’s response with the elections looming. The images of crowds “seemingly so full of hatred against the United States” were utterly depressing. It was not just the hatred on display in Iran, it was the sense of “unity” in America and portents of a “turn inward” that concerned him. “This may well be the end of public interest in development in the Third World—so, from the point of view of my interests, I also see it as the end of an epoch.”27

  With the hostage crisis in the background and long queues forming at gas stations as the United States was struck by a second energy crisis, Hirschman was understandably nervous about his reasons for optimism. Still, in December, he walked before the podium at Dodds Auditorium in the Woodrow Wilson School to deliver two lectures to large crowds of students and faculty at Princeton: “Private and Public Happiness: Pursuits and Disappointments.” As with Passions, the choice of conjunction was vital for what followed—for Hirschman there was no basic choice between the two; it was not or that adjoined public to private; the private and public domains were not exclusive. The point of the lectures was to argue that people were always choosing depending on their moods and inclinations. It was this activity that Hirschman wanted to draw out. Exit, Voice, and Loyalty was a peerless book about how people made a variety of choices that changed institutions; the issue now was, why did they make choices? Not unlike Exit, Voice, and Loyalty, what followed were thoughts based on observations of everyday reactions to peoples’ behavior (like the tunnel effect and BMW ads), as well as weaving in lessons from various of the welfare state “crisis” projects and the engagement with Latin American colleagues on dictatorships. Indeed, these were the empirical skeletons of “Public and Private Happiness,” although it was impossible for anyone to know. The decision to keep these projects separate from his answer to the impossibility theorem and free-rider problem was probably a mistake. Many would find the eventual book arch, removed, speculative—short of a new model of social science.