Issue #30, Fall 2013

Oracle’s Odyssey

Albert O. Hirschman lived a dramatic twentieth-century life and sought to use it to create a more humane social science.

Worldly Philosopher: The Odyssey of Albert O. Hirschman By Jeremy Adelman • Princeton University Press • 2013 • 760 pages • $39.95

It is an interesting oddity of Albert O. Hirschman’s life, a life that spanned and was directly touched by the twentieth century’s most momentous events, that his most important insight struck him while he was contemplating, of all things, the trains of Nigeria. He traveled there in the mid-1960s and, during a ghastly journey on the state-operated railway system, started thinking about why the railways performed so poorly in the face of competition from trucks, even for the transport of peanuts grown some 800 hundred miles away from the ports. Competition, according to most economists, is supposed to improve performance in such cases. But Hirschman made the counterintuitive observation that in this case, competition from trucks meant that the weaknesses of the railroad system led many simply to abandon the rails rather than fight to improve them.

This insight led Hirschman, by 1970, to publish his best-known work, Exit, Voice, and Loyalty. “Exit” means that individuals abandon a product, firm, brand, organization, or association when they are no longer satisfied and see no chance for improvement. “Voice,” by contrast, suggests that they seek improvement and want to make their preferences heard and see their choices respected. “Loyalty” characterizes one’s commitment to associations such as the family, the nation, the ethnic group, or religious congregation that are based on formative and deeply held values.

In the Nigerian case, Hirschman observed that instead of exercising “voice” by protesting the railway’s inefficiencies, the population practiced “exit,” and state managers tolerated inefficiencies in the rail system that they may have been less inclined to accept had they been subject to loud protests. These options held true, he wrote, not only in the economic world but in social life at large: Reflecting on the worldwide youth protest movements of the late 1960s and the anti-war movement in the United States, Hirschman mused that since young people did not feel their voices heard by traditional political institutions, they chose instead to “exit” established representative political systems via street protests and demonstrations.

While Exit, Voice, and Loyalty may have been Hirschman’s most striking contribution, it was hardly his only one. He was interested in social science as a form of moral inquiry and not as the building of models or the manipulation of large data sets. He dreamed of a “social science for our grandchildren.” Over an illustrious career that spanned nearly half a century he contributed not only to economic theory but to the sociology and economy of development, the history of ideas, political psychology, and political philosophy.

Yet it is thanks only to this remarkable biography by Jeremy Adelman, a professor of Spanish civilization and culture at Princeton University and a one-time colleague of Hirschman’s, that we now have the first comprehensive view of the man and his work. Adelman writes with affection and respect and chronicles Hirschman’s life through painstaking archival work, extensive interviews, and the examination of personal and professional papers. He brings the work alive by exploring the origins of Hirschman’s achievements in the twists and turns of his life—a life, Adelman notes, that “was a personal history of the twentieth century.” It was also a life of intense political commitment and activism that transmuted itself into a relentless reformism with the passage of time.

Otto Albert Hirschmann (yes, two n’s and Otto preceding Albert, at first), named after Otto von Bismarck, was born to a well-to-do Jewish family in Berlin in 1915, when the nationalist euphoria over the German Reich’s military triumphs had not yet been extinguished in the trenches of World War I. His family thoroughly shared in the illusions of Germany’s assimilated Jewry that they were full citizens of the Kaiserreich, though some of his relatives converted to Christianity for social mobility and professional acceptance. They were yet to experience, in Amos Elon’s wrenching phrase, “the pity of it all.”

The young Albert refused Christian confirmation and became politicized as an adolescent through the influence of his older sister Ursula, who had already declared herself a socialist and through whom he met one of the greatest influences of his life, the Italian socialist Eugenio Colorni, to whom Ursula was married for a number of years.

Many of his teachers in Berlin’s distinguished Französisches Gymnasium, which he attended for nine years in the 1920s, were also dedicated socialists and communists, and they soon introduced Albert to the works of Hegel, Marx, and Lenin. His immersion in the school’s French language and education program gave Hirschman an orientation quite different from that of other German-Jewish émigrés, such as Hannah Arendt, Max Horkheimer, and Theodor Adorno. Unlike Arendt, who defended her attachment to the German language with the phrase “Die Sprache ist ja nicht verrückt geworden” (“It wasn’t the German language that went crazy”), and as distinguished from Adorno and Horkheimer, whose unique philosophic idiom remained the German idealist vocabulary of Kant and Hegel, Hirschman felt that “the German language may have been his mother tongue (Muttersprache), but it was not his home (Heimat).” In April 1933, after his father’s death and after Berlin was rocked by anti-Semitic violence, the 18-year-old Hirschman left for France, not to return until decades later.

Paris in the interwar years was teeming with refugees, militants, and expats of all political stripes. German-Jewish refugees like Arendt and Walter Benjamin were there, as were White Russians such as Alexandre Kojève, whose lectures on Hegel electrified a generation of French intellectuals, including Sartre, de Beauvoir, and Merleau-Ponty. They were soon joined by many others, such as Colorni, fleeing Mussolini’s fascism. Others were fleeing not fascism but Stalin’s communism: notably Rafael Abramovitch Rein, a leader in exile of the Russian Workers Social Democratic Party, a journalist for the American Jewish Daily Forward, and a surrogate father figure for Hirschman for some years. These groups formed that “other Europe” of the anti-fascist resistance, which remained “uprooted from country yet loyal to cause.” Between 1935 and 1938, Hirschman shuttled across four countries: France, Italy, Great Britain, and Spain. From July to October 1936 he fought in the Spanish Civil War near Barcelona with the Italian and German émigré battalions of volunteers, loosely under the leadership of the leftist but anti-Stalinist POUM. It was an experience that must have left him with not only physical but also deep psychological wounds, because to the very end of his life, he refused to talk about it even with his wife, Sarah Chapiro, a Lithuanian-Jewish, French-educated refugee.

The last episode of Hirschman’s dramatic time on the European continent came in 1939, when he was drafted into the French Army to fight against Germany. Hirschman was lucky to have been drafted because the French shortly thereafter started interning all male German refugees who were not in the military. When France capitulated in the summer of 1940, Hirschman and his comrades convinced their commander to release them with fake military passes. Assuming the pseudonym of Albert Hermant upon being discharged from the French army, he started making his way toward the South of France. Soon he met a young Harvard-educated classicist, Varian Fry, who had come to Marseilles on behalf of the Emergency Rescue Committee.

Fry and Hirschman spent the next five months preparing the departures of refugees whose names read like a who’s who of intellectual Europe: Arendt, Andre Breton, Marc Chagall, Marcel Duchamp, Max Ernst, Siegfried Kracauer, Alma Mahler Gropius Werfel, and so on (but not, alas, Walter Benjamin, who would commit suicide in September 1940 in the coastal Spanish town of Portbou while waiting for papers to transit to Portugal). Hirschman himself was not among the luminaries. Efforts made on his behalf by some cousins in New York and by an Italian friend, Max Ascoli, who taught at the New School, went for naught. Eventually, in late December 1940, the Rockefeller Foundation paid for his passage and for a travel allowance to reach the University of California at Berkeley, where he was to study on a fellowship under Professor Jack Condliffe, who specialized in world-trade issues. (There he would also meet Sarah.) This was his fourth or fifth emigration; even he was not sure anymore. The passage to America ended his name changes: Otto Albert Hirschmann, with two n’s, finally became Albert O. Hirschman with just one.

Hirschman left Europe with impressive intellectual skills: Not only was he fluent in German, French, English, Italian, and Spanish, but he had studied some law in Germany, administrative sciences and statistics at École des Hautes Études Commerciales in Paris, and economics at the London School of Economics, where he became familiar with the works of Keynes and Hayek. Add to this his lifelong fascination with Flaubert, Dostoevsky, Montaigne, Montesquieu, and Machiavelli. This formidable intellectual background meant that he was never really comfortable with the traditional boundaries between academic disciplines and often felt that he lacked the formal methods and mathematical-modeling skills that characterized so much of postwar economics. Instead, he set out audaciously on his own. Completely avoiding “the raging debates of the day,” he produced his first major book.

With 1945’s National Power and the Structure of Foreign Trade, Hirschman entered, in Adelman’s nicely turned phrase, “the neglected, ravaged space between the romance of revolution and the firmament of reaction.” Reflecting on Germany’s economic aggressions in Central and Eastern Europe and on Italy’s in Ethiopia, Hirschman examined how strong states manipulated trade to bolster their power at the expense of weak states, leading to a breakdown of the world system of commerce. He then advanced an idea far ahead of its time (and not for the last time would he do so): The only way to achieve peace and welfare in Europe and beyond was “by a frontal attack upon the institution which is at the root of the possible use of international economic relations for national power aims—the institution of national economic sovereignty.” He added, “[T]he exclusive power to organize, regulate, and interfere with trade must be taken away from the bonds of single nations.” Such authority should be turned over to “consular services,” “chambers of commerce,” “export-import banks,” and kindred organizations.

To our contemporary sensibilities, jaundiced by the pitfalls of economic globalization and the ideological fetters placed on struggling nations by institutions such as the World Bank, the International Monetary Fund, and the World Trade Organization, Hirschman’s faith in supra- and transnational institutions to better manage the world economy may seem naïve. Nonetheless, he was completely right in establishing clear connections between military aggression and foreign trade that went beyond the traditional leftist belief that capitalism necessarily led to imperialism. He also foresaw very clearly the need to regulate the world economy, predicting that economic integration without regulation would not lead to peace among nations. Hirschman argued that a new model of national sovereignty was needed: one that federalized economic sovereignty.

Like many other German-Jewish refugees in this period, Hirschman was employed by various agencies in Washington, beginning with the Office of Strategic Services (OSS). He was shipped to Europe, now as an American citizen and soldier, in February 1944, as an interpreter for the OSS. Upon returning from the war, he was employed by various agencies engaged in planning for postwar Europe; for a period, he was chief of the Western European-British Commonwealth Section in the Federal Reserve Board. Yet the long shadow of his socialist European past would extend into his Washington career and scuttle his desire to move from the Fed to the Treasury Department when it came to light that he had fought with the socialists in Spain. These shadings of red and pink in young Hirschman’s life were too much for Washington’s bureaucrats, and the Treasury Department’s Enforcement Agency was unable to clear him. In 1952, the Hirschmans and their two young daughters left the United States and headed to Colombia. They stayed for the next decade, years that were some of the happiest of their lives.

He left for Colombia under the auspices of a new development program supported by the World Bank. This engagement with Latin America, and eventually India and Africa as well, inspired his major theoretical contributions to the economics, sociology, social psychology, and anthropology of development. In The Strategy of Economic Development, first published in 1958 and translated into ten languages, Hirschman saw that development was not something that could be imposed from without. At the time, “balanced growth” perspectives prevailed among economists, think-tank specialists, and development entrepreneurs, who argued for attacking “the vicious cycle of poverty, ignorance, ill-health and low productivity” by engaging in aggressive and coordinated improvement on all fronts. Their strong preference was to invest in mega-projects such as ports, roads, and power grids.

Hirschman, by contrast, was interested in industrial, agricultural, and trade investments that would promote people’s “capacity to problem solve in a capitalist world, the ‘ability to make development decisions.’ ” Instead of balanced growth, he promoted “unbalanced growth,” which meant “look[ing] at the dynamics of the development process in the small.” What Hirschman had in mind is best illustrated by the extremely successful “microcredit” programs of our own day that have lifted enormous numbers of rural women out of poverty in countries like India. He also supported agricultural cooperatives through which peasants would organize themselves and make their own decisions about what, when, and how much to produce.

Hirschman’s seminal ideas, such as the principle of the “Hiding Hand,” began to emerge through these global encounters. It is initially difficult to distinguish his idea from Adam Smith’s “Invisible Hand” or from Hayek’s concept of the “unintended consequences of social action.” Undoubtedly, Hirschman felt affinities to both. Yet what preoccupied him were not “unintended but realized effects.” Rather, as Amartya Sen explained in his foreword to the twentieth anniversary edition of Hirschman’s 1977 book The Passions and the Interests, Hirschman focused on the importance of “intended but unrealized effects.” Reflecting on development projects ranging from a pulp and paper mill in Pakistan to an irrigation scheme in Peru, Hirschman observed that in all these cases “if project planners had known in advance all the difficulties and troubles that were lying in store for the project, they probably would have never touched it.” Ironically, however, “the difficulties and the ensuing search for solutions set in motion a train of events that not only rescued the project, but often made it particularly valuable.” He concluded that we may be dealing here with a general principle of human action and psychology, which he called “the Hiding Hand”—that is, often the only way to bring our full creative and problem-solving capacities into play is to underestimate the daunting difficulties that await us. Particularly, in the case of development, but maybe for social movements in general, “[t]he Hiding Hand is essentially a way of inducing action through error,” and such error can be encountered only when one has had the courage to undertake one’s projects and goals.

In 1956, Hirschman was offered a fellowship at Yale, the first in a series of appointments at America’s most prestigious universities, including Columbia, Harvard (in 1964), and ultimately, nearly a decade later, Princeton’s Institute for Advanced Study. The period would prove to be a turbulent one on America’s campuses—and even more so in the world beyond. In Latin America, the Cuban Revolution had discredited World Bank-style theories of economic development, and Latin American intellectuals came under the influence of various Marxisms. In the early summer of 1973, Hirschman visited Chile and saw that “the middle ground” was caving in. In September of that year the Chilean Army, with the blessing and collaboration of the U.S. government, bombed Salvador Allende’s presidential palace and put an end to Chile’s socialist experiment. Retreating from economic policy to the history of ideas, he produced The Passions and the Interests—subtitled “Political Arguments for Capitalism before Its Triumph”—an elegant essay in the history of ideas, which gained Hirschman a wider audience among students of political life.

The rise of neoconservatism in the United States in the 1970s and ’80s and continuing attacks on the welfare state led Hirschman to engage in American politics and policy debates. He published The Rhetoric of Reaction: Perversity, Futility, Jeopardy in 1991. An unusual blend of intellectual history, social scientific observation, and political analysis, the book traced the origins of conservative thought back to the reaction of Edmund Burke and others to the French Revolution. Hirschman deftly connected these reactions to the critiques of the American welfare state by Charles Murray, Milton Friedman, and Commentary magazine’s neoconservatives. He showed that they shared the belief that any action to improve social conditions will only worsen them.

Hirschman’s goal was not simply to probe the anatomy of conservatism but to illuminate the “rhetorics of intransigence.” And he did not limit his critique to the right. He believed, for example, that the “conservative futility thesis,” which is based on faith in deep structures or immutable laws of motion within society, is mirrored precisely in Marxism, which also claims to have uncovered the “laws of motion of capitalist society.” Hirschman revealed an even more subtle interplay between progressive and conservative notions of the “perversity thesis.” For conservatives, the thesis holds that all human action to change social conditions invariably results in making them worse. For the left, the thesis implies that, precisely if one has nothing to lose, one should engage in social action in any event, even to the point of a nihilistic politics of the apocalypse. He concluded the book on a coy note, worrying that his diagnosis of the weaknesses of progressive thought would lose him many friends who are “long on moral indignation and short on irony.” He may have been recalling here his own encounters with all stripes of socialists and communists, first in the interwar years in Europe and then in Latin America.

Hirschman’s sober vision and noble commitments are rare today. Our politics are paralyzed by obstinate factions that have gone far beyond “the rhetorics of intransigence,” while many of our social science departments are bent on educating students to be detached specialists and number crunchers, or, as Hirschman would have called them, “paradigm wielders.” Hirschman practiced social science with the heart of a progressive militant and the mind of an ironic observer of human follies, one who had seen Fortuna, in Machiavelli’s sense, scramble the path of history too many times.

We can take issue with Hirschman’s somewhat lopsided emphasis on individual human action over the institutional and structural forces that shape social life. But thanks to Adelman’s magisterial biography, we can see how Hirschman’s social science was informed and strengthened by his deeply moral and principled politics. While Hirschman proved how important it was to retain a sense of irony about the unexpected consequences of our actions, he showed us that political action, at its best, can still summon the “better angels of our nature.”

 

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Issue #30, Fall 2013
 

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