Plan it mañana

Geoffrey Hawthorn

  • Wordly Philosopher: The Odyssey of Albert O. Hirschman by Jeremy Adelman
    Princeton, 740 pp, £27.95, April 2013, ISBN 978 0 691 15567 8
  • The Essential Hirschman edited by Jeremy Adelman
    Princeton, 367 pp, £19.95, October 2013, ISBN 978 0 691 15990 4

In June 1940 a French lieutenant issued false passes. ‘Sauve qui peut,’ he said. ‘Il faut se débrouiller.’ Get out of this as best you can. Albert Hirschman would say that he’d been a débrouillard all his life. He’d left Berlin in 1933, sought an education in Paris and London, fought in Spain, worked in Trieste, fled back to France, enlisted, and with the rest of his émigré platoon now had to avoid arrest by Vichy. He stole a bicycle in Le Mans; buried evidence of who he was in a tin near Niort; pedalled down to Bordeaux; emerged from Nîmes as Albert Hermant, translator, born in Philadelphia; went to Marseille to get a visa for America; stayed for a few months to help others who needed them too; and eventually walked out over the Pyrenees with little more than a copy of Montaigne under his shepherd’s wrap.

In his new biography Jeremy Adelman doesn’t resist the romance. Hirschman, like other survivors, would refuse to see it. He wouldn’t talk even to his wife about the scars he had from fighting in Spain. And it wasn’t until the 1980s, after Mary Jayne Gold had published her Crossroads Marseille 1940, that others learned what this person ‘wrapped in false papers of which he was inordinately proud’ had done for the Emergency Rescue Committee that she and others had been funding (an organisation which, as Neal Ascherson recently explained, did much more than the Americans had asked of it but much less than it wanted to before Vichy dismantled it).[*] When Hirschman did look back, it was to concede that the sharp things he’d said about quitting in Exit, Voice and Loyalty (1970) revealed his guilt about leaving his family and friends in Berlin the day after his father was buried and the Nazis had announced that Jews were to be expelled from the universities. He wanted to be remembered for what he wrote on economics and politics.

On these, he liked to say, he was a ‘dissenter’. He was of the generation that rejected the economic orthodoxy of the 1930s in favour of deficit financing to encourage growth and employment, but he came to resist the orthodoxy in that too. He had respect for unforced prices but thought free markets an illusion and put no premium on sound money. He accepted intervention but ridiculed planning, valued obstacles and welcomed conflict. Not all good things, he thought, go together. But he was a relentless optimist, and didn’t want to think that all bad things did either. The social scientists who tried to make everything fit, he thought, were misguided, and those who took them seriously were a nuisance. The solutions to most things lay in what he called ‘hidden rationalities’ and it was for these and above all for the way in which he presented them that he acquired his fame. He was unusual in the world in which he worked, and on the things he cared about was usually right.

Hirschman died in December 2012. There is nothing very remarkable about his early years, or nothing remarkable for a clever and ambitious son of assimilated Jews growing up after the First World War in a sophisticated neighbourhood near the Tiergarten. He captured these years in an essay he wrote at the Französisches Gymnasium when he was 17. He had been reading Hegel. The relations between parents and children, he declared, are boringly ‘natural’ and of no ethical significance. It is siblings of the opposite sex who ‘become ethically significant as diverse forms dividing between them the different aspects which the ethical substance assumes’. He remained close to his older sister, Ursula, to the end of her life, less so to Hegel: he liked contradiction and would allude to dialectics but came to doubt whether reconciliation in the wider world was to be expected or desired. He inclined to socialism, wanted to study economics, and started classes at the University of Berlin in the autumn of 1932. The following February the Reichstag was set on fire and students started burning the university’s books. Marxists were saying that the conditions for resisting were not correct, but waking to the truth that theory might be as poor a guide to inaction as it was to action, Hirschman inclined to Lenin’s view that ‘there is no such thing as a hopeless situation.’ By the end of March he wasn’t so sure, went to Paris, and set about getting a degree.

He wanted to go to the Ecole libre des sciences politiques, the precursor of Sciences Po, but was advised that as an immigrant he could never succeed to the kind of post for which the school trained its students and settled for the Ecole des hautes études commerciales. That was deadly but it put him in the way of a year’s scholarship to the LSE; ‘only in England,’ he said later, ‘did I really discover what economics actually is.’ He joined the queue at the bookshop for Keynes’s General Theory in February 1936 but it was the subject’s foundations in individual choice rather than discussions of large forces that drew him. He read Mill and Marshall and was excited by Hayek’s lectures and those of the brilliant Abba Lerner. But it was Philip Barrett Whale, who worked on international trade, who prompted Hirschman’s first paper and wrote him a reference for a professional life.

So far, one might say, still not so unusual in the circumstances of the time. What particularly affected Hirschman was his friendship with Eugenio Colorni, whom he and Ursula had met in Berlin. Ursula had followed Colorni to Trieste, where he taught, and in the autumn of 1936, after Spain, Hirschman went to join them and stayed to do a doctorate. Colorni was active in the movement which in the name of Giustizia e Libertà was mobilising socialists, liberals, republicans and Mazzinian nationalists to work for a post-fascist order in Italy. Hirschman was at one with the movement’s purpose but fast losing any taste he may have had for isms. Colorni confirmed him in that and the two men committed themselves to what Colorni called ‘little ideas’, making a pact ‘to prove Hamlet wrong’: doubt, they believed, could make one more certain about how to be. Adelman gives the impression that Hirschman never loved or admired any man more, and it was about Colorni and the importance of ‘petites idées’ that he was to talk on the first evening he spent with his future wife at the International House in Berkeley in 1941. Sarah Hirschman, as she soon became, was Russian by origin, and they conversed for years in French. Their many letters are among Adelman’s best sources.

Hirschman thought he should join the American army. Not to fight perhaps; to do something useful in intelligence. But the Office of Strategic Services would only offer him a post as a translator in Algiers. He found economists there to talk to, met Camus’s wife (the two men looked very alike), and spent time with exiles at the house of Umberto Terracini, a long-standing member of the Italian Communist Party and friend of Gramsci’s, where he learned that Colorni had been interned. When the OSS took him to Florence in 1944 he was pleased to reconnect with old friends from Giustizia e Libertà and make some new ones. Colorni, released from prison, had been gunned down in Rome the week before the Americans arrived. Hirschman was relieved to get back in Berkeley and meet a new daughter.

When Hirschman first arrived in America, he’d collected his thoughts on Keynes and his beloved Machiavelli – neither of whom, as he read them, had seen the connections between the desire for power and the control of wealth – and wrote about the way Germany and Italy had used industrial exports to weaken other European states in the 1930s. But National Power and the Structure of Foreign Trade didn’t appear until 1945 and, though politely received, had missed its moment. He told his wife that he had ‘abandoned the idea of a famous “academic career”’ and for a while could find nothing else. He was rescued by Alexander Gerschenkron, an émigré from Russia who had met him at Berkeley, been impressed by his expertise and command of languages, and asked if he’d like to take charge of research on Western Europe for the Federal Reserve. This was perfect. He and Sarah moved to Washington, and when Congress passed the Economic Co-operation Act for Europe in 1948, Hirschman joined the staff to implement it.

George Marshall’s proposal in 1947 for what came to be called his ‘plan’ was nothing of the kind. A circular in his own Department of State likened it to a flying saucer: ‘nobody knows what it looks like, how big it is, in what direction it is moving, or whether it really exists.’ But Truman had taken no chances. He thought Americans wouldn’t like the sound of it and on the day Marshall delivered his address called a news conference on a different subject to draw the press away. The act itself was conservative; it emphasised financial stability, an increase in production and as much free trade as was consistent with favouring American exports. But those who’d been hired to implement it had admired the New Deal and looked forward to a planned ‘integration’. Hirschman sat between the two views. He enjoyed pointing out that in Italy in 1948, the conservatives’ wishes had already been met. Selective restrictions on credit had brought inflation down, the balance of payments was fine, and there was no marked shortage of commodities. There were certainly obstacles to production within the country, but the progressives were wrong to think that these could be planned away; Italians knew what they were and with ‘trial and error’ were in the best position to get round them. What the producers wanted were orders. One firm was paying ten thousand employees to stay at home. Nonetheless, now that the finances were more stable, people were bringing out the lire that they’d been keeping (often literally) under their beds. The market, he thought, would expand and meet initial shortages of supply, and there would be inflation. But the conservatives need not worry. This would be of a ‘structural’ rather than ‘monetised’ kind, and if producers could trade they would have an incentive to get their prices down.

Trade, everyone agreed, was the problem. Each government was imposing quotas, tariffs and other defensive barriers against the others and some had non-convertible currencies. On this, Hirschman was all for action. He argued for currency union and with now prominent Europeans like Altiero Spinelli – who when interned with Colorni had written (on cigarette papers) in favour of a federal Europe – urged political union also. The visionaries were not alone. George Kennan’s Policy Planning Staff had done much to shape Marshall’s original declaration and envisaged something of the kind. In March 1948 a Treaty of Brussels was agreed by Belgium, France, the Netherlands and the UK to consider questions of ‘collective security’. The following year the Briton on the commission asked Kennan ‘off the record’ to think again about Europe as a third force in world affairs. Kennan was glad to do so and invited several outsiders, including Reinhold Niebuhr and Robert Oppenheimer, to join him. They concluded that a sovereignty strong enough to calm French fears about Germany and resist what they took to be the threat of Soviet expansion would have to include the British and that the British, to maintain what they could of sterling and remain close to the US, would not relinquish their own sovereignty. In the event Brussels led to Nato, the German problem was solved in the Schuman Plan, trade was revived by an agreement to ease payments between states, and in 1951, occupied with defence rather than recovery, Congress bundled its foreign aid into a new Mutual Security Agency and closed the Co-operation Administration down. Hirschman’s bid to work in its office in Paris accordingly died. Even if it hadn’t, he would have had to resign. The Nazis’ ruling on universities had prompted him to leave Berlin, Mussolini’s Manifesto of Race had made him leave Trieste, and the FBI now refused to clear him for further work in the federal government. He turned to the World Bank, which having ceded responsibility for Europe to the Marshall Plan was involving itself in what the British Colonial Office had come to call the ‘development’ of poorer countries. When he called home to say that he had been assigned to the bank’s new ‘mission’ in Colombia, his wife reached for the atlas then dropped the phone in delight.

The prevailing view of the difference between an economics for the more developed countries and an economics for the less was that the less didn’t know how to do economies at all. The bank accordingly asked its missions to come up with grand plans to guide programmes and create projects from scratch. Hirschman had become sceptical of imposing schemes of this kind on Europe, no one knew quite how to impose them elsewhere, and he knew next to nothing about elsewhere anyway. When he and Sarah set off for Bogotá (tiffing for a moment in an unanticipated stopover in Miami, Adelman chooses to tell us, about the number of dresses that had been packed for their two young daughters), his only guide was a paper of Gerschenkron’s entitled ‘Economic Backwardness in Historical Perspective’. Salutary though this was in suggesting that no one plan would suit all, none of Gerschenkron’s examples were of use for Colombia, where there were few entrepreneurs, no big banks and the state had no grip. Hirschman liked Colombians, insisted that they be involved in what was going to be planned for them, spent time going out to see what they were up to, and was irritated by the joke they made about it. Like stage fools in a Western they lamented that ‘aquí en el trópico hacemos todo al revés’ – here in the tropics we do everything in reverse. But the people he talked to were not sitting about waiting for foreigners to tell their government what to do. They were arranging small loans in their localities, planting sugar, making textiles and brewing beer, all the while creating jobs and liveable wealth. They did meet obstacles, and Hirschman’s colleagues in Bogotá, committed to implementing what was described at the time as a ‘big push’, would fret over these. Hirschman saw their value. When Colombians met a difficulty, they invented ways of getting round it. On se débrouille. But he was not in a position to help them do so. Charged by what was in effect the agency of one government whose ideas he disagreed with to work with another that was hopeless, he was convinced that he could do better without either and started a consultancy of his own. He did however have to report back and what he said secured an invitation to a meeting of academic grandees at MIT. Instead of ‘a propensity to plan’, he argued, there should be ‘a propensity to experiment and improvise’. The ‘emperors’ of development, he told several sitting in front of him, ‘had nothing on’.

What he wanted now was time to think and write, and with the help of the mischievous Thomas Schelling was offered a visiting post at Yale in 1956. Schelling had himself worked on the Marshall Plan and was to go on to many things, not the least of which were to advise Stanley Kubrick on Dr Strangelove and win a Nobel Prize in economics for his work on game theory; he encouraged his new colleague to think of development as strategy rather than a subject for theorising. ‘Theory’ would suggest firm arguments from incontestable premises to a definite conclusion. Hirschman, Schelling saw, was an opportunist. He favoured moving step by step and sometimes sideways, always consulting, concentrating on what might be possible at each point and not insisting too strongly on a definite end. The talk of a big push to balanced growth – in which the planners would decide the inputs, specify the linkages and administer the balance – was unreal. Development could not be achieved in one go or be calibrated from on high. In the course of writing all this down, Hirschman acknowledged Rockefeller’s generosity in funding him at Yale by going to a conference of the International Economic Association in Rio, after which the foundation asked him to stay a while to see what social scientists in Brazil were thinking. It was a revelation. Some there could only see failure, but others inspired him and he them. Back at Yale, he found it easy to finish The Strategy of Economic Development.

He didn’t just argue against trying to achieve all the linkages in an economy at once. He also suggested that one need not start at the beginning of any. The people he’d talked to in Colombia had had a point. Backwards can be better. (‘An excellent food is the banana, let’s eat it today and plan it mañana’, a Hirschman family card from Bogotá had said.) Consider transport. Distances in a poor country can be long, making good roads and railways is expensive, one can’t at first be sure where to locate them, and once laid down they can’t easily be moved. (An instance he came across later in Nigeria made the point. A new railway there remained unused.) Why not, he asked, take to the air? Planes are fast and flexible and airfields are easy. One shouldn’t assume that something so advanced can only be reached at what our own histories suggest is the end of development. The facilities, skills and mobility that this kind of activity demands will be an incentive to invest in other services and a range of goods, even in agriculture; these will create markets; and if the markets are small at the start, one can prime consumption. There will have to be loans to get things going, one has to keep watching for what works and what doesn’t, make more loans to assist what does, and learn to expect imbalances and gaps. But if one thinks and acts in this way, there will be growth, and soon. (Hirschman would have taken pleasure in the fact that after a shaky start Brazil’s Embraer is now the third largest manufacturer of aircraft after Boeing and Airbus.) Development is a matter of imagination and good judgment and of paying as much attention to failure as to success. It is not a toy that, as he put it in an image of the clockwork 1950s, can be wound up and left to run.

Hirschman knew that those whom he called the ‘fracosomaníacos’, the failure maniacs, would insist that all is hopeless: it’s revolution or nothing. Professional economists said that if this was the future of development economics, it was the end of it as a coherent discipline. The World Bank continued to complain that he wasn’t telling it what exactly to do. But as the grander ambitions of the Marshall Plan had shown, comprehensive plans required a form of politics that in the West was all but unrealisable. And though economists had formal models, no theorist had yet worked out how to deal with the kinds of oligopolistic competition and imperfect markets that would be likely to emerge. No one in the West, that’s to say, could in any very strong sense of the term be said to know what they were trying to do for a nation’s development or be sure to have the means with which to do it. That didn’t matter to Hirschman. He didn’t think in wholes or with grand theories and preferred metaphors to models, a stock of which, he would say, he always kept in a drawer, waiting for their referent. He relied on observation and ‘little ideas’ and the powers of ordinary language with which to expound them. The Strategy of Economic Development made a wave when it appeared in 1958; universities were attracted, and in need again of a salary, Hirschman accepted an offer from Columbia that year and in 1964 from Harvard.

*

He was not at ease. He disliked institutions and the administration by which they lived. (He was famous throughout his career for his glum silence in the few academic meetings he attended.) He didn’t want to find himself founding another orthodoxy. In one place after another in Latin America, in Brazil after 1964, Bolivia after 1971, Chile and Uruguay after 1973 and Argentina after 1976, those who’d inspired him and whom he in turn had inspired were being cowed by dictatorships. The IMF and the World Bank were starting to return to the nostrums of the 1930s. And the situation was deteriorating in the United States. In the 1960s conservatives and self-described liberals were clamping down, radicals were dropping out and social scientists were becoming more rigid. The Hirschmans’ friends at Harvard were moving to extremes. Adelman describes the long moment well. Hirschman was dismayed and confused. He escaped for a year to Stanford, discovered the psychology of cognitive dissonance and its claim that in times of crisis people close their minds to alternatives, and realised that this was what he wanted to write about. He’d long been convinced that there were rationalities to be found and choices to be made even in the most difficult of times, indeed that difficult times could lead to the most constructive. He made the case in Exit, Voice and Loyalty in 1970.

‘Exit’, he explained, was the economists’ answer. If something is too expensive or won’t do for other reasons, one tries something else. This is choice, and the way perfect markets work. Hirschman corresponded with Ralph Nader, who sent a stream of examples; ‘our system,’ as Nader put it, ‘has institutionalised “exit” into an ideology and remedy for a wide variety of abuses.’ But the defective cars that Nader was drawing attention to were one kind of case: institutions, Hirschman argued, quite another. Even when it’s possible to turn away from these, to take one’s children out of poor schools, for instance, it will be the better off, better educated and more confident who do so, those who were they to stay would be most likely to exercise their voice and try to improve things. Hence, Hirschman said, an argument for monopolies. If there are no better schools to be had, parents will complain. On the other hand, poor practices may be embedded, especially where they have a monopoly, and even if people do use their voice, they may not be heard. Hence the need for time and what he called ‘loyalty’. But loyalty will increase the likelihood of disloyalty. And if the discontents remain unheard and loyalists leave, hope will have to rest with ‘the spineless’, those who have stayed and kept quiet but who may eventually find it in themselves to speak up and act (perhaps because they won’t like to be thought spineless). The book, so short and neat and easily applied, though more intricate than any sketch can suggest, was a runaway success; not least because in the idiom of choice in which Americans felt at home it had what Hirschman was pleased to say was ‘a bias for hope’. He dedicated it to Colorni.

By 1973, Hirschman had a permanent position at the Institute for Advanced Study in Princeton, free at last from the confinements of academic disciplines, the demands of committees and of the teaching at which even one of his admiring students said he was ‘catastrophically bad’, able to think whatever he wanted to think, write whatever he wanted to write; and thanks to the institute’s programme of visiting fellowships, he was in a position to offer refuge and stimulation to Latin Americans who were being sidelined at home. In The Passions and the Interests (1977) – asked how he arrived at his titles, Hirschman would mention Flaubert – he recovered the long-lost thought that the pursuit of material interests and commercial exchange would dissolve the passion for place, ethnos, religion and glory, undermine greedy rulers and bring peace and civility. But although he saw that ‘capitalism’ was now being blamed for destroying exactly what its advocates had hoped to destroy, he confessed that it was only after he’d written the book that he saw that the uneven development he’d been accepting, even advocating, in the 1950s and 1960s had set region against region, town against country, class against class and contributed to the extreme reactions in Latin America. In Shifting Involvements (1982), he wondered, not always persuasively, whether private disappointments might not produce public reactions and vice versa. In The Rhetoric of Reaction (1991), which he wrote towards the end of the Reagan years, he exposed the claim that reform will do one of three things – achieve nothing, make a problem worse or damage an existing good – and pointed out that in these respects the left could be as intransigent as the right. Indeed he wanted to call the book ‘The Rhetoric of Intransigence’, but Harvard University Press demurred; Americans, it said, wouldn’t know the word or be able to pronounce it. The Brazilian, German, Italian and Mexican editions made the change; only Fayard in Paris insisted on keeping rhétorique réactionnaire. In all this writing, Hirschman deployed his gift for making things simple; almost all his little ideas, he would say, could be captured in the contrasts of a two-by-two table. The simplicity made his arguments easy to unwind, and he was often the first to do so. His final title was A Propensity to Self-Subversion (1995).

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One item in The Essential Hirschman, Adelman’s collection of Hirschman’s odds and (mostly) ends, is the text of a talk he gave to an audience that had gathered in Dresden to think about ‘community’. He told it not to underrate conflict; people had to disagree, struggle, bargain and experiment; conflict was both ‘glue and solvent’; the ties that those he was talking to might value in community were not the precondition of politics but at best its effect, and always temporary. It is the last in Adelman’s collection of 16 pieces and might serve as well as any as a conclusion. Except that one of Hirschman’s favourite injunctions from Flaubert was to guard against ‘la rage de vouloir conclure’. Emma Rothschild and Amartya Sen, in a short note here on his economic heterodoxies, are among the few to heed it. Some, being American, have praised his commitment to liberty, but he rarely and then almost always with the irony of a capital letter wrote about liberty or liberals and never mentioned liberalism. Some have praised his sensitivity to interests, a notion he did much to deconstruct. And several have talked blandly of his ‘humanity’. No one appears to have mentioned his silence on the subject of fear, personal security and the law. Adelman himself, revealing on the life but sentimental and for the most part analytically diffident, is suitably nervous and at the end can only burble. Might his subject’s contribution to ‘the history of possible futures’ not be ‘a script for grand theory’? Was ‘the personal and moral stuff of which his vision was made’ not ‘bold enough for him to dream of a unified social science’? No, and no again. ‘We have achieved our purpose,’ Hirschman wrote at the end of one of his essays on unexpected outcomes and endless paradox, ‘if the reader feels a bit confused.’