Worldly Philosopher: The Odyssey of Albert O. Hirschman (32 page)

The bookshelves of the Doe Library, the sanctuary at Charter Hill, and the commitment to prove himself in America affected the ways in which he engaged—or not—with radical circles in Berkeley. Berkeley, by 1941, was a hub for cocktail Marxism. The Bay Area had active militants in the Communist Party: some from the trade unions in the port, some from the faculty of the University of California. It was into these circles that the physicist J. Robert Oppenheimer merged, along with his fiancée Jean Tatlock, as well as many other faculty and graduate students. Many drifted away after the shock of the Molotov–Ribbentrop Pact of August 1939, but many hung on. Hirschman made a point of giving them as wide a berth a possible, but it was hard to seal off the entreaties, especially given the mystery that trailed him, that he was one of the few who had
really
fought fascism. His old friend and his best man at their marriage, Peter Franck, had kept up his affiliation in the party. Albert struggled to keep the personal and the political apart, but Franck made it impossible, and ultimately spoiled their friendship for good. Peter insisted that Albert
come to meet a comrade of his, Haakon Chevalier, a charismatic professor of French literature at Berkeley, known to Sarah and Albert alike. He was also an active Communist recruiter in the Bay Area. By this point, Albert’s experiences in Berlin, Paris, Barcelona, and Trieste had confounded all hopes for a “common cause” between Socialists and Communists; the disappearance of Mark Rein had terminated them. The dogmas of the party had no more allure; Albert had long since embraced the free-form style of Eugenio’s liberal socialism. But one day, Albert unhappily relented to Peter’s pressures and agreed to meet with Chevalier. When he returned home to Charter Hill, Sarah asked him how the meeting had gone. Albert’s expression said it all: his face was that of a man forced to smell rancid meat.

This episode may have planted a seed in a file that the Federal Bureau of Investigation (FBI) opened on Albert, for around the same time, Chevalier had asked Oppenheimer if he would be willing to make technical information about the work at Los Alamos Laboratory available to the Soviet Union. We cannot know for sure; what we do know is that suspicions about Albert were awakened by FBI field officers in the Bay Area. The episode also contributed to the end of his friendship with Peter Franck. Writing to Ursula, he noted that “Peter reveals all too often his fundamentally bad character and is not even (he never was) very intelligent. But as “Best Friend” he has become an institution. I have still not found a circle of true friends. In New York I would have some, but not here.”
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Hirschman may have been isolated, but he was not lonely. With Sarah’s companionship, a steady diet of books, and just the right amount of support from his officemates in the Doe Library, his solitude was precisely what he wanted to turn to his project—to write a book. He wasted no time in making himself at home in his writing. No sooner did he arrive in Berkeley and install himself in one of the gray desks in Condliffe’s library suite, than he went to work. Berkeley was a disarming, but most welcome, surprise. Indeed, the very nature of American academia was a novel setting. University life in Berlin, London, and Trieste involved a much more porous—if disruptive, chaotic—relationship with the outer world. In the context of the rapidly polarizing political atmosphere, universities could
not help but be one of the sites where debates were especially electric. By contrast, Berkeley seemed “totally shut off, in a sense, from something called the real world.”
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The isolation was strange but liberating. Berkeley afforded time and peace. In seminars and discussions, students “earnestly” (if innocently) debated ideas and problems removed from the relentless pressure to attach them to political positions or confront their ideological ramifications. At the time, the economists at Berkeley were obsessed with whether Keynes was “right or wrong,” which struck Hirschman as both less confined than the more immediate—and less academic—need to deal with the social and political crisis, and at the same time quite provincial. Hirschman, by now, was fatigued by what he felt was a false debate between Keynes’s champions and his critics, as if
The General Theory
’s significance depended on its victory and defeat.
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What interested him was a preoccupation drawn from his Marxist antecedents: conflict between organized interests and how bargaining power, shorn of the rigid class structures, actually worked to create systems. Moreover, he wanted to put the analysis on a plane in which it was not social classes, but regions (inspired by his old economic geography classes in Paris) and nations in an international financial and trading system (inspired by his classes in London) that fought over capitalism’s spoils. All his accumulated thinking from the franc Poincaré to the Italian imperial economy pointed toward questions of global trade and their effects on national economies—a theme obscured in the debate among pro- and anti-Keynesians on whether markets were self-correcting. At the same time, he was becoming concerned about the reverse process: how the organization of national economies affects international commerce. Fascists were, if nothing else, hard bargainers with neighbors.

What gave him the freedom to explore was his sponsor, Jack Condliffe, who had some sense of what Hirschman had been through and was thus inclined to permit him to roam under the broad umbrella of the Rockefeller-funded Trade Regulation Project. Condliffe had just published
The Reconstruction of World Trade: A Survey of International Economic Relations
, to which Albert had contributed an analysis of exchange
controls and which used the lessons of the botched responses to the aftermath of the First World War to recommend a different architecture to follow the Second. To Condliffe, the efforts to restore a pre-1914 gilded age had been naïve. One had to accept the interventionist state endowed by electorates and leaders with a mandate to protect “national” interests engulfed in a “conflict between nationalism and industrialism.” The regulation of international trade was the result of this conflict—and it would be best if economists accepted this shift rather than deny it in an effort to retrieve a multilateral, free trade model. The issue was rather what kind of regulation—bilateral bargaining and the formation of big blocs dominated by economic powerhouses, or the creation of an international regulatory order that upheld fairness and impartiality for all trading members? The latter was an economic condition for a durable peace; the former was a recipe for rivalry and friction.
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This tension was already on Albert’s mind before joining the Trade Regulation Project. Indeed,
chapter 4
of
The Reconstruction of World Trade
, on the rise of economic autarky, relied on Albert’s unpublished essay, “Étude statistique sur la tendance du commerce extérieur vers l’équilibre et le bilatéralisme,” which prefigured how he would fit into Condliffe’s plans. With his move from London to Berkeley, the Rockefeller Foundation funded a new project that extended the themes that were supposed to be tackled at the Bergen conference of 1939—how states manage their commercial relations in ways that enhance or thwart cooperation between governments and thus keep peace or fuel conflicts. Housed inside the Doe Library in a large room filled with books and furnished with gray metal desks, this cluster of professors and their European economist assistants toiled away on the crisis of world commerce. Here was where the New Zealander welcomed his protégé with open arms. Condliffe’s project contained several branches of research, including the evolution of state trading and the practice of exchange controls in Central Europe. The fellowship that Condliffe had secured for Hirschman was open-ended. In theory, he was supposed to be conducting research on the theme of Italian exchange controls, and to some extent Condliffe did rely on Hirschman for research assistance for the larger project. In
practice, this afforded Hirschman an opportunity to work on his own ideas. Condliffe sensed that Hirschman’s ideas on autarchy, bilateralism, and the formation of trading blocs embedded in “Étude statistique” were going to be an important part of the overall diagnosis of what went wrong after 1918. He was on his way to writing something innovative, and so Condliffe gave him a wide margin of support and independence.

There was also some sense, hope even, that Hirschman would use the Rockefeller fellowship to upgrade his credentials. It was less an explicit term laid out by the foundation than a suggestion that he should prepare to qualify for an American PhD and thus launch a successful career as an economist in the United States. Hirschman certainly wanted the latter but was not willing to take the route that others prepared for him, and so he eschewed the coursework that would give him any further degrees. In the back of his mind, Hirschman must have known that the decision not to upgrade his Trieste PhD was a risky one. But with a chance to conduct research and write an original book, he wanted as few intrusions as possible.

He did take a few courses—one with William Fellner, a Hungarian expert on business cycles who taught a general seminar on the principles of economics, and one with Howard Ellis, who taught international economics and coordinated the Bureau of Business and Economic Research, which had sponsored Condliffe’s grant. For the most part, Berkeley was not a hotbed of economic thinking, and so its seminars were probably not very compelling. By the rapidly changing standards of the time, Condliffe himself was not a very sophisticated economist; it was his pragmatic generosity and open-mindedness that most influenced his assistants. Meanwhile, Fellner and especially Ellis were skeptical of the Keynesian revolution and kept sniping at what they considered a fad—which only licensed Hirschman’s decision to sidestep the great economics debate of his time.

What Hirschman did sense was that economics was becoming more and more mathematical, and Hirschman’s training was more in advanced accounting, more applied than theoretical. This was already a concern of his by the time he reached Berkeley. In the summer of 1941, he enrolled in a course on mathematics for economists, and the following fall he
enrolled in probability calculus, by the end of which he had competent skills, which he used to his advantage. He must have known that this would never be his forte in the field. Still, he tried his hand at developing several statistical indices for measuring concentrations of foreign trade and the incidence of attraction of trading countries with larger or smaller partners. These yielded his first two publications in English, one for the
Quarterly Journal of Economics
and another for the
Journal of the Ameri can Statistical Association
in the late summer of 1943, a feat that Condliffe happily boasted about to the Rockefeller Foundation.

It was in the latter publication that he presented his arithmetic model of indices of concentration. Unlike existing measures, which restricted themselves to gauging the inequality of distribution (of, for instance, wealth or income, most famously known as the Gini coefficient), what Hirschman was after was a measure not just of distribution but also of the
fewness
of buyers or sellers as a measure of their market power—the number of firms in a market
as well as
the degree of concentration. The result was a calculus measured by summing the squares of the market share of the largest firms, yielding an index from 0 (a large number of small firms) to 1.0 (a case of pure monopoly by one firm over an industry). This calculus gives an observer a consistent gauge of the size of a firm to a particular industry. Much later, the index became a standard measure for competition and antitrust enforcement. For Albert, however, the measure was less intended for firms’ market shares. His concern was measuring countries’ trade with other countries. Condliffe was not the only proud one; Albert wrote to Ursula, “I have also built some new indices for measuring certain economic phenomena and the first results are in—I have one of my assistants calculating and it is clear! They are pretty interesting.”
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Condliffe and Ellis were the “professors” in the project. There were also several assistants, who played, if anything, a more important role than the maestros. Alexander “Sandy” Stevenson, a young Scottish student, became Albert’s closest associate in the office. Stevenson had applied to study economics at Berkeley shortly before the war broke out and crossed the United States on a Greyhound bus. Moving into Phi Delta Theta house was an abrupt apprenticeship in one aspect of American
university life—but fortunately for Stevenson, he found an alternative. Condliffe arrived from London and hired Sandy, whose fellowship was running out, as his assistant. He created the index for
The Reconstruction of World Trade
. So, well before Hirschman’s arrival, Sandy was intrigued to meet this exotic German talent, having helped Condliffe track him down through the Rockefeller Foundation.

Another assistant was Alexander Gerschenkron, whose background was not dissimilar to Hirschman’s. The two of them, Gerschenkron and Hirschman, would go on to have notably entwined lives, and at several important junctures, Gerschenkron would have a decisive—if invisible—role in Hirschman’s career. Several years Hirschman’s senior, Gerschenkron and his family had left Russia for Vienna after the revolution. Like Hirschman, he was to a large extent self-taught; the University of Vienna had become a shadow of its former glory in economics. He came to the attention of the Berkeley circle through Charles Gulick, who had hired him as a research assistant—some would say ghostwriter—for Gulick’s
Austria from Hapsburg to Hitler
, an arrangement that left the gregarious Gerschenkron with an enduring grudge. After the Anschluss, he had left for England and thence to Berkeley, funded by the same Rockefeller Foundation grant that supported Condliffe. Gerschenkron’s section of the Trade Regulation Project was State Trading. In fact, like Hirschman, he worked on his own ideas, which led to the publication of his first (and only) monograph,
Bread and Democracy in Germany
, published in 1943. Growing out of the common concern with protectionism, Gerschenkron demonstrated the ways in which the great Prussian estate owners, Junkers, made agricultural protection a cornerstone of the “iron and rye” coalition that buoyed the German empire—and how the persistence of Junkerist power was the principal obstacle to modernization and democracy in Germany, prefiguring the crisis of the Weimar Republic. In this sense, it was fully in keeping with Condliffe’s abiding concern about the connections between freedom of international trade and liberalism at home.
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