Worldly Philosopher: The Odyssey of Albert O. Hirschman (54 page)

The original cover of his book was of a jigsaw puzzle, partly assembled, partly scattered—meant to denote the premise of the book that there is little that is especially integrated or balanced about development. Hirschman chose this on purpose. Between the covers he wanted to put his jigsaw together while leaving many parts scattered to denote the unfinished nature of the subject he was exploring. Indeed, his original title was meant to be
Unbalanced Growth
. But he confided to future colleagues at the RAND Corporation, Charles Wolf and Paul Clark, that it “is too provocative and provoking a title and [I] have provisionally decided to call it
The Strategy of Economic Development
.” The echo with Schelling’s word choice Hirschman kept to himself. One is also tempted to see in the cover a personal representation of a life taken apart and reassembled in pieces—and still incomplete.

The outer surface of the book was a sharp attack on balanced growth advocates. But underneath was a critique of more the generalized preference for abstract model-building in the service of big all-encompassing plans of modernization through top-down reform. While the approach, he argued,

appears quite general, its principal parameters have been chosen so as to give it maximum relevance within the environment with which it was intended to deal. But the very success of this enterprise make it virtually certain that the model will have minimum relevance in any radically different environment. (p. 33)

In the Sputnik age of outsized plans and “overall assaults” on backwardness, Hirschman wanted to strike an entirely different pose, offer a different vocabulary, for reform—without implying, as conservatives did, that it was all futile. From Hirschman’s perspective there was a common problem: the view of development as a grandiose release of tension and blockages so that the economy could put itself on a smooth path to a new, “developed” equilibrium. This was pie-in-the-sky nonsense; the causality was the other way around. It was the very creation of “pressures, tensions and disequilibrium” that had to prime the motion and then unleash more frictions and tensions. There was a “hidden rationality” to the chain of tension-producing constraints or challenges: by creating them, people are
lured into solving them.
To hide
was to become a key verb for Hirschman, full of possible significances over a long
vitae
of writing. What he had in mind was playing with Adam Smith’s notion of the Invisible Hand. Instead of transparent, self-evident, all-inclusive plans, Hirschman opted for more cunning operations and unplanned consequences. To jump forward a bit in time, within a few years he would be rereading
The Wealth of Nations
to fathom the unintended general effects of individual pursuits. For the time being, he wrote in his diary, “The mystery is the meaning.”

If this was the subtext of
Strategy
, its text consisted of themes stemming from his tension-producing, disequilibrium-creating stance. It made the case for fashioning new conditions for decision making; conditions to induce or compel policy makers and investors to have to decide where, when, and how to invest capital by presenting them with opportunities and challenges. The heart of the matter was how to think about investment. To balanced growth advocates the answer was where capital was shortest—these were sectors guilty of throttling growth. Their strong preference was for social overheads, such as ports, roads, and power grids, to eliminate prospective scarcities before the growth cycle began. Hirschman wanted it the other way around. Developing countries were not fragile infants at risk of being choked in the cradle without expanded infrastructures. Better to invest in industries, agriculture, and trade directly; allow them to expand and to create the obstacles and bottlenecks—and therefore create shortfalls in social overheads. Herein lay the idea of spawning pressure points.

This was not just a technical move. It shifted the spotlight to “entrepreneurs” and away from “planners.” It also raised fundamental doubts about the experts’ convictions about “sequencing” the process before it ever began—as if one could chart history’s course in advance with a plan of meeting “prerequisites” and satisfying “conditions.” Nothing could be more wrongheaded. To Hirschman, backwardness or lateness afforded opportunities to skip or invert the normal sequence of stages. There was no single route through history.

Shifting from anticipating problems in an overall schema and favoring state-led investments, to favoring private, precipitating problems did
not sideline the modern economist, even as “expert.” Hirschman still had full faith in the economist, but the “expert’s” agency was that of a more discrete, subtle actor in the story. Economists can be most useful by indicating which productive sector or industry deserves investment according to the industry’s “linkages”to other economic activities. One might see this as Hirschman generalizing the “consultant’s” view. The idea of linkages was one of
Strategy
’s most enduring contributions. There were two kinds of linkages—forward (what happens to a product as it gets refined or marketed to yield subsequent economic activity as it rolls to the consumer?) and backward (what sorts of inputs are necessary for the production and handling of the good?). Each yielded different kinds of activities. What was important was that a push in one industry or sector could set in motion tensions or scarcities and thus new opportunities for lucrative ventures in other industries or sectors “linked” to the original push. It was in the very imbalance and the disequilibrium created by the initial shove that the economy might develop. In this schema, the intentional targeting of disequilibria and destabilizers replaces large infusions of capital and the general “big push” favored by images of “balance” and “coordination” gathered under the abstract principles of “development planning.”

By the end of
Strategy
, the core of Hirschman’s thinking about what was scarce in traditional societies becomes clear. It was not capital. It was not a middle class. It was not “entrepreneurship” or the right kind of cultural bedrock of striving individualism. It was altogether more original: the capacity to problem solve in a capitalist world, the “ability to make development decisions.” Balanced growth presumed that core of the vicious cycle of poverty was a shortage of capital. To Hirschman, capital was simply underutilized for lack of perceived opportunities. In fact, what was in short supply was “the ability to carry out cooperatively decisions and activities for development,” which was now compounded by development gurus who insisted on an idea of progress as an uphill struggle whose success depended on a concerted, expensive, overall push on indivisible economic fronts. With this as the only way out of the trap, no wonder people in the Third World felt—or were made to feel—incapable of making effective decisions on their own!

Here one can see his debt to psychology and his fascination with frustration and anxiety as the patient “works through” traumas; in development, societies face problems of disequilibria by learning to solve them because they cannot afford not to. The trick was to create just the right amount of tension to enable decision making to serve, as he put it, as a “binding agent” compelling societies to resolve induced instabilities such as inflation, balance of payments problems, and population growth. He recognized the reluctance of people to submit themselves willingly to this trial. It was not just a self-imposed burden; it had the feeling and appearance of something unnatural. “There is something distasteful, hectic about this method. One wants to force nature’s hand. One is always on the brink of disaster and disaster strikes if the calling forth is unsuccessful.” This passage illuminates not only his principles, but his doubts. With pressures came risks of failure. Hirschman’s approach was one that had to accept the full blame for its consequences, for having advocated “foolhardy risks.” On the other hand, if we have no latitude to solve an induced problem, “we cannot afford to fail” means being “bound” to solve it. This was pressure. But at least it did not pin failure on the patient, the underdeveloped society that refused to shake off its traditional ways and “resisted” outsiders and their pushy interventions.
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The result was an optimistic charter that took aim at the prevailing view that there were so many constraints on development, so many scarce factors, that the enterprise required a totalizing approach to tackle them all in one swoop—or be condemned to fail. Given the proliferation of scarcities and shortages, Hirschman wondered whether such “objective scarcities of specific factors” were quite so central at all. Why not consider “manmade difficulties” in mobilizing resources, like the ability to solve problems? The more Hirschman thought about it, the more he realized that a closer examination “permitted a more sanguine view.” The result, in contrast to expensive, expansive, intellectually seductive general plans and combined assaults, was a piecemeal approach targeting the scarcest of all variables. This was the premise of “unbalanced growth,” a term he eventually abandoned because he did not want his work positioned only as an alternative to a mainstream. There was also a matter of scale and of
what was knowable. Once more in contrast to the all-encompassing big-push-or-nothing standpoint, Hirschman featured modesty. In a phrase he liked to share with readers and listeners, he summarized his view of unbalanced growth thus: “To look at unbalanced growth means, in other words, to look at the dynamics of the development process in the small. But perhaps it is high time that we do just that.”
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He did not even try to contain the surge of pride as he wrapped up his manuscript. What had grown out of an assortment of insights, petites idées, and readings had evolved, he thought, into a framework for a grand intellectual agenda. As the book was about to appear in the fall of 1958, he shared his sense of triumph with Ursula: “The reason why I would like to force it on you is that for the first time I have the feeling that I have produced or captured more than just a petite idée. The main themes can still be developed and applied, and I already have a couple of pages of thoughts that could possibly become the basis for a general investigation.” With completion surfaced a lurking sense that the book was more than sum of his ideas about the world; it was the discovery of a personal truth. “I still remember how Miss Rubinstein once explained to me that I shouldn’t worry about love—and she stretched out her arms and then slowly brought her two index fingers together from afar—as sure as that, she said, would the girl that I will love get together with me one day. As it may be, along the lines of this example I think that there exists for each of us a personal (and nevertheless general) truth, we only have to trace it and then follow it deliberately and courageously. And I just had these last months the exciting feeling that I am about to succeed in following my truth.”
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Strategy, therefore, was freighted with more than a career. Having watched his first book vanish onto library bookshelves with minimal attention, Hirschman was determined not to face the same anonymizing fate again. He would promote the book himself. Upon reading an essay by the All Souls College economist, J. R. Hicks, Hirschman found occasion to point out like-mindedness and sent Hicks a copy of
Strategy
with guideposts to relevant paragraphs. “You will see,” Hirschman wrote, “I make, I believe, exactly the same point that you state on page 346, namely
that if a country is able to maintain per capita incomes in the face of rising numbers, the stage is set for cumulative growth.” Hirschman’s pleasure was to be shared. “I am rather happy about the coincidence because up to now I had the feeling that in this section I was the one to climb up a queer tree, for the sake of maintaining the consistency of my general approach.”
²⁶
This was a bit of a reach, it must be said, for this concern for population was neither controversial nor important to the book. But it was a convenient opportunity to reach out to a famous colleague.

As fortuna would have it, what gave the book its splash was timing. Development was hot, and readers were looking for guidance. The critique of modernization theory was already starting to form by the late 1950s, but there was still little available that did not swing to the other extreme, of Marxist or radical anticolonial critiques of capitalism. What Hirschman offered was a dissent that was still sympathetic to the power of market forces, a case for reform as the first rays of revolution shone out from the horizon.

Attention came from high circles. Roy Harrod, Keynes’s associate and official biographer who had met Hirschman while at the IEA meetings in Rio de Janeiro, procured a copy as soon as it appeared and lathered Hirschman with gratifying praise. “I found it the most interesting book that I have read on economics for years,” wrote the Oxford economist. Harrod continued: it is “perhaps the most stimulating book that I have read on any subject in some time.”
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Other heavy-hitters were less fawning. The harshest critique, published in the
American Economic Review
, came from the Stanford economist, Hollis B. Chenery, who was present at MIT when Hirschman aired his early reservations about the enthusiasm for ambitious master plans in 1954. Chenery’s reservations centered on the premise that the main obstacle to development was not so much the supply of capital as the ability to invest. It was a technical distinction of significance. The reviewer cut to the chase: “Hirschman’s emphasis on the ability to make investment (or development) decisions leads to a theory of development which is more applied psychology than economics.” Since it was not capital that was scarce, “the economist is left with nothing to economize except the
elusive quality of decision-making.” While he praised Hirschman for addressing “motivational factors” in economic theory, he charged him with “overstating his case,” replacing simplifying notions of capital scarcity with new, no-less reductive assumptions about the centrality of decision making as the key. One “overemphasis” replaced another.
²⁸
The Chenery review stung. Shortly after reading it, Hirschman wrote to his friend J. J. (Coos) Polak, at the International Monetary Fund, to share his feelings about the “rather unpleasant review.” Hirschman shrugged: “I would have thought that the book should have [given] rise to strong feelings (of like or dislike).” He was actually hiding some pain here. Chenery had sent him a copy of the review before it was published, and Hirschman tried to salvage himself, politely. “Perhaps I have overstated my case, but it seems to me that you in turn overstate the extent of my overstatement,” he wrote. More important, he sought to defend the use of psychology in the theory of development and social change: “My principal assumption is that underdeveloped economies are squeezable and my principal contention is that there are special techniques of resource mobilization which are not necessarily the same as … the techniques of efficient use of given resources. I do not understand why the former techniques are necessarily the concern of the psychologist and only the latter the province of the economist.”
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