Published by EH.Net (December 2022).

Michele Alacevich. *Albert O. Hirschman: An Intellectual Biography*. New
York: Columbia University Press, 2021. xvi + 332 pp. $26 (paperback), ISBN:
978-0231199834.

Reviewed for EH.Net by Adrian Darnell, retired Professor of Economics,
Durham University.



Albert Otto Hirschman was a complex man whose early years were difficult,
to say the very least. Born in Germany in 1915, he was the only son of an
assimilated Jewish family. In 1933 and not 18 years old he was leaving
Berlin in the first exodus of Germans fleeing Nazi oppression. His father,
a neurosurgeon, had died just days earlier, and the young Hirschman began
studies in Paris. By the time he was 30 had lived in seven different
countries on three continents and could write and converse in five
languages. He never studied for a higher degree yet went to hold major
positions at a dozen elite institutions. To gain an understanding of the
details behind these rather bald statements you simply have to read this
fascinating book and its more than fascinating subject.

Hirschman’s work as a social scientist is best known in the field of
development economics, yet his entrée to the field was more accident than
planning. Having fought on the front of the Spanish Civil War in 1936, he
decided not to join the International Brigades in Madrid but travelled to
Trieste to join his sister, Ursula (who had married Eugenio Colornio, the
Italian philosopher and anti-fascist activist). Colornio was an important
mentor to Hirschman (so much so that Hirschman dedicated his book *Exit,
Voice, and Loyalty*, 1970, to Colornio\’s memory). Hirschman recommenced
his studies, graduated from Trieste in 1938, and later wrote a thesis on
the franc Poincaré (even though doctoral programmes did not then exist in
Italy). His studies were then interrupted again by war – the Second World
War – and he proceeded to help refugees flee Europe through Marseille. When
that became too dangerous for him, he left for the USA. From 1941 to 1943
he was a Rockefeller Fellow at the University of California, Berkeley, and
from 1943 to 1946 he served in the United States Army.

From 1946 to 1952 he was the Chief of the Western European and British
Commonwealth Section at the Federal Reserve Board. In this role he
published analyses of the European postwar reconstruction and the newly
created international economic institutions. And it was his time at the Fed
that led him into development economics. Columbia had established a new
planning council on the recommendation of the World Bank, and the
Columbians asked for an economist who could help them. Alexander Stevenson,
then at the Bank and formerly one of Hirschman’s colleagues at Berkeley,
recommended Hirschman and so he began to work in the field of development.

To complete the potted statements of his career, he held a succession of
academic appointments in economics: Yale from 1956 to 1958, Columbia  from
1958 to 1964, and at Harvard for 10 years (1964–1974). He worked for the
Institute for Advanced Study from 1974 until his death at 97 in 2012 (just
months after the passing of his wife of over seventy years, Sarah
Hirschman).

Perhaps one of the most pervasive of his legacies is the concept of
‘linkages’. Not exactly entirely novel, but in Hirschman’s sharp analyses
he was able to articulate how an economic activity encourages new
activities to produce inputs to the former (‘backward linkage’) while the
outputs of the primary activity themselves become inputs to other
processes, thus stimulating and facilitating the production of other goods
upstream (‘forward linkage’). While such linkages are readily recognised as
input-output constructs, they proved most useful as a general framework
within which to construct development strategies (but not as a tool for
determining whether to proceed with any one development investment).

Hirschman’s work straddles disciplines, and his development work
exemplifies his attempts to intertwine economics and political science. He
himself preferred to speak of one interpretative social science. His
attempts to integrate distinct social sciences into one, and his attempt to
ground that one science in ‘reality’, did however generate some tensions of
which he seems to have been oblivious (or perhaps deliberately chose not to
dwell on). Indeed, his biographer, Alacevich, does not always spell out all
the contradictions in Hirschman’s approach, but rather leaves it to the
reader to tease out all the consequences and contradictions. I will confine
myself in this review to just a couple.

As is well recognised, a model, by setting to one side several ‘realities’,
is designed from the outset as an abstraction. Assumptions are made for
various reasons, but one is to simplify the ‘real world’, and a great
advantage of such simplifications is that the resulting model is applicable
to wide range of circumstances. Models, by their very construction, are not
‘particular’. Hirschman’s work ‘was always occasioned by specific problems
to which he hoped to contribute with useful ideas. No ivory tower
intellectual, Hirschman was solidly down to earth’ (p xiii). But his very
‘groundedness’ in ‘reality’ meant that much of his work was so particular,
so relevant only to the problem at hand, that it was not transferable to
similar, but different, problems. His approach to project appraisal
illustrates this perfectly. Expressing a dissatisfaction with cost-benefit
(CB) analysis he argued for something he described as ‘simpler’, namely
‘judgement in the weighing of alternative objectives and in the trade-off
between them’ (Hirschman, 1967, p. 179, here at p. 125). This rejection of
CB analysis is one example of Hirschman’s unorthodox approach, but his
alternative was seen by the World Bank as, not surprisingly, at total
variance to their research agenda; one senior officer was moved to observe
that Hirschman’s work contained no useful operational analysis (Demuth to
Asher, 1966). Hirschman’s approach may well be a helpful adjunct to more
orthodox methods, but it could hardly be described as “simpler” because it
is non-operational.

As another example of the internal contradictions in his approach to
development planning, Hirschman promoted the idea of not looking at any one
issue or project individually but rather constructing what he called a
‘comprehensive plan’. Alacevich describes how Hirschman identified the
advantages of such an approach: ‘a plan, because of the large financial
commitment involved, would prove a useful ‘tactical weapon’ for policy
makers, attempting to stop pressures for additional uncoordinated and
haphazard expenditures. A comprehensive plan would help policy makers
define a perimeter dividing two huge groups of policies and problems –
namely those to be addressed now (within the perimeter of the plan) and
those that must be postponed (outside the perimeter).’ (p. 105). In
Hirschman’s hands, the concept of a ‘comprehensive plan’ becomes both
highly conditional and elastic: the plan is as ‘comprehensive’ as its
designers choose. But perhaps effectiveness, as measured in the most direct
of economic terms, was not its purpose. As Alacevich notes, as ‘pointless
and rigid as a comprehensive plan seem when the question is how to induce
economic entrepreneurship, it turned out to be a rich and flexible
instrument when the question was how to advance political decisions’ (p.
106).

One of the powerful and recurring themes through Hirschman’s large body of
work is the need to understand political processes and decision-making. In
*Strategy* (1958) Hirschman offered a critique of theories of balanced
growth and proposed his theory of unbalanced growth, where imbalances
created by the growth process can be used to identify areas where
policymakers might intervene; he argued that the most critical of shortages
in developing countries was often not capital or any other physical asset
but actually the capacity to take decisions. In *Journeys* (1963) the core
issue he addressed was ‘the investigation of the behaviour of public
decision-makers in problem-solving situations’ (p. 4, here at p. 109). I
found the many passages dealing with uncertainty in decision-making most
thought-provoking. Hirschman, in *Development Projects Observed* (1967),
introduced the notion of the ‘Hiding Hand’ (dismissed at the time by one
senior officer at the Bank as ‘a bit thin, particularly with respect to
relevant guidance for those who must decide whether to undertake, continue,
or complete a proposed project’ (Asher, 1966, here at p. 122). The Hiding
Hand concerns the ‘underestimation of problems [which] induces the
implementation of projects which, had all the difficulties been foreseen,
would never have been initiated in the first place’ (p. 122). He then
argued that problems, when they occur, become the triggers for the
construction of creative solutions, leading to their ultimate solution.
This idea was later articulated by Hirschman as seeking ‘to prove Hamlet
wrong’ to show ‘that doubt could motivate action instead of undermining and
enervating it’ (Hirschman 1995, pp.118-9, here at p. 249). Hirschman later
suggested that the Hiding Hand was not operationally useful; but as
Alacevich seeks to interpret and give meaning to the concept, it ‘was not
intended to be a policy tool. It was a way for Hirschman to elaborate on
the need to include uncertainty and limited rationality in the [World]
Bank’s epistemology’ (pp. 122, 3). To this reviewer the Hiding Hand looks
very like a manifestation of the old (Platonic) adage ‘necessity is the
mother of invention’.

Hirschman’s innate complexity is well reflected in this dense and
compelling biography. His long and varied life, best known amongst
development economists but in fact much wider, is excellently told in this
volume and its reading will reward anyone interested in Hirschman directly
and more generally anyone interested in intellectual history.

References

Asher, Robert E., to Hirschman, Albert O. World Bank Group Archives, May
27, 1966.

Demuth, Richard H., to Asher, Robert E. World Bank Group Archives,
September 13, 1966.

Hirschman, Albert O. *The Strategy of Economic Development*. New Haven,
Connecticut: Yale University Press, 1958.

Hirschman, Albert O. *Journeys toward Progress: Studies of Economic
Policy-Making in Latin America*. New York: Twentieth Century Fund, 1963.

Hirschman, Albert O. *Development Projects Observed*. Washington, D.C.: The
Brookings Institution, 1967.

Hirschman, Albert O. *Exit, Voice, and Loyalty**: Responses to Decline in
Firms, Organizations, and States*. Cambridge, Massachusetts: Harvard
University Press, 1970.

Hirschman, Albert O. *A Propensity to Self-Subversion*. Cambridge,
Massachusetts: Harvard University Press, 1995.



Adrian Darnell retired as Professor of Economics at Durham University in
2017. He has published extensively on econometrics and its history and
regularly contributes to contemporary economic and political debate in *The
Guardian*, *The Observer*, and *The Daily Telegraph*.

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