Worldly Philosopher: The Odyssey of Albert O. Hirschman

by Jeremy Adelman

  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.25

  One might have expected these expatriates to huddle together. They did so, but only to an extent. Stevenson and Gerschenkron became close friends, having breakfast together regularly, sharing the feeling of using American slang at the local diner when ordering Breakfast No. 4! By contrast, Hirschman kept to himself. From his first day, he struck a profile as a reserved—even deliberately reticent—officemate. Everyone in the office knew he had adventures to tell of from Germany, Italy, Spain, and the fall of France; he had been present, studying economics, in the very countries they were now observing from far away. But no one dared ask. He emitted subtle but unavoidable signals that his past was not a subject of conversation. Nor, indeed, was the present; Sandy recalled how shocked everyone in the office was the day that the door opened and Albert introduced everyone to his fiancée, Sarah Chapiro. No one even knew he had a girlfriend. As concerns Hirschman and Gerschenkron, it is most accurate to say that they worked alongside each other on the big gray desks, thinking in parallel rather than thinking together. Still, there are some remarkable echoes in their first books. While they developed a profound respect for each other, they never became close friends or intellectual soul mates.26 As far as Condliffe was concerned, this was an ideal team, each helping and reinforcing the other in their autonomous pursuits, and he informed Kittredge that the combination allowed each to realize important and original work while “aiding the other collaborators.”27

  Hirschman had arrived in Berkeley with ideas of his own and a determination to develop them. Why dominate? was a question at the forefront of his mind. To help sharpen his thoughts, he returned to the classic readings, a habit he would refine over the years. As he was wandering in the stacks of Berkeley’s library—yet another of the great pleasures of the American academy that he was discovering—he happened upon Machiavelli’s Opere complete. In Trieste, Machiavelli was one of his staples, and by then he had also developed a fondness for reading epistles, most especially those of Flaubert. Albert flipped to the pages of the Florentine writer to find his correspondences. Therein, he initiated a lifelong admiration for the abundant, roaming letters between Machiavelli and Francesco Vettori. From them, he culled more quotes and aphorisms. One in particular he plucked out: “Fortune has decreed that, as I do not know how to reason either about the art of silk or about the art of wool, either about profits or about losses, it befits me to reason about the state.” What to Machiavelli was so vexing, to Hirschman seemed vital: the connections between trade and power, the ties between economics and politics. Hitler, it struck Hirschman, did get what Machiavelli had not. And with this insight, Albert plunged into the writing of his first book. Provoked by Göring’s famous line that “guns will make us powerful; butter will only make us fat,” he labored from the early spring of 1941 over double-spaced longhand on pads of paper. The script was also written in English, which Hirschman quickly mastered, though he had doubts to the end about his eloquence (and it is true, compared to his later works, it still had the occasional awkward passage).

  The effort consumed its author. The newlyweds did not take a honeymoon, though they did find time to take the occasional ski trip in Nevada and went to see Sarah’s parents in Beverly Hills. Governing those years was a sense that Hirschman, as he had told his mother, wanted to prove himself in America.28 While the research and data compiled for the book was something that brought Hirschman to the office he shared with Condliffe, Gerschenkron, and Stevenson, when it came to writing, he retreated to his apartment. Sarah, busy studying, had little to do with the direct composition—a role she would acquire in his later books. Only three people commented on his drafts in early 1942—Condliffe, Gerschenkron, and Stevenson. With encouragement and suggestions, he went back to his desk. In the end, Hirschman only trusted two readers of the manuscript draft, Sandy Stevenson and Fred Bloom, a fellow German with odd mystical proclivities who helped Hirschman on some of the earlier articles and the footnotes. In the meantime, when radios broadcast the news of the bombing of Pearl Harbor, and the United States entered the war, Hirschman stepped up the pace of his work. He could not face a war against fascism in which he was not taking a part. By the end of 1942, it was done, and the manuscript went off to the University of California Press, which Condliffe had recommended. He had developed new quantitative tools, harvested data, sorted out his argument about the world economy, and had written a book in his third language in less than two years.29

  It was a formidable accomplishment. It was also a mess. The final draft of National Power and the Structure of Foreign Trade started with Machiavelli’s confession and gave way to a stack of sheets with notes scribbled all over as the author, impatient with his English and keen to be as precise as possible, edited relentlessly. In the rush, the handwriting was so poor that no typist could decipher it. Only Sarah could. “The first book was my first act of great love,” recalled Sarah, chuckling. She went to a typist in an office on Telegraph Avenue and read the manuscript verbatim while the typist manufactured the typescript.30

  National Power sought to cast new light on two prevailing anxieties—how to account for the Nazis’ aggrandizing hunger and how to evaluate underlying trends of the world trading system. But he also wanted to connect these concerns. This was unusual by the terms of the social sciences of the day. Depression-era economists were more absorbed in debates about Keynesian macroeconomics or the failure of the multilateral trading and financial system, and less with the connection between economic policy and political regimes. Meanwhile, the authoritarian turn in Germany and Central Europe was cast in purely nationa
l frameworks, as if the misfortunes could be laid at the feet of national characteristics. This included Gerschenkron’s account. The result, as far as Hirschman was concerned, was not just an empirical gap, but also a conceptual failure. If Göring had provided a blunt statement about the perceived conflict between the social purposes of the state, between war and welfare, well-meaning democrats and reformers were in a state of denial that war and welfare were bound up with each other. They had fallen prey to Machiavelli’s separation of state power from any consideration of wealth; the result was a failure to understand the fundamental nature of fascism and its will to dominate others, and therefore turned a blind eye on the problems of the world economy. What Hirschman sought to do, therefore, was to introduce “New [national] Machiavellianism” and the “system of international trade” to each other and to illuminate what he called the “intermediate links” connecting power politics with global trade.31 This was an audacious agenda.

  From start to finish, it was a unique contribution to the field. It completely avoided the raging debates of the day. Keynes was neither right nor wrong. And it steered clear of most of the discussions among international economists about how to envision a postwar system that would rebuild and stabilize the payments system. Hirschman was guided by an altogether different set of preoccupations. Imagined against the background of German and Italian economic aggression—Germany’s to Central and Eastern Europe, Italy’s to Africa—coupled with the more general global trends toward protectionism and state intervention and monopoly, Hirschman wanted to combine all three together to reveal how autarky did not mean that nations looked purely inward for their economic pulse. On the contrary, they continued with an outward trade strategy. But instead of free commerce, they opted, when they could get away with it, for a bullying commercial strategy. Observing the intersection of national sovereignty and world trade, Hirschman wanted to show how strong states manipulated foreign trade to bolster state power at the expense of weak states; the breakdown of the world system and the clash between big blocs was hardly an irrational, nationalist pathology. It was an understandable response to a basic contradiction. In this sense, Hirschman was still hanging on to some underlying Marxist sensibility—to see economic relationships as intrinsically unharmonious and inclined to disequilibria. But he distanced himself from his Marxist roots by seeing patterns of exploitation beyond class terms; empire was not—as Marxist economists had been arguing—the result of cyclical capitalist crises, but rather was ingrained in the nature of commercial interdependence. In this sense, he wanted to shake liberal and Marxist tendencies to see aggrandizement as irrational or the expression of reactionary elites (like Schumpeter did) and to bring some “realism” to the understanding of political economy and economic analysis to the study of realpolitik.

  Machiavelli may have been mystified, but mercantilists figured out how foreign trade was an instrument of national power. They, unlike their successors, never lost sight of the ways in which butter and guns depended on each other; welfare and warfare were not irreconcilable, they were inextricable. Part of National Power outlined the history of economic thought from Machiavelli to late nineteenth-century liberal political economy, detailing the rise and fall of an ability to visualize what the Scottish philosopher David Hume had seen as the harmony of “the greatness of a state” and the “happiness of its subjects.” A century later, English economists came to see that interdependence by trade led to peaceful collaboration, as if mutual interdependence defused conflicts and allowed a state to redirect its energies from war making to welfare. All the while, as Hirschman pointed out, not only were European empires going back on the rampage, but by 1900, the rivalries and tensions between them were heating up. The “liberal” moment was precisely that—but only one moment in a broader historical sweep. It was not an appropriate hiatus for contriving general covering laws of history or universal principles of economics, whether Marxist or liberal. Not yet explicit in National Power, one can detect Hirschman’s first cautionary note against social scientists’ appetite for ageless theories derived from observations of one age.

  So, what was the relationship between “dependence” on trade to “domination” of others? Here, Hirschman wanted to inscribe his concepts in terms of basic modern trade theory and was indebted to the University of Chicago’s Jacob Viner’s influential 1937 collection of essays, Studies in the Theory of International Trade, which outlined the ways in which wealth and power commingled; although a free trader, Viner was clear-eyed about the connections between the classical concepts of the “gains from trade” and the power concept premised on dependence on trade, and about how states experienced an unavoidable temptation to manipulate the trading system by reducing the dependence in a way that did not compromise the gains from trade. This was especially tempting, Viner felt, in moments of crisis such as the Great Depression. What Hirschman sought to do was develop some formal, testable hypotheses for the connections and then cast them into a series of mathematical formulations outlined as a series of notes on the second chapter of National Power.

  Other Hirschman traits also appear. He displayed a fondness for the illuminating metaphor or coinage. One challenge, for instance, was to puzzle out the “intermediate links” that held the system together. Hirschman coined two phrases to illustrate two processes. One was the supply effect, which alluded to a country’s ability to import from a number of competing partners; in effect, more dispersal of sources gave a country more bargaining power. The other was the more elusive influence effect, reflecting the ability of a government to interrupt its export and import business; a country that could rely on domestic provisions in the event of a trade crisis had more leverage than one that depended on the exports of its staples or imports of needed consumer goods or raw materials. Greater influence effect gave a country wider room to use military muscle to drive a hard bargain with those having a lower influence effect. The result was that giving up free trade was hardly irrational; strong nations displayed an understandable preference for subjugating neighbors endowed with fewer choices of trading partners or commodities than their behemoths nearby. In this fashion, commerce was an alternative to war as a method of exercising coercion—a twentieth-century model of imperialism that did not require “conquest” to subordinate weaker trading partners.

  Another Hirschman trait was a concern with the human behavioral foundations of the system. Temptation lay at the heart of the problem. One can see in this book the underlying fascination with the human motivation lurking behind behavior and the importance that Hirschman would place on psychological factors. When it came to the intersections of foreign trade and national power, any postwar order had to grapple with the means to curb it. “As long as war remains a possibility and so long as the sovereign nation can interrupt trade with any country at its own will, the contest for more power permeates trade relations, and foreign trade provides an opportunity for power which it will be tempting to seize” (pp. 78–79). Seen in this way, Germany’s approach to trade—to swing away from commerce with countries with similar or higher GDPs and to concentrate commerce with smaller neighbors to the east and south—was hardly pathological and suggested some “amazing coherence.” It may have been extreme, but it was not exceptional. The “bloodless invasion” of Bulgaria, Hungary, and Romania reflected the Nazis’ exploitation to the fullest of the opportunities that were “inherent” in international trade, whose precedents were clear from the 1890s in the form of “export dumping”—about which Viner himself had written eloquently. Between the supply and influence effects, Hirschman updated the ancient saying fortuna est servitus (p. 12).

  If flexing trade muscles was a way to subordinate partners and fueled “economic aggression” that could not be explained away as bad cultural habits, greed, or the entrenched interests of landowners (Gerschenkron’s Junkers) or bankers seeking opportunities to invest overabundant capital (a prevailing Marxist theory) but rather was a property of the global trading system as long as
there was basic asymmetry between trading partners, what was to be done? Hirschman was aware that German aggression was partly a response to the punitive terms of the peace after World War I, although he urged readers to see that it had older origins that the Treaty of Versailles merely helped bring to the fore. There was in fact a larger challenge. “The Problems of Reconstruction,” National Power’s fourth chapter, argued forcefully against the temptation to see Germany as an aberrance, an exception to a more general rule about trade. Economic aggression had to be seen in more systemic ways—as woven into the very fabric of national sovereignty. A real peaceable order required a drastic overhaul of the multilateral system. It had to confront the source of the problem—a contradiction from which liberal, democratic regimes were not immune. If there was a “natural temptation” to use trade as “an instrument of national power,” Hirschman felt it was therefore obligatory to sacrifice the means of national power holders’ access to commercial weaponry. The core of his injunction came down to this: “Nothing short of a severe restriction of economic sovereignty” would preserve a world that wanted peace with the gains from trade. The lesson of 1919 was that restraining one side, the Germans, had simply sharpened national antagonisms and created additional opportunities for an even more viral and dangerous form of nationalism.