Worldly Philosopher: The Odyssey of Albert O. Hirschman

by Jeremy Adelman

  With this inquiry, Hirschman’s shadow got separated from his body and was filed away in the archives of the FBI. It only saw the light of day again thirty years later in response to Freedom of Information Act request number 1030518-000 by this author. What should we make of it? The FBI’s reliance upon flimsy sources and bad information speaks for itself. So does the alarm posed by a foreigner with a “blind” past. The coiling of nativism with growing anti-Communism hysteria did Hirschman in by the early 1950s, when the Red-baiting reached its frenzied peak during Senator McCarthy’s inquisition. In Hirschman’s trajectory from loyalty to public service in the fight against fascism before 1945 and the effort to rebuild Europe’s economies after 1945 to his exit in 1952, there is also a larger arc. Having recently arrived in the United States in 1943, when he enlisted in the public cause, Hirschman had few contacts or friends in his adopted country who could serve as “informants” or witnesses about his character and work; there were no checks against the powerful inertial forces of suspicion and eagerness to believe sources that confirmed an ungrounded bias to mistrust. Two decades later, in the mid-1960s, the story was very different. A list of famous Ivy League professors, think-tank experts, friends, and associates became the champions he did not have in the 1940s and 1950s, when those charged with gathering information in the name of security were all too willing to rely on their own fallible judgment. As for Hirschman, while his shadow haunted him and at times drove him to despair, in the end he never lost his propensity to find creative ways to make the best of a bad situation.

  CHAPTER 10

  Colombia Years

  You can hold yourself back from the sufferings of the world, that is something you are free to do and it accords with your nature, but perhaps this very holding back is the one suffering that you could avoid.

  FRANZ KAFKA

  In 1952, Colombia was in the throes of a terrible conflict. Its capital was emerging from the worst urban unrest and destruction in the hemisphere’s history. Marauding gangs and sharpshooters no longer patrolled the streets, but charred buildings and empty lots remained as silent echoes of a spasm of violence that had since spread to Andean valleys and plateaus where guerrillas, militiamen, and the army fought for control. This was an improbable setting for a marginalized economist to make a big difference or a place for his family to make a new life. But, if nothing else, Hirschman’s displacement testified to the adage about how life’s best rewards come from what is least planned. The years that the Hirschman family sojourned in Colombia were, in many respects, the best of their lives. Adventurous, culturally exciting, and intellectually awakening, this war-torn country gave Albert Hirschman an environment to reinvent himself. Driven from the policy-making sanctum of the United States, Hirschman was quick to spin a virtue out of necessity. Some years later, when a colleague asked him why he moved to South America, Hirschman joked “I was born under Prussian rule, so when the emperor calls, I obey.”1

  The emperor in this case was the World Bank. Known then as the International Bank for Reconstruction and Development, it had been created in 1944 to help fund the reconstruction of Europe after the war. In the end, the scale of the Marshall Plan dwarfed the bank’s budget, and the bank’s role never measured up to its billing. “I think we are going to be driven into a very different field sooner than I thought, into the development field” the bank president, John J. McCloy, told his executive directors in late 1947. The institution cast about for a new role in world affairs. McCloy—who, as the well-heeled Wall Street attorney to the Rockefellers and wartime senior servant in the State Department, epitomized the figure of far-seeing magnate—saw how quickly the world was changing with decolonization of what would soon be baptized the Third World. Here was an opportunity for the lending agency to help colonies lift themselves from poverty and backwardness. The idea was to secure them for free-market capitalism lest they fall into the hands of Communists—paradoxically through ambitious planning. The handmaidens of this conversion were, in Mary Morgan’s words, “economic missionaries.” One laboratory for this experiment would be Colombia, “the most ambitious undertaken so far by the Bank,” as its president noted. This was how Hirschman went from the reconstruction of Europe to development in Latin American, from the US government to a global agency, which gave him a privileged position to observe development close up, seeing warts and all, during its formative years.2

  Sarah and Albert in the Llanos, Colombia, 1953.

  Like the groping, improvising way in which world institutions refashioned themselves as the dust of the Second World War settled, Hirschman also sought new bearings. Years later, he reflected on the man he was when he arrived in Colombia. “I looked at ‘reality’ without theoretical preconceptions of any kind.” When he returned to the United States almost five years later, he discovered that “I had acquired a point of view”—one that was at odds with orthodoxies forged in American universities. While playful, this claim to self-enlightenment can be misleading. When he went to Colombia, Hirschman was hardly an ingénue when it came to markets and hidden springs of change. The frustrations as a Marshall Planner had hardened his skepticism of ideological formulae in the drag of abstract theories. What made the Colombian experience so distinctive was proximity: observing so closely, and for enough time, the process and effects of the decisions of which he was a part. The art of learning from doing and then watching closely, a sensibility already encoded from Colorni and Montaigne’s personal tutorials, accented his fascination with small things and routine behavior; it would become a cornerstone of a disposition that Colombia brought to fruition. He crisscrossed Colombia, pen in hand and paper handy, examining irrigation projects, talking to local bankers about their farm loans, and scribbling calculations about the costs of road building. He leaned toward what his future colleague, Clifford Geertz, would call “experience-near” knowledge, the insights of an actor, keeping the “experience-distant” concepts of the detached observer at bay, at least for the time being.

  Colombia may have been a mess, but it was not Hirschman’s first graze with deep civil strife, although it would be his most prolonged. The country’s political climate crackled with tension by the 1940s. The assassination in 1948 of the Liberal Party firebrand Jorge Eliecer Gaitán as he walked out of his office in the Agustín Nieto building at the corner of Seventh Avenue and Jiménez Avenue (Hirschman’s office would be very nearby) set off a decade of civil war known eponymously as La Violencia. Two hundred thousand Colombians died at its hands until the military finally stepped in to put General Gustavo Rojas Pinilla in power in June 1953. The dictator began the slow process of containing partisan violence, albeit at a cost.

  It was in this context that the World Bank decided to involve itself in the Colombian economy. One of the anomalies of Colombia was that it was a political mess, but an economically robust one. Its elites had always prided themselves on pragmatic modernization and openness to foreign ideas—and investments. In late 1948, as the republic was sliding into its political morass, Emilio Toro, the Colombian member of the Board of Executive Directors of the World Bank, approached President McCloy with a list of projects that might appeal to the lender. The upshot was a decision to send a mission, called a “survey,” to the fissiparous republic to come up with a master plan. The proposal went to the president of Colombia, Mariano Ospina Pérez, who endorsed it enthusiastically. Colombia would, in the eyes of its developers, be a model for others; maybe “development” could rescue its democracy. Such was the hope.3

  The survey’s history would affect Hirschman’s experience and observations. Getting a chief on short notice was not easy. McCloy used all his contacts. He asked several business moguls, then turned to Lionel Robbins, the anti-Keynesian economist from the London School of Economics, pointing out that this was an opportunity for Robbins to play a formative role in bank policy and new “activity in [the] development field.” Robbins thought about it for a weekend. Then he declined. In the end, McCloy found his man in a Ca
nadian-born economist, Lauchlin Currie, an influential Keynesian and prominent New Dealer. He might have been slightly at odds with bankers’ orthodoxy, but he had a lot of experience in administration and international financial relations. The close assistant to Treasury secretary Harry Dexter White during the 1944 negotiations at Bretton Woods, New Hampshire, in 1941 he had headed the Economic Mission to China. Brilliant and experienced, Currie also had the missionary trademark. Currie did not just have confidence, he exuded it; he required no personal conversion. Currie was also suspected of dealing secrets to the Soviets, conveying information to Elizabeth Bentley, a Russian agent, and charged with having undermined the Kuomintang government with his policy recommendations during the war. Investigations into his past began in earnest in late 1949, by which time, for all intents and purposes, Currie was moving to Colombia, where he would settle down. It was one of many ironies of the Cold War that Currie and Hirschman, the “fellow traveler” and the seasoned skeptic, would wind up entangled in distant Colombia, clashing over the future of the whole enterprise of economic development.4

  Once named as mission chief, Currie expanded the scope of the survey to include designing a master plan to raise the standard of living for the entire country. Bank officials were skeptical; this was not what Toro had proposed, though he was eager to aggrandize. But they acceded, laying the tracks for a problem regarding the place of local knowledge in the business of economic missionizing. The size of the team expanded to fourteen members (none of them Colombian) ranging from experts on agriculture to railways. To help the experts, locals provided the “staff.”

  If a plan was the goal, Currie was clear about what the plan was to accomplish: “a coordinated attack on the problem of poverty,” he proclaimed. He quickly set to clearing the ground for his grand scheme. The mission arrived in Colombia on July 10, 1949, spent four months touring the country conducting its research, and had a draft of its findings available in March 1950. In all, it took a year to assemble a team, conduct research, evaluate alternatives, elicit feedback, and produce a lifeless 600-page tome, impressive mainly in its ability to amass vast quantities of data.5 The response in Colombia was no less hurried. Within weeks, the government announced the National Planning Council. Whatever one might think about this hurried approach to “planning,” there was no shortage of enthusiasm. Eugene R. Black, former chairman of the Federal Reserve Board and the new president of the World Bank, threw his weight behind the mission’s recommendations. He extolled the “unbiased analysis … by a competent group of independent experts” to Colombian president Ospina and applauded Colombia’s swift response in “already taking active measures in line with the Mission’s recommendations to obtain expert assistance in the vitally important task of effecting improvements in governmental organization and administration.”6

  The Basis of a Development Program for Colombia was an archetypal document from an age of humanitarian missions. Coded in the scientistic rhetoric of economic missionaries, it argued that the root of the problem was a vicious poverty cycle: the poor were poor because they were unhealthy and illiterate. The result was that too many people produced for current consumption, yielding little savings for capital growth. Colombia not only needed an infusion of capital from abroad, it had to tear down a wide range of intractable obstacles, such as the land tenure system, and make up for others with rural credits and energy and transportation improvements. What was needed was a comprehensive “generalized attack” to break “the vicious cycle of poverty, ignorance, ill-health and low productivity.” The emphasis was on aggressive and coordinated improvements on all fronts simultaneously to avoid distortions, bottlenecks, and lags. Nothing piecemeal; this was a mission. What the report echoed was a growing academic current, propounded above all by the Polish-born economist Paul Rosenstein-Rodan and the Estonian Ragnar Nurkse, in favor of “balanced growth” across a variety of sectors simultaneously, of a “big push” to break the trap of underdevelopment, a disposition leaning hard to the “experience-distant” end of the conceptual spectrum.7 All of this was supposed to emanate from the members of the council planners housed in the Banco de la República.

  It was perhaps predictable that grandiose expectations would crash against inconvenient realities. Some were of the missionaries’ own making. Within the council, the mission’s inflated scale and top-down government planning crossed with personal conflicts. The World Bank urged the council to hire an outside “expert” to assure technical ability and keep decisions from getting embroiled in partisan fighting. Vice President Robert Garner, with Sandy Stevenson’s imprimatur, had recommended Albert O. Hirschman “as an economist of outstanding ability and integrity”; both Hirschman and the bank agreed that expertise and outsiders had to be kept to a minimum to simplify internal affairs and that one priority should be to train a cadre of experienced and proficient Colombian administrators. Garner told the council chairman, Emilio Toro, that “we feel strongly that there should be only one ‘Economic Advisor’ to the board” and that Hirschman would have “final authority” to make recommendations. Hirschman sketched out detailed guidelines for his role in the new council and presented them to Toro, curbing his role to screen investment alternatives and to evaluate projects for the policy makers. Excited, he felt that an effective council with an effective outsider could strike the right balance of influence and integration; planning should not take place in a cocoon, he explained. But Toro had other plans; he had kept close ties with Currie, who’d returned to Colombia as a consultant, and urged him to join the council as an “adviser” to focus on matters of the wooly problem of administrative reform. Currie happily accepted and wasted no time expanding the meaning of administrative reform.8

  Garner foresaw trouble. He knew of Currie’s ambitious penchants and habit of “creating resistance.” He warned that Currie “might, despite the best of intentions of every side, embarrass Hirschman.” Toro, who seems to have taken a disliking to Hirschman’s modest sights, assured Garner that Hirschman was the “top economist” and the “boss.” But he was irrepressible, as was Currie. The clash of personalities reflected a more profound collision of ideas. Currie liked big plans, especially when they made administrative reform the condition for everything else; Hirschman preferred projects, even big ones—but the more specific, the better. Aligned with Liberals, Currie tended to create animosity between the council and the Conservative government; Hirschman eschewed partisanship and wanted to focus on problem solving.9

  To make matters worse, a Belgian economist, Jacques Torfs, also joined the council as an advisor. Torfs and Currie did not see eye to eye; Hirschman too would soon have problems with the Belgian. Between Torfs’ convictions, Currie’s ambitions, and Hirschman’s growing skepticism, there was plenty of disagreement to go around among the tiny team associated with Colombia’s lofty economic plans. Hirschman confided to Richard Demuth in Washington that “this is not only unpleasant (Currie’s operating methods do not help matters), but also seems to confuse the Council members.” To another he quipped that “the whole episode reminds one of Napoleon’s Hundred Days, with the fortunate difference that Currie’s comeback lasted only about half as long.”10

  Hirschman, it must be said, was not exactly an obvious choice to advise the president of Colombia on economic policy. Latin America was terra incognita. The closest he got to development was an invitation to attend a conference in 1952 at the University of Chicago organized by Bert Hoselitz, soon-to-be founder of the journal Economic Development and Cultural Change, which would be committed to a more interdisciplinary approach to progress. At the time, Hirschman thought of the southern and eastern Europe he’d known before the war and wrote about in National Power and the Structure of Foreign Trade. Development was synonymous with industrialization.11