Worldly Philosopher: The Odyssey of Albert O. Hirschman

by Jeremy Adelman

  The Chicago event was memorable for a more important reason. Alexander Gerschenkron, Hirschman’s colleague at the Fed and office mate in Berkeley, unveiled a pioneering work in economic thought, “Economic Backwardness in Historical Perspective.” Shura argued that progress was not of a piece; societies did not have to follow the same route toward development or to fail. The Marxists’ plodding stages of growth were wrongheaded; so too were counterpoints like “modernization” theory, with each stage eclipsing its predecessor. Backwardness was not a condition that had to be erased as a prerequisite for advancement. It contained some hidden advantages: it could husband a precocious spirit, could foster ideologies of change, and had institutions (like a powerful state) that could pool resources more effectively, and latecomers could skip earlier phases while advanced societies had to labor continually with updating their industrial plants. Backwardness could be an asset, not a liability. At the time, Gerschenkron’s arguments were utterly new. For Hirschman, they were eye-openers. Historical lateness was not necessarily a reason to despair or a motivation to grasp for ambitious plans to overturn the status quo. The implications were not yet clear to Hirschman; Colombia brought them to light.12

  Other than having read Gerschenkron’s paper, Hirschman was an ingénue. He was not aware of Rosenstein-Rodan’s work. Nor was he aware of the stirring controversy about the role that international trade played in national development. Since the creation of the United Nations Commission for Latin America and the Caribbean (commonly known as ECLA), and the famous 1949 “manifesto” written by the Argentine economist Raúl Prebisch, called The Economic Development of Latin America and its Principal Problems, there had been a major clash of views. For increasing numbers of Latin American economists, global trade was skewing the pattern of local growth. None of this came to Hirschman’s attention until many years later. In effect, he began to think about development in Colombia from the ground up—with a style but with no theory.

  Colombia thus promised all the hallmarks of a professional, personal, and intellectual adventure—which started as so many precursors did, with language. Hirschman’s Spanish was not very good; he had only ever spoken it extensively during his months in Catalonia in 1936. But this soon passed. Before long, Albert found himself at play with Spanish word games, though he never managed to rid his Spanish, or indeed any other language save French, of a distinct German accent. He was not the only one to master Spanish. The whole family did and with the same spirit of adventure. The Chevy Chase house was emptied, and remnants were dispatched to storage. Armed with a few suitcases, they boarded their flight to Bogotá. When the plane ran into difficulties, they were forced to spend a night in a hotel in Miami. While Albert was digging around in the suitcases to find the girls’ pajamas, out came fistfuls of old dresses, pink gauze strips, and forgotten evening gowns from Sarah’s mother’s wardrobe. As the evening wear came flowing out of the suitcases, Sarah confessed that she had secretly packed away her mother’s old gowns so the girls could play their dress-up games. So much for traveling light. The next day, as the plane descended on the Colombian capital, the Hirschmans pressed their faces to the windows to admire the emerald green fields of the valley below and the hem of Andean mountains that surrounded it. At the airport, a delegation of officials was there to greet them. After much handshaking and presentations, someone from the Central Bank piled the Hirschmans into a car. With the girls squealing in the back seat, everyone marveled as the driver wheeled effortlessly around potholes and donkeys to get the family to their new home.13

  The latitude of his tasks enabled him to tailor a work method to fit his inclinations. A trademark of his later research style, conversing with as many people about as many topics as possible to spot possibilities drawn from everyday practices of problem solving, took shape in Colombian fields and factories. Getting to know the country meant getting near its people: lots of travel to talk to farmers, local bankers, industrialists, and artisans who labored to improve their lot in small, ordinary, and to the lofty-minded social scientist, often imperceptible ways. Rather than concern himself with the state issues and courtly intrigue, Hirschman preferred the micro-foundations of economic development—and became especially intrigued by the role, neglected in the Currie Report, of the private sector. He focused on evaluating firms, industries, and sectors as prospects for major investments, presenting their cases to the council as it sifted the worthy from the unworthy. Perhaps Hayek’s warnings of the perils of subjecting people to rules and plans designed for a single (even if enlightened) purpose echoed in Hirschman’s ears; either way, his choice was to accent individual activities for evaluation and attention.

  This kind of sleuthing posed its share of challenges. Travel was hard. The roads were treacherous. Railroads were few. The airplane was new, expensive, and only carried passengers to major destinations. Beside, it was also not without its hazards, because the Andean mountainsides were famously lethal obstacles for even skilled pilots. Hirschman’s preferred mode of transportation was his car. He loved his car, a gray Chevrolet, which he had delivered to the steamy Pacific port of Buenaventura. When the vehicle arrived, Sarah and Albert flew to Cali and then took the train to the port to pick it up. After some wrangling at customs, they liberated the vehicle, hired a driver, and prepared their overland return to the capital. That night, the hotel’s orchestra blared into streets while Albert and Sarah sat on rocking chairs drinking highballs and watching the local belles dance the cumbia. The next morning, their driver never appeared. “He must have gotten drunk,” surmised Sarah. So Albert plucked up the courage—though it probably required little—and embarked on their maiden road trip up the piedmont from the Pacific, down through the rich plain of the Cauca Valley, passing another Andean ridge to wind through the coffee groves around Manizales, and over more ridges back to Bogotá’s valley. This prolonged, winding rollercoaster ride over nosebleed-high gradients was the beginning of a romance with Colombia and Latin America. While the jungle roads and mountain passes, not to mention the fear of bandits, hung over Sarah, Albert’s confidence in their Chevy and his own driving prowess would not be dimmed. Sarah found herself captivated by the orchids hanging from cliffs over the roads. Along the way they picked up hitchhikers, an Indian shepherd, and several policemen escorting two prisoners. If there were any concerns for safety, they were waved off in order to meet as many ordinary Colombians as possible. By the time they got home from their adventures, the car and its driver had been broken in. That night, however, Albert had nightmares of falling over every precipice he had managed to avoid.14

  In his fashion of operating in larger organizations, Hirschman carved out a niche. At first blush, it seemed to work. His relations were especially cordial with the Finance Ministry, the Banco de la República, and especially the Agricultural Bank (Caja Agraria), whose staff solicited his help in evaluating investment proposals for the countryside. In 1953, he also took on contracts with a new lending agency, the Banco Popular, and got involved in low-cost housing projects in Bogotá, Cali, and Medellín in collaboration with a French housing expert from the United Nations, Yves Salaün, ventures that excited a passion for studying private but collective ways to solve problems for the poor in a country where outlays were, at best, beggarly.15

  The Planning Council was an endless source of fascination and possibility; the latitude it gave him allowed room to improvise, adapt, and create initiatives that were not necessarily envisioned in the original master plan. It could also be frustrating. Howard Ellis’s letter of encouragement had alluded vaguely to potential problems. Ellis and Buchanan were curious “whether your appraisal differs in significant ways from what appears to be the excellent recommendations and findings of the Currie Report.”16 Could it be that Ellis knew Hirschman well enough to detect something? Sure enough, the differences soon came to the surface. One source was the vision: a plan drafted by a team of foreign experts armed with impressive, if questionable, statistics but administered and realized b
y Colombians whose local knowledge was treated as partial, unscientific, or worse, because they were the ones who had to be transformed. Hirschman was caught in the middle—and was an early witness to development economics’ peculiar afflictions. Working alongside the Colombians as the “foreign expert” and growing to admire some of the administrators of the Colombian government and private actors, he had to wrestle with his peers and their plans, which were premised on confident algorithms of national savings and the muscular vocabulary of capital-output ratios, growth projections, and investment targets. The three foreign advisors met twice a week in afternoon gatherings at the Banco de la República to report on their ventures. Currie and Enrique Peñalosa (later a friend and moving force behind agrarian reform) authored a rosy prognosis for 1953 and the prospect for a fiscal surplus—and predicted room to spend money. Hirschman was livid. He not only urged caution, he argued that the council was becoming the source of confusing advice to ministries. “You have to be naïve not to know that the preliminary calculations of the Budget Directorate were intentionally low,” he fulminated.17

  Afternoon staff meetings left Hirschman feeling pressured to conform his projects to the original grandiose scheme laid out in the survey. Hirschman’s notes and letters overflowed with resentment. We do not know if Currie ever picked up the scent. If not, he certainly got it when Hirschman published an uncharacteristically scabrous review of Currie’s 1966 book, Accelerating Development, in the discipline’s flagship, the American Economic Review. Currie was furious and complained bitterly to the editor, Moses Abramovitz, who conceded that it was poor judgment to let an adversary review another’s work.18

  It was not just Currie. Jacques Torfs, drove Hirschman crazy with his overconfidence in an abstract synthetic plan and the dubious figures upon which it rested. Torfs, a firm believer in the elemental formula for development based on minimizing capital-to-output ratios, claimed to have compiled complete tables of Colombian national accounts based on an industrial census from 1944, as well as reports from the superintendant of corporations. “His whole technique is so personal, artificially esoteric but essentially arbitrary and therefore uncommunicable that the idea that he might train someone to step into his shoes one day, is quite utopian.” The task of “Colombianizing” the office, which Hirschman understood as paramount, was “a hopeless endeavor,” so long as the outsider-expert was the only one who understood the occult. The whole environment became poisoned. Burke Knapp—back in touch now that he’d joined the World Bank—apologized to Hirschman, “You have had a rotten deal and we understand and sympathize with the extraordinary difficulties which you have had to confront.” It says something about the grammar of development that the alliance between a World Bank vice president and his deputy in the field could not offset the collusion of a rival expert with local officials bent on making their offices the gatekeepers of the process.19

  Knapp only got the half of it. Tending to see the problems in terms of personal chemistry, he missed what was inscribed in the very nature of expertise in a developing country. The Marshall Plan, which asked Washington’s economists to be “on tap, and not on top,” had its own troubles; it was more tolerable because it did not ask the planners to be the source of unquestioned verities. Hirschman now found himself drafting decrees because of his exalted status as the foreign expert—a status that made him cringe. A premise of the Currie mission was that only foreign experts could really understand the problem because they were foreign and because they were experts. Colombians themselves were not expected to understand because, as the circular logic would have it, they came from underdeveloped circumstances. These interlocking biases eventually became a cornerstone of his critique of foreign expertise and “aid.” It also shaped his sympathetic jibe at Latin American intellectuals to get over their mantras about inferiority and backwardness (Hirschman would invoke the common saying that “aquí en el trópico hacemos todo al reves”—here in the tropics we do everything backward—as defeatist self-scorning.) Hirschman confided to Howard Ellis that he really wanted to learn lessons from development and not presume to know its secrets in advance.20

  Still, he did not throw in the towel. When Knapp offered him a job in the new Western Hemisphere Department, Hirschman declined. “To come back now would be to concede failure, when in actual fact there are even as of now several sides to the picture.” He had some good contacts, was developing “a few ideas,” and had “quite a bit of work in progress, the completion of which is of interest to me and I hope of some use to the Council.” Besides, the family was settling in and starting to enjoy the adventure.21

  What were these ideas? By 1954, Hirschman was fixating less on the country’s pathologies than on what it was doing right. In early March he put the final touches to a research project that he had been mulling for some time. But “Case Studies of Instances of Successful Economic Development in Colombia” never saw the light of day. Almost everything about it was at odds with the expectations of development and practices at the council. The country and its people were moving forward, not wallowing in the lethargy of tradition. Indeed, the proposed research method ran against the grain. Instead of compiling general national statistics, he proposed a study of successful businesses, starting with an analysis of the “personality and background of founders and managers”—their training, decision-making styles, methods of financing—the elements of a different analytical approach. The cases, drawn from the projects he knew from direct observation, included Manuelita, the sugar plantation and refinery in the Cauca Valley; Coltejer, Medellín’s big cotton textile plant; Bavaria, the brewer; and Banco Popular de Bogotá, which specialized in small loans to individuals, artisans, and small firms and “which has experienced remarkable expansion recently due to novel methods and political support.” Hirschman sounded out some sources of support: MIT’s Center for International Studies, directed by Max Millikan, Harvard University’s Center for Entrepreneurial Research, and Colombia’s National University and the National Association of Industrialists.22

  The ideas went nowhere, or so it seemed. In the meantime, working for the Colombian government was becoming too uncomfortable. Things changed with the coup d’état of General Rojas Pinilla on June 13, 1953. At first, the overthrow enjoyed some popularity. Like many, Hirschman felt ambivalent about the coup. Among other things, it promised to slash the level of partisan violence. The new Banco Popular and many social reforms aimed at delivering benefits to small producers, artisans, and peasants queued up for more attention. But with time, General Rojas consolidated his power and personalized policy making. Hirschman confided to Washington that the government was immunizing itself from advice and raising taxes on companies, which “is both irrational and excessive in a country in which corporate enterprises need to be developed.” Hirschman found himself caught between the cogs of a president determined to do it his way, a Finance Ministry staff wanting independent support, and a council with its own agenda. The minister, Carlos Villaveces Restrepo, asked Hirschman to work with “him in my personal capacity,” but the council vetoed the idea, thereby shielding the administration from any insider warnings against “a strong ‘soak the rich’ trend,” which “seems to be at work within the new government.”23 In the meantime, the economic situation worsened. The slide in coffee prices aggravated Colombia’s trade imbalance and ushered in a period of austerity. The general dug in his heels—and eventually even the World Bank had to suspend loans; by then, the original Currie plan had long since unraveled. Aligned with the Liberals, Currie resigned from the council and became a dairy farmer. Many others also left.24

  The autonomy and freedom of action that Hirschman yearned for, and to some extent had carved out, was thus constrained on various fronts. As Sarah recalled, “In Bogota he was often very depressed by the multiple difficulties he had.” His final report to the council was an inventory of mixed results. The contract for an electrification mission was a good sign, as was the plan for the development of the Atlan
tic coast and support for deposits in popular housing accounts. But “the general balance is, in my opinion, negative.” The lack of coordination, no room to advise a president who, in any event, “never takes it,” reports that languish on the shelf—why bother anymore, especially once he realized that he could recreate what was so compelling about the original venture without the aggravation by simply leaving the Colombian government and setting up his own private consultancy?25

  This is what he did.

  In April 1954, as his two-year contract with the Colombian government expired, he emptied his desk and left the Banco de la República building. Hirschman prepared for the day in a way that only he could. He bought himself a comfortable armchair, placed it beside the desk he improvised as a home office, and planned to do a lot of reading. The only regret about leaving the council was losing his devoted secretary, Fanny Durán Vargas, the daughter of a prominent Liberal politico, who had become a close family friend. Burke Knapp sent a personal letter of regret—but understanding; “I dare say you have come to the right decision.” Perhaps presciently, probably as encouragement, he closed with, “I feel sure that your work in Colombia, even though it has had its painful aspects, has given you a fund of experience which would be immensely useful in tackling a comparable range of problems in other Latin American Countries.”26

  Money had to come from somewhere. He took a short trip to Washington to explore his options. But as he told Ursula, “I have very little desire to go back to Washington, not to mention that it might be impossible or at least not advisable anyhow because of the McCarthy atmosphere.” Still, he needed a livelihood. The frantic days spent in Washington, not surprisingly, yielded nothing—other than long conversations with his old friend George Jaszi. Returning to Bogotá was thus even more depressing. As he told George, “Back here, I am passing through some trying weeks since obviously my heart isn’t in this job any more.”27 What to do? Going back to Europe, Italy in particular, was an option—and once again Hirschman appealed to his sister for ideas and suggestions. Should he work “for a big corporation,” or find “a research project funded by one of our several foundations,” or “completely switch to something else and set up a business, to turn a piece of rainforest into a flourishing cattle breeding farm”? “Albert,” Sarah confided to Helen Jaszi, “has several great plans in mind.” Not one to let the uncertainties of the future weigh on him, he let the great plans uplift him. We have seen him at this kind of crossroads before, including entertaining fantasies of retreating to the land—a fanciful and not entirely realistic idea from someone who had never used a farm tool. The situation forced him to confront the limitations of his practical but skeptical turn of mind. There was a reason, he intuited, that the Curries of the world enjoyed an advantage: “I am precisely no creator of systems, but I always only come up with small improvements or criticisms, which give me pleasure while I am doing them, but which, upon their completion, always throw me back into a vacuum in which it seems completely impossible to me to ever have a single new thought again. Therefore the need to create something on which I am able permanently to sharpen my intellect.”28