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.23
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.”24
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.”25
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 promo
te 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.”27
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.”29
Chenery was not the only reader who wondered about some of the assumptions built into Hirschman’s Strategy. A young economist, Amartya Sen, wondered if Hirschman had not created something of a false dichotomy between “balanced” versus “imbalanced” growth. Asked by Austin Robinson to write a short note on the book for the Economic Journal, Sen normally considered much of what passed for development economics as “exceedingly boring.” But Strategy, he felt, belonged to a different league—and deserved a fully engaged review. Sen’s criticism was that neither balanced nor unbalanced models stand up in their pure form; they differed only in the degree of interdependence each assumes. But he bowed to the pummeling of the orthodoxy and “this cliché-ridden branch of economics.”30 C. P. Kindleberger, an otherwise sympathetic reader, found himself running out of patience with the book after the seventh chapter; so much of the book was organized around illustrating the special twists and hidden dynamics of growth that “paradox is piled on paradox; frequently, however, what is discussed is only a paradoxical aspect of a larger question, with the issue left unresolved whether the paradoxical aspect outweighs or simply modifies the normal analysis.” Kindleberger wondered whether Hirschman ever really showed that capital shortages were not the problem to begin with. In the end, he echoed Chenery: “Authorities of developing countries can find warrant for practically any course of action they may choose to take.” Still, Kindleberger’s review acknowledged the originality of the analysis and where it now stood in the field: “With the publication of The Strategy of Economic Development, the scales have tipped against balanced and in favor of unbalanced growth.”31
There could be no complaint that readers were not taking the book very seriously. It was clear that The Strategy of Economic Development would not go the way of National Power. Having spent two very productive, highly concentrated years writing and reading, positioning himself at the forefront of a looming debate, Hirschman had succeeded. His book became an instant landmark. But establishing his profile had taken some of the adventure out of life, adventures of the sort that provided the opportunities for travel and observation in Colombia that were so vital to conceiving Strategy. The book complete, Hirschman’s wanderlust caught up with him. Writing to a friend, Paul Streeten, a Balliol College don who had authored a shorter critique of balanced growth theory around the same time, Hirschman noted that “now that I have emptied my bag, I really feel like filling it up again at some faraway place, but our children being soon 12 and 14, I suppose we should stay put for the next few years.”32 It would not take long for a new opportunity for adventure to come along.
CHAPTER 12
The Empirical Lantern
The decisive moment in the history of mankind is everlasting. That is why the revolutionary spiritual movements that declare all former things to be of no account are in the right, for nothing has yet occurred.
FRANZ KAFKA
After Strategy, then what? The book had clear, entwined objectives—to recast the debate about Third World development and fulfill a personal dream of being an intellectual. But basic issues about life remained in the air. Two years away from Bogotá, where was the family to live? Tasting the beginnings of success in the United States as an intellectual, Hirschman now wanted to stay. But he was without a job, hustling for work and contracts. By the summer of 1958, he was on month-to-month earnings with two teenage daughters. Hirschman, undimmed in his determination, saw the problem coming. “Nothing is easier,” he told Ursula, “than to pursue a goal if that goal is clearly and convincingly visible. The most difficult thing is to continue to believe that the goal is possible if it has already slipped through our fingers several times or turned out to be brittle and rotten. The willingness to recognize a new goal (or rebuild an old one), to continue waiting for the moment where it suddenly might reveal itself—that is the task, together with the willingness to give it up, if necessary, to ‘betray’ it.”1
As Sarah always marveled, Albert exuded confidence that things would work themselves out; he enjoyed the persona of the improvising, solving débrouillard. But few could play the part with his uncanny skill. This time, his gambit worked. The success of his publications and his unique hands-on experience threw open a
flurry of opportunities, as he had hoped. History favored him. Strategy appeared just as the pace of African and Asian decolonization gathered speed, and nationalist and radical alternatives to capitalism gained increasing followers. Radical, Marxist appeals for revolution and anticapitalism argued for a complete break with the West and its legion of economic missionaries wielding master plans drafted in Washington, London, and Paris. Hirschman had something different to say about development, which, as the demand for alternatives rose, would send him on voyages that ended with meditations about the soul of reform in a new age of revolution.
Among his suitors were some of America’s leading foundations and think tanks. This activity put him in touch with scholars in Latin America at a time in which there were few contacts and even fewer collaborations north-south. As Hirschman became a go-between figure, he not only became more influenced by Latin Americans, he also grew more and more aware that intellectuals themselves played a role in the social changes they studied. He caught his moment: if nothing else, the 1960s was going to be a decade to register the power of ideas, as well as their limits.2
Worldly Philosopher: The Odyssey of Albert O. Hirschman Page 41