Worldly Philosopher: The Odyssey of Albert O. Hirschman (43 page)

Ideas for greater union, “federalizing” sovereignty in Europe, as Hirschman had been advocating for some time, had been circulating through the agency’s working group. Now, the ECA was willing to force Europeans to come up with a sustainable payments plan based on freer regional trade. In October 1949, Harold van B. Cleveland and Theodore Geiger submitted two papers that condensed the thinking within Bissell’s working group. Western European economies had to find a way to “integrate.” A European union gave “the best hope for a regeneration of Western European civilization and for a new period of stability and growth.” The time had come to turn necessity into an opportunity. Several weeks later, Cleveland asked Hirschman to sketch the outlines of a monetary authority for a federated Europe. Scarcely two years after the Second World War, Hirschman rolled up his sleeves to begin “drafting a project for a European central bank and currency.” It would take a while to finish. But he was excited: “the ECA finally seems to get ready to exert real pressure.”
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The convergence of Paris and Washington led to a fundamental shift in the Marshall Plan. Hoffman picked up the brain-trust papers and went on the campaign trail, opting personally to deliver a powerful speech in
Paris to the OEEC Council that explained why a new structure was necessary for Europeans to close the dollar gap for good. The State Department, which felt the ECA was muscling in too deep into its diplomatic territory, howled, but it did not stop Hoffman who was, by now, fatigued at the bureaucratic wrangling in the administration and despondent about the ill-temper in Congress, and thus losing some of his energy. He mustered his clout for one final push. The word “integration” was mentioned fifteen times in his speech. This time, many European leaders were ready; the OEEC under Marjolin responded immediately by proclaiming as its goal the creation of a “single large market in Europe” and inaugurated an aggressive process that compelled its members to slash restrictions on imports from other members. Hoffman, emboldened by the new OEEC spirit, rushed back to Washington to get Congress to apportion more funds, this time making the case, as one would expect from an automobile executive, that loans would help Europe become more efficient because integration would yield greater economies of scale.

Behind the scenes, Hirschman was working on the details of
how
Europeans might cooperate and bury the temptations of bilateralism for good. He himself had thus come a long way from thinking that this temptation was inherent to international trade, a gist of
National Power and the Structure of Foreign Trade
. One idea that Cleveland had invited Hirschman to consider was a common monetary authority. His response laid out the immense difficulties of erecting a supranational agency over the heads of state leaders who were just rebuilding their sovereignty of their countries. But this did not make it unimaginable. “While it may be impossible to tear down the economic and fiscal attributes of national sovereignty by direct assault, it may be possible to coordinate these attributes and to build … new institutions in the ‘interstices’ of the national prerogatives.” What followed was a step-by-step guide for how such a process would unfold, from coordinating monetary stability to institutional innovations. The issue for Hirschman was not
whether
Europe should have a common currency, but rather
how
“to think of a monetary and financial organization for Europe that does not ask for the impossible, yet which would result in a closely knit European monetary and financial
structure.” He did not discount the idea of a common currency but made it clear that it was a goal rather than a means for creating a larger, integrated market. He likened the arrangement to a return to the principles of the nineteenth-century open markets, but without the gold standard whose inflexibility gave way to nationalism and bilateralism. “The 19th century method of allowing coordination of national economic policies to be brought about by their automatic adjustments to foreign development, no matter how drastic, is impossible for governments whose political existence depends on the maintenance of full employment and the achievement of continuously rising living standards.” What was necessary was a successor that was more accommodating to governments’ needs for political legitimacy while premised on economies that were dependent on trade with neighbors. The blueprint for what he labeled a European Monetary Authority made its rounds through the ECA echelons as a “secret memorandum.”
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This was a visionary idea whose day had not yet come. In the meantime, Europeans came up with their own plan, the European Payments Union (EPU). Hirschman’s brass wanted his evaluations. He applauded it as a milestone for multilateralism: “It really is obvious that the greatest advantages from world trade are realized when every country can buy in the cheapest market.” It was a return, he felt, to a system that had flourished in the middle of the nineteenth century. “The choice before us,” he insisted, “is not integration or maintenance of the status quo, but rather whether we wish to stop and then reverse the slow process of
disintegration
, which has been taking place in Europe almost uninterruptedly at least since the First World War.” Without some kind of general framing agreement of this sort, “at every shock, cyclical or otherwise, the national economies are likely to look to further insulation as a way out.” This, he noted in his last line, reminds us that the goal is not just trading for its own sake, but fostering “a healthy Western European society in our struggle for peace.”
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Looking back, Bissell considered the EPU “the greatest achievement of the Marshall Plan.” For Marjolin, it was the framework for “a habit of working together which may perhaps be regarded as the most important
political success of the Marshall Plan.”
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Finally, European trade was released from the obstinate intricacies of quantitative restrictions that had flourished in the 1930s. In a lecture he delivered to the State Department, Hirschman tried to dispel the fears that European regional integration would create a bloc that would stymie worldwide integration. There he argued for the need for “multiple approaches” to multilateralism, that worldwide efforts to dismantle barriers to trade could be reinforced by regional unions; lowering the walls of individual countries was by far the toughest hurdle, and if the easiest way to bring them down was with openness to neighbors, then that was a useful expedient and intermediate step. Once they began to fall, the process could build on itself. “I thus believe,” he told his audience, “that it is not necessary to choose between the one-by-one and the collective approach.” This would be the first time he would advocate that reformers think about multiple strategies and not a single road to change.
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There was an irony buried in these reformist years. As they began to yield their fruits, the cause seemed less desperate. The need to think openly became less urgent. So it was that as Europe finally bounced back after a nail-biting reconstruction, the window that was open to Hirschman’s thinking began to close. By the end of 1949, the Communists had completed their triumph over Nationalists in China; the following January, Mao went to Moscow to spend a month meeting with Stalin. That same month, Alger Hiss faced convictions of perjury for lying while testifying under oath. Richard Nixon pounced and denounced the State Department as “Acheson’s College of Cowardly Communist Containment.” Matters went from bad to worse with the arrest of the physicist Klaus Fuchs and disclosures—after the Soviets had detonated their atomic bomb—that nuclear secrets might have been leaked. Joseph McCarthy went wild. In the summer, North Korean forces invaded the South; by August, NATO forces under General Douglas MacArthur were on their heels. Seoul was an occupied city. Three days after the North Korean assault, Congress authorized $4 billion in military spending and cut $200 million from the ERP appropriation. “Mutual security” replaced “economic cooperation.”
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The Cold War turned the screws on Hirschman’s style of open reformism. The partition of Berlin brought the drama close to his heart. The decision to create a new West German currency, the deutschmark, which is what sparked the Soviet blockade, was discussed intensely in his section of the Fed. Writing to Ursula in mid-1949, Hirschman had mused that world peace may require a defeat of the USSR. An irate sister accused him of American warmongering. Albert’s response, which coincided with the lifting of the Berlin blockade, was a measure of his ideological development since his socialist days in Berlin. “I, of course, cannot change anything about your judgment of me,” he explained, but he felt the need to correct Ursula’s “errors of fact” and “misunderstandings in particular regarding my alleged conformism.” He did not endorse a “preemptive war against Russia,” but rather “a revolutionary struggle against the Stalin regime in Russia itself.” One does not have to labor to read sibling disappointment between the lines to his sister; Ursula did not understand him. “I found it outright funny that … you accused me of conformism.” In fact, his disappointment lay in her failure to read his real mood—of growing isolation. “If you knew how little [my conviction] corresponds with the milieu in which I live!” Surrounded by good “liberal” men bereft of humility or humor who wanted to solve all the world’s problems with “far-reaching state intervention in the economy,” he was stung that Ursula did not understand that his turn of mind implied unease with
all
simple explanatory models or worldviews. Stung, but not entirely surprised; secretly, he felt that she had not fully appreciated this turn of Eugenio’s mind. He was not about to abjure self-doubting in order to cling with Ursula to the purity of youthful beliefs or to concede to Cold War convictions and to fold into the gathering mainstream American thinking about freedom.
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A nuance beyond her reach, what Ursula did not understand was her brother’s increasing seclusion. The ECA was losing steam and purpose. European reconstruction and integration showed signs of self-sustenance after 1950. The project was never meant to last; doing so would have defeated the purpose. But there were also local administrative problems. The State Department always resented ECA influence. Treasury, by then, was
also hostile because it wanted a global free market—and thus scorned regional blocs. The National Advisory Council on Monetary Policy, which watched the Fed’s International Section with hawkeyes, was the bastion of worldwide multilateralism and attacked ECA policy vociferously. With the passage of the EPU, Hoffman felt his work was done, could stand no more of Congressional belligerence, and left for the Ford Foundation; in early 1952, Bissell would follow suit. Ted Geiger, one of Hirschman’s closest associates in the brain trust, defected to the National Planning Association. The Miatico Building offices were put to another use.

To the outer world, Hirschman appeared the picture of professional success. The outer world might have surmised the same for home life. The Hirschmans finally settled down in Chevy Chase, Maryland. A comfortable suburban, wood two-story cottage near the end of a leafy street, it had the added benefit of not being far from Helen and George Jaszi, Albert’s old friend from the LSE who had landed his first job in Washington.

Living in the American suburbs brought its share of pleasures and challenges. Albert was itching to have a larger family—more so than Sarah, for whom suburban housewifedom offered Spartan amenities. He “was the one who wanted right away another child,” recalled Sarah. “I wasn’t keen on it.” “The only argument
against
it,” he confided to Ursula, “was that it will delay a bit the point when we are able to travel, but there are many in favor of it.” Lisa was born on October 17, 1946, almost exactly two years after Katia.
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When Lisa was born, he had brought Katia to the hospital to await the baby’s delivery. There were no complications with the birth, so the family drove back to Maryland in their Ford with baby Lisa; when Albert returned to work shortly thereafter, he fretted over whether he should be handing out cigars, which he had heard was the American custom. In the end, he did not, but he was left with doubts about whether he had committed a faux pas. This was the most stressful aspect of becoming a new father.
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In general, Albert loved to return to his two-story home from work, to be greeted by happy, smart, and energetic daughters. On weekends, he took them on excursions. Washington’s famous zoo was a favorite destination; so was the Jaszi’s house nearby, where there were children of similar ages. For “Papa,” the backyard was
a setting for endless inventing of games. For one of her birthdays, Katia remembers her father having to be away. While she was romping with her friends in the leaves, she looked up to see an old man walking down the street toward the house with a bulky package. The kids paused, wondering who the strange intruder was. When the old man entered the yard he peeled off the beard and shabby clothes to reveal a father loaded with gifts and goodies for delighted squealing girls.
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Still, there was a monochromatic aspect of their lives that was harder on Sarah than Albert—who had his daily escapes to the capital. Compared to life in Berkeley, and even more to memories of Paris, Washington was boring and became ever more so. The suburbs depressed Sarah. While she had help around the house, and there were also some friendly neighbors, it was the environment beyond the front door that she found stultifying. When the weather was good, she would let the girls undress and run around in the yard. Passing cars would slow down, its drivers and passengers frowning at the spectacle. Sarah asked a neighbor why cars would stop in front of her house? “But of course! You have your children stark naked, playing!” Sarah went crimson.
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Albert had his colleagues and a career. When they, such as George Jaszi and Hans Landsberg, or Paul Baran, the Russian-born economist and friend at the Fed before leaving for Stanford in 1949, came to the house, the talk was over her head. “I couldn’t understand a blessed word of what was going on.” Even Helen Jaszi, truly Sarah’s friend in the United States, was an economist. One day, Albert introduced Sarah to the wife of one of his carpool mates. She was a Russian, a war bride, also at a loss for what to do in the Washington suburbs. She would spend her days at home. “I am so lonely, Sarah, in this house by myself. In Moscow, I …” The desperation prompted Sarah to find excursions with her. Then one day the news came that the war-bride had committed suicide in her bungalow, alone.
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Anxious to find something for herself, Sarah did eventually find a part-time job teaching languages to foreign service officers needed for the diplomatic expansion of a budding empire. It got her out of the house and introduced her to some friends. After a half day’s work, she would return to the suburbs when the girls got back from school.