Worldly Philosopher: The Odyssey of Albert O. Hirschman (51 page)

In mid-July 1956, Hirschman went to the office one day and opened his mail. In it was a letter from Lloyd Reynolds, the chairman of Yale University’s economics department. “The Department has asked me to inquire whether it would be possible for you to consider an appointment as Visiting Research Professor for part or all of the academic year 1956–57,” wrote Reynolds. At such a late date, just over a month from the start of classes, this was a hurried offer. But there was no teaching involved: “Visitors are entirely free to work on any piece of research or writing which they may have on hand.” One need not stretch one’s limits to imagine Hirschman’s reactions. The timing alone is revealing. Albert immediately called Sarah, who was in Beverly Hills with her parents. The call bore an uncanny resemblance to the one that preceded the departure from Washington four and a half years earlier. This time she was less shocked than tentative. She felt at home in Bogotá. The girls were happy. They had a wonderful life. But Albert’s career had reached a plateau. Sarah knew, not for the first or last time, that this was a unique opportunity to revive the closeted métier of an intellectual. There does not appear to have been much negotiating: Reynolds had sent his letter to Bogotá on the 13th, and Hirschman accepted within a week. While this meant he would delay opening a branch of his consultancy in Mexico or Venezuela, he was “truly exhilarated.” The terms were quickly sorted out, and the Hirschmans began to pack for the year. Albert wrote to Tom Schelling to ask if he and Corinne could help find something to rent in or near New Haven, and the Schellings went house hunting. “It’s going to be a pleasure to have you here,” wrote Schelling, “and a highly exploitable opportunity. I’m awfully glad you accepted.”
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Many years later, Hirschman acknowledged the significance of Reynolds’s invitation. It arrived as Hirschman was fighting local traffic, dealing
with his clients, and “hanging around hotel lobbies trying to land new contracts,” he told his first chairman. With the fullness of hindsight, he added that “the letter of yours has turned out to be a principal turning point in my life. For me, it typifies what Machiavelli has called the influence of fortuna on one’s fate in contradistinction to that of virtù. Of course, looking at the matter from your point of view, writing that letter and making things work out were part of the daily performance of your work and duties—it was part of your virtù. From which circumstances we can derive an important generalization: one man’s virtù is another’s fortuna.”
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Among the steps and contingencies in Hirschman’s reinvention, moving to Colombia was one opportunity for a new start. But in no way did it point to a life as an intellectual, though Hirschman was itching to do more than write investment memoranda. The Yale letter thus represents another such step, this time, albeit for just one year, to leap from utter obscurity on the periphery to the heart of the American academic establishment. No wonder hindsight seemed to string each opportunity together with a cord of good fortune; fortuna did indeed appear to be smiling on him. A common biographical device relies on turning points and epiphanies as pivots. But plenty of chances are squandered. Others come with expectations that never ripen. And most acquire significance only after the fact, which reminds us that it is what comes later that makes the turning point visible. As Machiavelli instructed his prince, it is equally important to seize opportunities and align the forces of virtù and fortuna on one’s side in order to convert an opportunity into achievement. It was with
this
Machiavellian esprit that Hirschman relocated once more.

The family moved to North Haven, where they would live for two not-always-easy years. Certainly compared to the adventure of Bogotá, leafy American middle-class suburbia, whose social awakening from the blanket of 1950s conformity was still over a decade away, was doomed to be a letdown. By contrast, New Haven, where Albert had an office in the Yale economics department, was an altogether different setting. Such were the clefts between life and work that the Hirschmans had to cope with. But it was clear what this was meant to service: Albert had to
write a book. Acutely aware that his previous effort to author a passport to influence, the by-now forgotten
National Power and the Structure of Foreign Trade
, did
not
curry Fortuna’s favor, he knew something had to be different about the second effort. One subtle determinant was timing. If
National Power
was written to explain a world whose problems had appeared to have passed, the trick now was to write something to intervene in an emerging problem.

What came of this was his landmark
The Strategy of Economic Development
, written in no less of a fevered hurry than his first book, which thrust him to the forefront of intellectual debates about economic modernization, social change, and policy making in the Third World as it was erupting. France’s war in Algeria was bogging down into a savage struggle, and Indochina was the next frontier of Communist expansion. Meanwhile, ninety miles off the coast of Florida, insurrection was spreading in Cuba. Timeliness almost understates how Fortuna pressed her thumbs on the scales for Hirschman this time.

That was one difference. Another was that his first book was written without an intellectual field with which to engage or parry. Eventually, a field would emerge to wrestle with lopsided trade relations, but at the time,
National Power
was an orphan even before it was published. By the time Hirschman settled down to write
Strategy
, an orthodoxy steeped in Cold War anxiety stared him in the face, and he disagreed with it vehemently. The beginnings of the failure of this orthodoxy, combined with escalating international tensions, gave Hirschman’s ideas some traction among North American social scientists and policy makers looking for alternatives as Washington found itself bogged down in conflicts in Africa, Indochina, and neighboring Latin America.

Orthodoxy may be too strong a word to describe what was, after all, a new field; but it did enjoy the privilege of some basic consensus among some influential thinkers. With the rollback of Europe’s formal controls in Asia and Africa and growing nationalism in Latin America, it became harder and harder to pin the Third World’s problems on tropical climate, demographic growth, or inadequate resources, which had variously justified colonial interventions and policies in the first place. Nor, it was clear,
did the Bretton Woods institutions of the World Bank and the International Monetary Fund or the safeguards for a liberal trading order under multilateral commercial treaties provide the sufficient conditions for “development.” It was one thing to prevent the world from sliding back into depression; it was quite another to lift societies out of poverty. The result was a groping for explanations for backwardness and the search for policies that would lure emerging nations away from radical alternatives, including Communism.

By the mid-1950s, “balanced growth” was becoming a prevailing wisdom in the fledgling field of development economics. Poor countries suffered from a surplus of labor and shortage of capital, and the combination was a lethal, low-level “equilibrium trap”—too much poverty, not enough savings, low investments, emaciated infrastructures, and the resilience of obstreperous traditions. The central issue was “investment criteria”—coordinates for policy makers and lenders to allocate capital to pull societies out of their corner as exemplified in Ragnar Nurkse’s 1953
Problems of Capital Formation in Underdeveloped Countries
. Balanced-growth theorists sketched how the dilemmas facing poor countries were interlinked: obstacles and hindrances transmitting themselves from one part of the system to another; chokepoints in one quarter could stymie advances elsewhere. This was so for two principal reasons. First, favoring one sector or industry would mean a surge in its output without enough demand to absorb it. The other main reason was that underdeveloped societies were short on capital, which had to be disbursed in a way that did not create scarcities in other sectors and industries that would choke off progress.
Balanced
growth was a way of breaking down the obstacles to development by hitting them all simultaneously and strategically to minimize dislocations like inflation or balance of payments troubles. Here was an approach aimed at avoiding as many conflicts as possible while changing the basic features of poor economies.

Balanced growth was also a script tailor-made to feature one particular actor: the foreign economic advisor with panoptic powers. The economic missionary could grasp the larger picture and wield analytic tools to figure out how to calibrate the delicate balance and time interventions
to minimize the frictions of an evolving system. There were several figures closely associated with the movement. They did not always see eye to eye, but they agreed on some essentials. One was Walt Rostow, a smart, ambitious, Yale-educated economic historian whose leanings grew more anti-Communist with the onset of the Cold War. At MIT, he cofounded the Center for International Studies as a nerve center for thinking about economic development and its political corollaries. Later he would go on to coin the term
modernization
and have an influence on US policy in Southeast Asia. His 1960 classic,
The Stages of Economic Growth: A Non-Communist Manifesto
, crystallized social scientific influences on Washington’s approach to containing radicalism abroad. The book offered a parable about how societies move through phases of development from “backwardness” to “maturity.”
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The other main figure, also associated with MIT’s center, was Paul Rosenstein-Rodan, an émigré from Poland, who shared much of the anti-Communist concerns of his American peers. He too was concerned with backwardness and advocated a “big push” to drive an economy out of the sand of its peasant base by investing in several sectors at once. By the late 1950s, he advocated the use of heavy investment of foreign funds, aid, and investment to spur the process, which dovetailed with the growing sentiment in the United States that foreign economic policy had to do more than rely on a passive liberal trading order to contain the spread of radical anticolonial ideologies. W. Arthur Lewis’s 1955 book,
The Theory of Economic Growth
, synthesized the position. Lewis, who was Hirschman’s age, had some of the same practical background dealing with policy makers in decolonizing Ghana. His treatise focused above all on the obstacles to capital formation, especially in the restricted pool of savings in proportion to the yawning demand for across-the-board investment. To increase savings required a major overhaul of a society’s basic institutions and norms. While Lewis was less a fan of generalized planning than others of the “balanced growth” school, even though he did help blueprint Ghana’s first Five Year Development Plan, he nonetheless shared their fear of instability lest the price system throw the entire system into disorder and anarchy.

The spectrum of thinkers among balanced growth advocates agreed on one thing. The crux of the problem lay in what underdeveloped societies were not: they were not developed. The circularity required that they had to be transformed without creating underlying imbalances that might throw a society off course—and fall prey to radical prophets. From one equilibrium state, planners had to create avenues to deliver societies to another equilibrium state. Against this backdrop, it is clear why Hirschman’s ruminations in 1954 at MIT did not go over well. Hirschman was skeptical of overarching models, he was less inclined to pathologize backwardness, and he was getting more interested in the role of disequilibria in history. So, it was a surprise to receive another overture from the United States two years later.

At the time, the Department of Economics at Yale was a rebuilding powerhouse, largely the effects of Reynolds’ energies and vision—and Ford Foundation support. Once famous in the 1920s as the home of Irving Fisher, it had fallen behind Harvard, Chicago, and MIT. Reynolds was the kind of chairman with an eye for smart scholars with original turns of mind, like Schelling. He also spotted a hot new field, development economics. The institutional match was therefore a good one for Hirschman. Reynolds had secured support from the Ford Foundation to endow the Irving Fisher Visiting Professorship with the idea of promoting “problem-oriented research.” This was good for one year. Hirschman was the first holder.

There were also significant affective ties at Yale. Some of Hirschman’s old colleagues from the Marshall Plan had moved there, such as Henry Wallich, who had worked on German reconstruction and later became a governor of the Federal Reserve Board and for whom Albert had a special affection; Robert Triffin, a former Fed colleague and soon-to-be critic of the Bretton Woods system; and Schelling, who had also served under the Marshall Plan. Wallich himself had launched Yale’s first course in the economics of underdevelopment and so was especially keen to learn from his friend’s extensive, firsthand experiences. This group wanted to “rescue” Hirschman from what they regarded as tropical oblivion. Schelling had been present at the MIT conference and was more enthusiastic about
Hirschman’s insights than the hosts. The two had remained in touch over the years, swapping holiday cards; one year, the Hirschmans sent the Schellings a card bearing a cartoon of the family with Albert up a banana tree with Sarah and the girls looking up at him, bearing the caption “An excellent food is the banana, Let’s eat it today and plan it mañana!” The ironic take on economic orthodoxy was kindred with Schelling’s. At the time he was working on his own landmark book,
The Strategy of Conflict
, about bargaining and strategic behavior; never part of the mainstream, Schelling and Hirschman were natural companions—hence the grinning allusion to “a highly exploitable opportunity.” Little did Hirschman know that Schelling had played a hand behind the scenes. Intrigued by the MIT paper about Colombia’s successes and upon hearing of the last-minute Ford grant for the visiting professorship, Schelling urged Reynolds to contact his friend.
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