Albert O. Hirschman

German-American Albert O. Hirschman was one of the first exponents of development economics after World War II, a field that was highly influenced by European immigrants to the United States. The emerging discipline promised to provide scientific solutions for accelerating the economic growth and development of the poorer regions in the global South. Experience with colonialism and with the so-called backward countries in Europe offered European economists an intellectual point of departure on such matters which they brought into a postwar world heavily dominated by U.S. interests. By the 1970s, Hirschman had also become well known among sociologists, political scientists, and historians for the significant contributions he made to broader topics of social change and the history of economic thought.

Albert O. Hirschman’s early life was characterized by travel in various European countries. He was born on April 20, 1915 in Berlin, Germany as Otto Albert Hirschmann. Hirschman, whose parents were Jewish, was actively engaged in the Socialist Workers’ Youth (Sozialistische Arbeiter-Jugend) and left his hometown after the rise of the National Socialists. He first moved to Paris in 1933 where he received a bachelor’s degree in economics from the distinguished Ecole des Hautes Études Commerciales. In 1936, he left for Great Britain to study at the renowned London School of Economics. Intellectually, he was more heavily influenced by the antipode of the liberal LSE, namely John Maynard Keynes who taught at Cambridge and whose findings Hirschman discussed with a group of like-minded students. In his own research he focused on French economic history, particularly the economic reform of 1925/26 and the history of the “franc Poincaré” as he planned to return to France (Hirschman 1998, 60).

However, in the years that followed, Hirschman dedicated himself not to academia in France, but to fighting fascism. In 1936, he joined the International Brigades in the Spanish Civil War for six weeks. Afterwards, he went to Trieste where he received his Ph.D. in 1938. In the same year, Hirschman traveled to France where he got to know Varian Fry from the Emergency Rescue Committee of the New School of Social Research in New York. From then on, Hirschman worked with him to organize the escapes of political refugees, mostly European Jewish intellectuals such as Siegfried Kracauer and Hans Sahl, via the Pyrenees and Spain to Portugal.

As this political engagement and involvement with rescue efforts became increasingly dangerous, Hirschman was forced to leave France and managed to immigrate to the United States with the help of a research grant from the University of California, Berkeley in 1941.

Economic Expertise in Support of the U.S. War Effort and Postwar Recovery

Like many émigrés, Hirschman subsequently employed his expertise to contribute to wartime analyses of the Nazi state and joined the American war effort. He wrote his book “National Power and the Structure of Foreign Trade,” an analysis of the National Socialist trade policy with smaller European countries as a means of exercising political power. In 1943, Hirschman became an American citizen and joined the U.S. army. First, he was deployed in North Africa and then in Italy as part of the Office of Strategic Services. He witnessed the end of World War II in Europe, but chose to return to the United States because, as he later reflected: “[T]he United States was at that moment really a superpower: in my life I had suffered so many defeats that I was only too glad to be on the side of the victors for once!” (Hirschman 1998, 77)

Despite becoming an American, Europe remained a major part of his professional life as he took a job with the Board of Governors of the Federal Reserve System in the Foreign Areas Section. In the beginning, Hirschman was responsible for the evaluation of economic and financial conditions in France and Italy, but was soon placed in charge of analyzing all of Western Europe. Wishing to play a more active role in the process of European reconstruction, Hirschman contacted the decision-makers of the Economic Cooperation Administration that were responsible for the implementation of theEuropean Recovery Program, i.e. the Marshall Plan. In 1948, Hirschman joined a “brain trust” created by Richard Bissell, the assistant deputy administrator, who had a very positive attitude towards Europe—something that became apparent in his strong support of the European Payments Union as opposed to the official position of the Treasury that favored multilateralism. Hirschman considered the members of the group to be innovators opposing the “advocates of orthodoxy” (Hirschman 1986, 5). Due to his observations in France and Italy during the interwar years, Hirschman had a “healthy respect (based on watching the misadventures of the French economy) for the efficiency of the price system, particularly with respect to the effect of exchange rate changes on the balance of payments, and with a correlative distrust (based on watching Fascist economic policy in the second half of the 1930s) of peacetime controls, allocations, and grandiloquent plans” (Hirschman 1986, 6). He also believed this to be true for many official U.S. economic policies after World War II which he perceived as “politically naive, socially explosive and economically counterproductive” (Hirschman 1986, 5).

Hirschman was therefore pleased to be able to contribute his suggestions for the development of the European Payments Union and the reconstruction of multilateral trade in Europe. In 1949, Hirschman wrote a paper entitled “Proposal for a European Monetary Authority,” in which he presented “a fairly detailed survey of the common fiscal, monetary, and foreign exchange policies that might be adopted gradually under the guidance of a future European Central Bank” (Hirschman 1998, 39). In this and other writings, Hirschman expressed his support for a strong Europe where individual countries worked together to generate growth and build economic strength. Retrospectively, he also came to the conclusion that the major aims of the Marshall Plan had been successfully achieved (Hirschman 1998, 78).

Development Economics in the Context of the Atlantic World

After six years in Washington, Hirschman’s interests shifted from Western Europe to South America. When he was asked to move to Paris to work with the Economic Cooperation Administration in 1951, he declined and instead accepted a job offer from the International Bank of Reconstruction and Development, which recommended him to the Colombian government as an economic advisor. Thus, in the years that followed, it was not Europe but Latin America on which Hirschman focused his attention. After working in Bogotá from 1952 to 1956, Hirschman used his practical experience to write his first development economic study “The Strategy of Economic Development.” Following the study’s publication in 1958, he became one of the most renowned development economists in the world.

Hirschman’s European background was something he shared with many of his colleagues. Twenty-nine percent of all German-speaking development economists that immigrated to the United States had lived and worked in three or more countries before finding refuge in the United States during or after World War II. The same can be said of only thirteen percent of all German-speaking exile economists in the United States at the time. Additionally, while approximately one third of the German-speaking development economists moved directly to the United States, nearly half of all German-language émigré economists in the United States did. (Eßlinger 1999, 216). Thus, a high degree of mobility characterized the lives and careers of many of the scholars who would become crucial for the construction of development economics, including Hans Singer (1910–2006) and Paul Baran (born 1910-1964) (Eßlinger 1999, 215). Unusual even among other émigré intellectuals, the frequency with which these individuals changed residences amounted to an enhanced international orientation among development economists. In many cases, their migration experiences appear to have motivated them to positively shape the world and to actively influence development processes (Eßlinger 1999, 221).

These years spent as part of the development initiative were crucial for Hirschman’s identification with his new homeland, the United States. His engagement in the modernization of so-called backward countries can be interpreted as an attempt to integrate himself and to show his identification with American values. Development and modernization stood for the attempt to promote higher living standards through free market economies and industrialization as well as the “American way of life.” Hirschman also believed in those goals and supported them with his practical and his theoretical work. However, he always viewed himself as a kind of dissenter, a critical mind that maintained enough distance to recognize the shortcomings of U.S. development and modernization policies that were often regarded as universally applicable.

After almost twenty years in the field of development economics, Hirschman began to deal with questions that were affected by his European background and his experience as a native German. The aim of his book “Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States” (1970) was to discern the conditions under which individuals respond to a decline in the quality of firms or organizations by raising their voice and those under which they respond by opting to exit, e.g. to purchase the product of a competitive firm or to leave the country. This question was important to him for autobiographical reasons, as he indicated in the foreword of the German translation of the study: ever since his emigration to the United States he—like other émigrés from Germany—had grappled with the awareness that the outflow of individuals who could have protested against the Nazi regime had weakened the position of those left behind.

Hirschman’s European background soon became more than a mere impetus for his research. In his next book “The passions and the Interests: Political Arguments for Capitalism before its Triumph” (1977) Hirschman delved into European intellectual history. As he considered the modern social sciences unable to analyze the political consequences of economic growth, he sought to demonstrate how scholars dealt with this issue during an earlier period of expansion in the seventeenth and eighteenth century. His study became a “new approach to the interpretation of the ‘spirit’ of capitalism and of its emergence” (Hirschman 1977, 3). Hebenefitedfrom his upbringing as part of the educated middle class, drawing on the works of classical European authors such as Niccolò Machiavelli and Charles Louis Montesquieu to analyze human characteristics that were originally considered sinful, but had gained more positive connotations during the evolution of capitalism in the seventeenth and eighteenth centuries. In this and other works, Hirschman made use of his knowledge of European intellectual heritage and mastery of concepts espoused by Karl Marx and Max Weber among others in order to enrich his analyses.

Well into the 1990s, Hirschman’s European origins continued to play a major role in his publications. Despite the extraordinary course of his life, Hirschman never wrote an autobiography. He did, however, publish several autobiographical essays and an interview. In 1995, he published a collection of essays under the title “A Propensity to Self-Subversion” in which he reflected on his way of constantly revising his past approaches and statements, as well as on his encounters with individuals in Europe who were important to him before his immigration to the United States. In his introduction to the book, he called these autobiographical memories self-affirmation and traced his life back to his childhood and young adulthood in Germany, France, and Italy. In this way, it seems as if his European origin became increasingly important to him the longer he stayed in the United States. This happened at a time when he had already gained an excellent reputation as a scholar in the United States, Latin America, and Europe, and had worked as an emeritus at the Institute for Advanced Study in Princeton, NJ.

Throughout his career, Hirschman pursued an interdisciplinary approach, integrating sociology, political sciences, and history into his analyses. The title of his last publication “Crossing Boundaries” (1998) not only referred to this holistic approach, but also to the geographical border crossings that characterized his and many of his colleagues’ careers and made development economics a transnational (though Western-oriented) discipline from its inception. These recurring border-crossings and the transatlantic nature of his biography impacted his scholarly work and, one could argue, he never grew tired of constructively criticizing his own discipline of economics for a lack of openness to other disciplines and perspectives.

The author would like to thank the Institute forAdvanced Sustainability Studies (IASS) Potsdam for its support.