Naturally, the news of Albert Hirschman’s death sent me back to [amazon_link id=”0674276604″ target=”_blank” ]Exit, Voice and Loyalty[/amazon_link].

[amazon_image id=”0674276604″ link=”true” target=”_blank” size=”medium” ]Exit, Voice and Loyalty: Responses to Decline in Firms, Organizations and States[/amazon_image]

The book anticipates why Hirschman was so neglected by mainstream economists over the decades after it was published in 1970. He writes that, first, economists assume rational behaviour, so a firm might start to fail for exogenous reasons, and nothing can be done about that. The ‘agents’ are simply maximising in less favourable circumstances. Secondly, in economic models, it doesn’t matter if a firm fails because of tough competition; individual firms or ‘agents’ have no intrinsic value or status. So economists focus almost entirely on the ‘exit’ mechanism. Yet, as Hirschman writes:

“In a whole gamut of human institutions, from the state to the family, voice, however cumbrous, is all their members normally have to work with.”

Mind you, he noted that in politics too the exit mechanism is also often the focus of debate. As Alex Tabarrok noted on Marginal Revolution yesterday, often voice and exit operate together, rather than as alternatives. And Justin Fox on the HBR blog suggested one reason for neglect of Hirschman’s work is perhaps that the answer to the question, what’s the right balance of exit and voice is ‘it depends on the circumstances.’

Although more than 40 years old now, Exit, Voice and Loyalty is well worth a read. Hirschman was a brilliant economist who, along with others like Herbert Simon, never commanded the attention they deserved from the rest of the profession. He was, as the title of Jerry Adelman’s forthcoming biography puts it, truly a [amazon_link id=”0691155674″ target=”_blank” ]Worldly Philosopher[/amazon_link].

[amazon_image id=”0691155674″ link=”true” target=”_blank” size=”medium” ]Worldly Philosopher: The Odyssey of Albert O. Hirschman[/amazon_image]