Worldly Philosopher

As I’ve already confessed, I’ve read very little by Albert Hirschman. By the time I was learning economics, he and the mainstream of the economics profession had moved quite far along divergent paths. The mainstream was embracing mathematical techniques for modeling and – more significantly – the reductive assumptions about human behaviour and social context that made this approach feasible. Hirschman became increasingly interested in the connection between economic policies and politics. The one book of his I had ever been introduced to was [amazon_link id=”0674276604″ target=”_blank” ]Exit, Voice and Loyalty[/amazon_link], and possibly as part of my politics reading rather than economics.

This means Jeremy Adelman’s superb biography, [amazon_link id=”0691155674″ target=”_blank” ]Worldly Philosopher: The Odyssey of Albert O Hirschman[/amazon_link], has been a real education. Its 600+ pages never flag; this is a very enjoyable book to read. It also means I’ve got some of Hirschman’s other books on the in-pile now, for the great lesson of recent years is that economists need to stay alert to the politics and the human behaviour that define the possibilities of economic choice; and that political scientists and other social scientists for their part need to pay more attention to economic incentives and to the domain of economic choice. Hirschman emerges as above all a careful observer of actual societies and economies, who therefore was multidisciplinary to the marrow.

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

The biography begins with his extraordinary early life in the tumultuous Europe of the 1930s and Second World War. A second chunk concerns his work in and on Latin America and economic development more generally, based in a variety of institutions. The final leg covers Hirschman’s more settled period, mainly at Princeton’s IAS, as a distinguished political economist and author of a number of classic books. The book covers in some detail The Passions and the Interests and also his last book, [amazon_link id=”067476868X” target=”_blank” ]The Rhetoric of Reaction[/amazon_link].

Hirschman’s conclusions about the nature of capitalism and economic growth have real resonance for the current situation. His reading of the classics, including Adam Smith, made him one of the first people to reclaim (from Milton Friedman and other economists) the wiser Smith who understood that “moral sentiments” as well as self-interest determine people’s behaviour. Adelman sums it up: “The rule of passions could lead, without checks, to horrible utopias; the rein of interests to soulless pragmatism.”

Hirschman argued against the kind of theorising that insisted on pre-determined outcomes from given pre-conditions, insisting instead on the number of possible paths depending on happenstance and unintended consequences. I suppose we would call it pervasive path-dependence; it contrasted greatly with both the mainstream and the alternative or heterodox approaches of the time. He also identified the way that beliefs or expectations constrain outcomes – in the context of developing economies, he thought that policymakers and economists fettered themselves by their own perceptions of insurmountable hurdles or cultural inferiority. Latin America in the 1980s, he thought, was imprisoned by clashing intellectual paradigms, the false dichotomy between free market ‘neoliberalism’ (as we call it now) and Marxist revolution. He wrote: “The obstacles to the perception of change thus turn into an important obstacle to change itself.” Many economists point out the importance of expectations for economic outcomes, but usually in a rather abstract way in a model; expectations are what people believe to lie in the realm of possibility, and are shaped by intellectuals and economists and policymakers, among a whole host of others. We live in a world shaped by ideas, both embedded in technologies and embedded in policies and beliefs.

As the years went by, Hirschman turned increasingly to reading the classics of economics and the Enlightenment. As Adelman writes: “The pathway to recasting self-interest in a way that did not make it incompatible with the public good required going back centuries to the founding of its modern meaning.” His final book, [amazon_link id=”067476868X” target=”_blank” ]The Rhetoric of Reaction[/amazon_link], is now at the top of my reading list. Although seen as a response to the politics of the Reagan era, Adelman argues that it should be read in a broader way as concerned with the kind of public discourse that sustains democracy. The rhetorical habits Hirschman describes in the book have not only become pretty pervasive, but are also amplified by online media. The state of civic discourse is a vital question in itself and because it shapes beliefs and therefore economic possibilities.

In these comments, I’ve picked up themes that interest me particularly, including the light cast on the state of economics. [amazon_link id=”0691155674″ target=”_blank” ]Worldly Philosopher[/amazon_link] has a lot for readers with other interests too, particularly development economics (I touched on this in an earlier post). It’s also the well-told life story of a fascinating and obviously charming man. Half way through 2013, I’m sure it’s going to be one of my books of the year.

Popular economists

I’m taking part in a panel discussion on “Disseminating Economic Research in the Policy Debate” at the European Economic Association and Econometric Society Congress next month. Starting to think about what I’ll need to think about to prepare, I picked up [amazon_link id=”0262025620″ target=”_blank” ]Lives of the Laureates: Eighteen Nobel economists[/amazon_link] edited by William Breit and Barry Hirsch. I have the 4th (2005) edition of this interesting series.

[amazon_image id=”0262025620″ link=”true” target=”_blank” size=”medium” ]Lives of the Laureates: Eighteen Nobel Economists[/amazon_image]

The series has got up to 23 Nobel economists now.

[amazon_image id=”0262012766″ link=”true” target=”_blank” size=”medium” ]Lives of the Laureates: Twenty-Three Nobel Economists[/amazon_image]

Some common themes stand out – the drive to contribute to making it a better world, the sense of being dismissed or disregarded by peers, but also in many cases either the ambition or the actuality of contributing to public debate in an accessible way.

For example, Gary Becker here describes getting a call from Business Week asking him to contribute a regular column, and not turning down the invitation, on the advice of his wife. He says: “It was hard for me to learn how to write a popular column. Writing short requires far more effort than writing long….. I do not know why they asked me, to tell the truth, but the experience has been great for me. It has taught me how to express economic ideas in a simple and non-technical way. I will make the assertion that every single important economic idea can be stated simply. … And when people state that an ideas is too complicated to state simply, it usually means they do not know how to state it simply, sometimes because they do not fully understand it.”

I wholeheartedly agree. Blogging and social media have given all academic economists the opportunity to write for the public, and I applaud the ones who can combine their scholarly work with the important work of communicating important ideas simply. Becker has taken to the online world, with the excellent Becker-Posner blog, always worth a read.

Intellectual fuel for modern feminists

There is one welcome side-effect of the unspeakable online threats made to Caroline Criado-Perez over her successful campaign to get Jane Austen on the next £10 note. It is the realisation that feminists, male and female, still have a lot of work to do.

Over at the Teen Economists blog today Viva Avasthi has reviewed Virginia Woolf’s [amazon_link id=”0141183535″ target=”_blank” ]A Room of One’s Own[/amazon_link], still a timely essay. The classic feminist text that opened my eyes in the 1970s was Simone de Beauvoir’s [amazon_link id=”009974421X” target=”_blank” ]The Second Sex[/amazon_link].

Recently Sheryl Sandberg’s [amazon_link id=”0753541629″ target=”_blank” ]Lean In: Women, work and the will to lead[/amazon_link] has gained a lot of attention. It’s quite good but puts all the onus for improving women’s economic standing on their individual actions; it omits discussion of the institutional barriers women face to progress at work and in society.

Another fairly recent book, startling in its findings, is [amazon_link id=”069108940X” target=”_blank” ]Women Don’t Ask[/amazon_link] by Linda Babcock and Sara Laschever. It reports research showing that part of the reason women’s pay is lower than that of comparable men is that, indeed, individual women need to ask for promotions and raises. The trouble is that when they do, they are disliked – it’s unfeminine, aggressive to put yourself forward, and male colleagues and bosses find other ways to punish women who do ask.

[amazon_image id=”069108940X” link=”true” target=”_blank” size=”medium” ]Women Don’t Ask: Negotiation and the Gender Divide[/amazon_image]

Other books include Arlie Hochschild’s [amazon_link id=”0143120336″ target=”_blank” ]The Second Shift [/amazon_link]on the burden of unpaid domestic work, especially childcare, on working women; and Susan Faludi’s [amazon_link id=”009922271X” target=”_blank” ]Backlash: The Undeclared War Against Women[/amazon_link] – old now but the backlash seems fiercer still now; and of course other classics of the 70s and earlier such as [amazon_link id=”0007205015″ target=”_blank” ]The Female Eunuch[/amazon_link], [amazon_link id=”1860492827″ target=”_blank” ]The Women’s Room[/amazon_link], [amazon_link id=”0860680290″ target=”_blank” ]Sexual Politics[/amazon_link] etc.

There is of course also a large scholarly literature in economics on gender discrimination such as Claudia Goldin’s research, Heather Joshi‘s, Betsey Stevenson’s, and much more. Enough to know that it’s time to act again.

Reading about inequality

In a post on the Oxfam blog, Nick Galasso has suggested three books about income inequality. They are Branko Milanovic’s [amazon_link id=”1459608151″ target=”_blank” ]The Haves and the Have-Nots[/amazon_link], [amazon_link id=”1416588701″ target=”_blank” ]Winner-Take-All Politics[/amazon_link] by Jacob Hacker and Paul Pierson and Chrystia Freedland’s [amazon_link id=”1846142520″ target=”_blank” ]Plutocrats[/amazon_link]. These are billed as summer reading.

[amazon_image id=”1846142520″ link=”true” target=”_blank” size=”medium” ]Plutocrats: The Rise of the New Global Super-Rich[/amazon_image]

For further reading, I’d add an earlier book by Milanovic, [amazon_link id=”0691121109″ target=”_blank” ]Worlds Apart: Measuring International and Global Inequality[/amazon_link]; Thorstein Veblen’s [amazon_link id=”0199552584″ target=”_blank” ]The Theory of the Leisure Class[/amazon_link] (albeit skimming the denser parts – he wasn’t a good writer); the papers by Emmanuel Saez and Thomas Piketty on the historical data; [amazon_link id=”0718197380″ target=”_blank” ]The Price of Inequality[/amazon_link] by Joseph Stiglitz; [amazon_link id=”0805078541″ target=”_blank” ]The Status Syndrome[/amazon_link] by Michael Marmot; and [amazon_link id=”0300089538″ target=”_blank” ]Mind the gap: hierarchies, health and human evolution[/amazon_link] by Richard Wilkinson (but not, for my money, The Spirit Level; I know it has been revised in response to critiques but I was irrevocably put off by the first edition).

Thinking aslant about development economics

I’m about half way through the biography of Albert Hirschman ([amazon_link id=”0691155674″ target=”_blank” ]Worldly Philosopher[/amazon_link]) now, and despite the arm-ache from holding up the book, am enjoying it more than anything I’ve read recently. My interest was particularly caught by an account of a paper Hirschman delivered at a conference at MIT in 1954, “Economics and Investment Planning: Reflections Based on Experience in Colombia” (sadly it seems to be only available as a mimeo, not published anywhere, but if anybody knows differently, please tell me!)

At this time, Hirschman was working for the World Bank and then as an independent consultant based in Bogotá, having been unable to get a job in Washington because of post-war anti-communist paranoia, even though he was anti-communist himself. His biographer Jerry Adelman reports that Hirschman’s paper went down badly with the audience of top academics, as it criticised the academic methodological orthodoxy, and in particular the claim to universality and abstract thinking – albeit applied to competing models of development. This gave rise, he believed, to a (false) presumption of the superiority of the western expert over the locals who understood what was happening in the economy. Hirschman advocated instead using case studies to try to identify which businesses were thriving or not, and a policy emphasis on experimentation and improvisation. He was also unusual in his focus on private investment rather than government planning.

Reading this biography is making me embarrassed to have read so little else by Hirschman over the years. Still, it has set me thinking about development economics. This field seems to me to be in quite good health these days, after decades of suffering as one of the ideological arenas of economics. There have been lots of terrific books published in recent years, including those such as [amazon_link id=”1611747511″ target=”_blank” ]Poor Economics[/amazon_link] riding the wave of field experiments. Still, it is the mavericks of development economics who until recently provided some of the most interesting perspectives. Think of Mancur Olsen’s [amazon_link id=”0300030797″ target=”_blank” ]The Rise and Decline of Nations[/amazon_link], Peter Bauer eg [amazon_link id=”0674200330″ target=”_blank” ]The Development Frontier[/amazon_link], Deepak Lal’s [amazon_link id=”0262621541″ target=”_blank” ]Unintended Consequences[/amazon_link] or even Hernando de Soto’s [amazon_link id=”0552999237″ target=”_blank” ]The Mystery of Capital[/amazon_link], briefly fashionable but academically dissed.

It is as if some economists are not considered by the orthodoxy to write authentically about development, and I wonder if the identification of these writers with right-of-centre political views means the left-of-centre establishment of development economics rejects them? If so, Hirschman seems to have pulled off the combination of the ‘correct’ political identification with a more or less Hayekian methodological approach and – like my other examples – a strongly multidisciplinary flavour. This isn’t my field so I will defer to people who know more, but will be interested in reactions.

As for Hirschman, Adelman writes: “He was not prepared to abandon his views in favor of more acceptable theories.”

[amazon_image id=”0552999237″ link=”true” target=”_blank” size=”medium” ]The Mystery Of Capital[/amazon_image]

Update: Francisco Mejia has pointed out another review of the biography making a similar point:

http://blogs.iadb.org/desarrolloefectivo_en/2013/06/14/hirschman-or-the-years-of-thinking-differently/