The Voice of Central Europe’s Exit

Albert O. Hirschman (1915–2012) is best known today for his short 1970 book Exit, Voice and Loyalty: Responses to Decline in Firms, Organizations and States. In a short 126 pages book plus appendixes, Hirschman offered a deceptively simple dichotomy of voice vs. exit: the less “voice” people have in their social unit, the more they try to exit it. Voice creates loyalty. This simple formula can be applied to explain the relations between individuals and social units, from marriage where the partner who has no voice may exit, to citizenship where lack of voice in authoritarian societies leads to emigration. It also explains declines in memberships in civil organizations and firms that do not give voice to their members or customers. The emigrants who head first for the exits are also the ones who would have been most vociferous in pressing for reform. Authoritarian regimes who do not want to reform encourage exit. Beyond the explanatory value of this simple theory, it also offers an alternative to intellectual and deliberative models of democracy and decision-making. Even uneducated or inarticulate persons can “vote with their legs” and exit. Economists preferred the “exit” aspect, political scientists the “voice.” Politically, his work on exit and voice has inspired generations of libertarian thinkers. Yet, his last book was an attack on what he called reactionary thinking, the attempt to show that all reforms result in unintended opposite outcomes.

Though Hirschman was categorized academically as an economist, his ideas were just as relevant for social and political theory and philosophy. His main inspirations were the classics, Montaigne, Montesquieu, Machiavelli, Flaubert, Freud, Kafka; and life. Add to this the emphasis on the significance of exit, and take a guess where Hirschman came from…

Born in Berlin in 1915, to a Jewish family that formally baptized him Lutheran though it did not observe any religious customs, Otto Hirschmann had a comfortable upbringing. His mother married “down” to a Jew of Lithuanian origin; but he was a medical doctor. He provided his family with comfortable living in the Tiergarten district of Berlin and young Albert graduated from the prestigious French high school in 1933, after the Nazis assumed power and the death of his father

The challenge Jeremy Adelman faced successfully in this excellent and comprehensive biography was in connecting the two parts of Hirschman’s adult life: the exciting and suspenseful quarter century after 1933 with the following half century when the ideas overshadowed the man. People familiar with the ideas will gain after reading this biography a fuller understanding of their historical provenance and grounding.

The first few months under Nazi government did not make much of a difference for everyday life in Berlin. Hirschman recalled watching smoke rising from the burning Reichstag as he exited the last big anti-Nazi rally of the Social Democrats. He decided then to make the first of many exits, to Paris. Paris was the destination for many German émigrés after the rise of Nazism, and he knew the language and culture. Adelman inferred that family funds, private German lessons and scholarships paid his way. Initially, his widowed mother and two sisters remained in Berlin. Later, the older sister joined him in Paris and the younger sister and the mother spent the war in England. Relatives who did not exit died in the Holocaust.

Hirschman’s talents and intellect would have directed him to study political science at Sciences Po in Paris, but practical considerations dictated that he should study at the Grande École of commerce. Graduates of political science had career prospects in the French civil service and in diplomacy, career tracks that were blocked for a German Jewish émigré. Though his talents and proclivities were in the more intellectual and abstract philosophical Central European tradition, Hirschman became—as the most apt title of this biography proclaims—a “Worldly Philosopher,” a philosopher trained as an applied economist, rather than a “dismal scientist.”

Politically, Hirschman was a member of the “New Beginning” youth movement in Berlin and a social democrat. It is not clear where exactly he placed himself on the political continuum between the communist party and the social democrats. Most likely, he was a free spirit with fluid political allegiances. When his sister Ursula came to live with him in Paris, she came under the influence of a German émigré communist ideologue, Heinrich Blücher, who became her lover. He later married Hannah Arendt. Ursula married the Italian Jewish thinker Eugenio Colorni, a founder of the European federalist movement. Hirschman had a better relationship with his brother in law than his sister, the mother of Colorni’s three children. Hirschman dedicated Exit, Voice and Loyalty to Colorni’s memory. Colorni was killed by a Fascist thug in Rome in 1944 after surviving and escaping detention. One of his daughter would marry Amartya Sen.

After spending a year in the London School of Economics on a scholarship, Hirschman joined the Colornis in Trieste where he obtained what he claimed to correspond with a PhD degree. He also went to fight Fascism in Spain. After three months in Spain he returned to Paris. This period in his life is shrouded in mystery. Was he a Communist, or a fellow traveler? What exactly did he do in Spain? Why did he exit after only three months of battle, while the war raged on? Definitely, by the time he returned from Spain, like many others, he was not a communist anymore. Back in France, he became an expert on economic intelligence, especially about Fascist Italy. He discovered what we would call today “economic indicators” to gauge the shape of Italy’s economy. He inferred Italy’s foreign trade deficits from the number of occupied beds in hotels, olive oil exports, and train freight reports. He concluded that Italy needed imperialism to generate exports to balance its imports and pay for militarization.

With the outbreak of the Second World War, Hirschman faced the choice of internment or enlistment in the French Army. He became a member of an auxiliary unit made mostly of soldiers with similar background. Following the French defeat, his French commanding officer agreed to give him official release papers with a false French identity. Many years later, in a discussion of the fashionable topic of “Identity Politics,” with the German social theorist Claus Offe, Hirschman interjected that in his youth the problem was not personal identity, but identity papers.

Hirschman made his way south to unoccupied Vichy France, to the port city of Marseille, where he resembled a character from Humphrey Bogart’s movie Casablanca (or rather the other way round). He worked for an American rescue organization, bank- rolled by the Rockefeller Foundation. He helped refugees to cross the border to Spain and then to America with the cooperation of an American consul, who issued visas against the will of his superiors. The list of people he helped makes the who’s who of European high culture, from Alma Mahler to Hannah Arendt to Chagall, Max Ernst, Marcel Duchamp and Breton. Once the U.S. visas were secured, the challenge was to smuggle the refugees across the border and past the Vichy soldiers who could detain them. The refugees also needed passports which Hirschman obtained from cooperative consuls of states that did not exist anymore (Czech, Polish, and Lithuanian). Contacts in the underworld also sold him forged Panamanian and other passports. He helped others purchase demobilization French papers to get to Casablanca. He also received money from the British government to smuggle back home its soldiers who went south rather than crossed the channel at Dunkirk. Refugees who were not interesting enough for the Rockefeller Foundation or another government to fund and did not have the resources to pay to exit France suffered worse fates, often were arrested by the Vichy government and later killed. Eventually the Vichy authorities became suspicious of Hirschman’s activities, and he crossed into Spain under an assumed name with a Lithuanian passport and a real American visa to become a researcher at Berkeley University paid by the Rockefeller Foundation. He returned to Barcelona where he fought in the civil war, and from there he travelled to Madrid, Lisbon and across the Atlantic to America.

Adelman, a Princeton professor with a PhD from Oxford University, wondered why Hirschman (who lost the final ‘n’ of his name in the process of immigrating to America) with a doctorate of sorts from the University of Trieste did not “upgrade” his skills at Berkeley by obtaining a doctorate there. Working on his second book and having the sort of cultural and intellectual background that he had, Hirschman may well have felt that his skills did not need upgrading. But the “upgrading” Adelman probably meant was of his educational brand and social class: If he wanted to become an academic and be paid to write, did he not understand that in the American academic system he needed to emerge from a high caste university to be accepted, for academics to pay attention to his writings and consider him for employment, irrespective of his skills and the quality of his writings? I guess Hirschman had other things to worry about in 1942–3. He got married to Sarah, a Russian-French Jewish immigrant with a similar background to his. Then he joined the American military and had his first daughter. Adelman stressed that enlisting paved the way for him to receive a U.S. citizenship. He may well have also wanted to rejoin the struggle against the Nazi enemy. Given his background and linguistic skills that did not require upgrading, he was assigned to the OSS (the Office for Strategic Services), the forerunner of the CIA.

At this stage the reader may expect some more cloak and dagger heroic exploits. But Hirschman had an incredibly boring war. He was deployed in North Africa with almost nothing to do and then crossed to Italy where the most interesting task he received was to serve as translator in the first War Crimes trial after the war. Adelman, wisely and effectively, first tells the story from Hirschman perspective. Only later does Adelman share with the reader his discoveries in the archives that make sense of what happened to Hirschman: he failed a security clearance. One informant in California, possibly a German émigré communist, informed on him that he was a communist. By Hirschman’s own admission, he fought in Spain for the Republican cause and he worked for British Intelligence in France, so he was considered unreliable. After demobilization, Hirschman attempted to get a job with the federal government in Washington, but that security file kept shadowing him and preventing him from being approved for employment. Eventually, after great difficulties, a friend who was working for the implementation of the Marshall Plan must have overruled or ignored the security issues and let him work on the rebuilding of Europe. A few years later, as the Marshall Plan ended and the patron moved on, he lost this job.

It was time for another exit for Hirschman. He wanted to return to Europe, Italy or France, but he found a job in Colombia. The new job as an expert on foreign aid marked Hirschman’s new focus on development economics. His new practice led him to challenge the prevailing development theories of the time that focused on bottlenecks and prescribed a massive all-fronts attack on poverty led by foreign aid generals. Hirschman instead favored local reforms, dismissing bottlenecks as problems with local market solutions. Instead of Adam Smith’s hidden hand, he liked to talk of a hiding hand, when development occurs against the plans, when investors grossly underestimate risks and overestimate returns, yet cause development. This unorthodox, from the bottom up approach to the then fashionable topic of development economics led to an invitation to conduct research at Yale University for a year. One year led consecutively to another year, a temporary part time position at Columbia University, a permanent position at Columbia, and an offer from Harvard University to join its faculty. Since Hirschman wanted to be an intellectual but did not like to teach, he took off to Stanford for a year to write Exit, Voice and Loyalty and then joined the Institute for Advanced Study at Princeton where he did not have to teach but could concentrate on writing and travelling. Once he embarked on an academic career, Hirschman’s ideas became more interesting than his life.

Hirschman consecutively confronted development messianic optimism, the broad failure of development, the rise of authoritarianism, and democratization and reform in Latin America from the fifties to the nineties, both theoretically and as a consultant to foundations like Ford that attempted to assist development and local independent scholars. The cast of American academic characters in the attempts to help development and democratization in Latin America would be familiar to readers who recall similar efforts in the post-Communist world during the nineties, as the same people attempted to reapply the same theories to the different post-Communist conditions.

Hirschman applied his voice and exit dichotomy to East Germany: some exits slam the door on the way out, but silent exits are also powerful because it is impossible to argue with those who leave unannounced. In his diary he summed up Communism as “the dead end that justified the means.” He visited Poland, Hungary and most notably his native Berlin with his sister. With age came accolades and honors for the old sage. As Adelman put it: “If academics could convert their awards into the equivalent of a soldier’s medals, Hirschman’s uniform would have been decorated like a Soviet General’s.” Yet, despite the appreciation, Hirschman remained largely intellectually isolated and he did not spawn a school or even a distinct set of “disciples” who carry on research in his tradition. I think that this is partly the result of never holding a teaching position for more than a few years. Had he remained at Harvard for a couple of decades he would have had dozens of disciples across the United States who would have had their own students. But also, as Adelman summed it, “there could be no more Albert O. Hirschman; he was the product of a place, Mitteleuropa, and of an intellectual moment that no longer existed.”