Albert O. Hirschman: Life and Work

Albert O. Hirschman has passed away. Hirschman was a deep thinker whose work has been influential in many fields. Most famously with the must-read Exit, Voice and Loyalty. I am also a fan of The Passions and the Interests his study of ideological transformations in the 17th and 18th century which promoted the pursuit of material interests as a way to tame the passions and thus opened the way to capitalism (profitably read alongside McCloskey’s Bourgeois Virtues). Hirschman’s early work in development, on backwards and forwards linkages, is now being rediscovered and formalized. Tyler looks at Hirschman’s work as it relates to development in a video at MRUniversity. Tyler also wrote in 2006:

Albert Hirschman deserves a Nobel Prize in economics.  His early work on the unbalanced nature of economic development was pathbreaking.  The Rhetoric of Reaction is a brilliant study in intellectual self-deception.  As a historian of thought he integrates wonderfully, such as in his study of how commerce shapes mores.

But he would win the Prize for focusing the attention of economists and political scientists on the phenomenon of voice: the ability of consumer or voter complaints to induce improvements in supply.  Hirschman was the first modern social scientist to think about this mechanism systematically.

Hirschman first suggested voice gets stronger and more effective when exit is limited.  In his (earlier) vision, if you can leave you won’t complain.  Fidel Castro understood this and let many Cubans go, although of course they complained from Florida.  It is sometimes suggested that in a world of school vouchers fewer parents would show up at the school board meeting.  Don’t yap, just yank your kid.

In reality voice often works best when competitive pressures are strong.  HBO is more responsive than was East Germany.  You are not wasting your time to complain at Wegman’s, or for that matter at this blog.  Competition and voice are more likely complements than substitutes.  Hirschman admitted and indeed emphasized this point in his later writings.

Here is Paul Krugman on Hirschman….Here is Alex on the topic of voice.

Hirschman also led a fascinating life. He became a professor only late in life after fighting in the Spanish Civil War, volunteering in the French Army and working in Marseilles to help refugees escape the Nazis. His work in development economics was based on field work when field work still meant working in fields.

As he once said of his work and perhaps also of his life:

Attempts to confine me to a specific area make me unhappy.

Daniel Drezner at the FP annually gives out an award he affectionately calls the Albie. It’s an award for

…any book, journal article, magazine piece, op-ed, or blog post published in the [last] calendar year that made you rethink how the world works in such a way that you will never be able “unthink” the argument.

It’s a fitting award to be named for Albert Hirschman whose simple but powerful ideas do indeed cause you to rethink the world and never to see it the same again.


He'll be sorely missed (actually I'd never heard of him until today). Does this explain why public corporations have fat?: "Hirschman first suggested voice gets stronger and more effective when exit is limited. " BTW you can download, if you have no scruples, the pricey stem book TC refers to the usual sources, free of charge. I just did and am looking forward to reading it. I see TC has some books there too: "Good and Plenty: The Creative Successes of American Arts Funding" by Tyler Cowen - sounds boring but I'll read it.


"Hirschman first suggested voice gets stronger and more effective when exit is limited."
This seems counter to politics. East Germany, North Korea, etc etc. Am I picking out bad examples?

Compare this with a situation where exit was not limited - South Africa. Anyone could flee. A lot of people did. The rest were demoralized and put pressure on the government to change the policy. Which they did.

What Hirschman means is that freedom is a bad thing. It is better to force parents to send their children to state schools because then they will lobby for better state schools. It may be true, but as it is the doctrine of a totalitarian nightmare, I hope it isn't.

Your example seems the opposite of the story you give in the next paragraph.

A story that fits better would be: they don't listen to you unless you have exit.

I love 'the passions and the interests'. The Sweden's Central Bank has lost its chance.

This is sad news...and it's an outrage that he was never awarded the Nobel Prize, as Tyler noted back in '06.

Great thinker, good writer. Ingenious fellow really. (Never met him.) But the Rhetoric of Reaction is aimed at conservativism: the greatest cognitive deficiency (what TC calls intellectual self-deception) is said to reside in the conservative dictum that "sometimes doing something will make things worse." I call that prudent; Hirschman calls it reactionary.

So we're back at the same old impasse, which is not nec. bad: liberals say "try it, you might like it" or "hey, it could turn out to be fine." And conservatives say: "messing around could make things worse, not better!" or "you better have a back-up plan if you are going to meddle with x."

Personally I'd like a little bit more humility by liberals before they embark on their revolutions.

It may have some vitriol, but I think the book's aim is to identify the type of arguments and their potential flaws conservative ppl r using, I read it like 5 yrs ago, but I do not remember that it had the intention to crush conservativism in general, it seemed rather descriptive for me, with some reflections. If I were conservative Id proudly call myself "reactionary". Maybe the word lost its negative connotation among young "intellectuals" in my country (Hungary) bcs of the blog.

Exit, Voice, and Loyalty was part of the most amazing classes I had as an undergrad. I remember the argument in a hazy, but agreeable way. I think I should re-read for an upcoming project at work and get some pointers on the balancing act between those three concepts. BTW I thought the Sethi's summary of Hirschman's work was also good:

In 1980, as part of a Masters in Development Economics at the University of New England, Armidale, I did a study of Hirschman's Linkage Hypothesis, which postulated that fast growh in industries with strong DEMAND links to other industries acted as an engine of growth. This used time series sectoral and overall growth rates and Leontief Inupt Output matrices to construct a test of whether overall growth rates were higher when sectors with high demand links were growing faster. The surprising result was that in India, it was not demand that was holding up growth but supply.( I left Economics soon after for actuarial work and then onto software development. This was partly because number crunching was not welcomed or admired in my branch of the profession at that time: one of my examiners deplored the tendency to statistical analysis in the field, and the other said he did not understand the mathematics and doubted the candidate either!)

However, India subsequently liberalised its trade system, which presumably allowed the import of inputs when the supply requirements were not easily met by domestic production, and the rest is history. It made me think that perhaps I had abandoned economics too easily.

Albert was a great economist, and more than an economist. It is bizarre that the Nobel [Memorial] Committee neglected him year after year in favor of Yet Another Exponent of an Experimentally and Experientialy Rejected Theory Called Game Theory. Oh, well. Albert knew from his fight against fascism that the world is often not just.

I don't think saying Hirschman fought Fascism is useful. It is more important what he fought for. I would guess Stalinism. Is that right? He fought in the International Brigades?

But I will agree it should have taught him life is rarely just. After all Vidkun Quisling was executed, while Zygmunt Bauman is honored by all.

Nomen est omen... And normally Id disregard ur comments, but u r insulting a dead man in a rather irritating way. To help u, Id suggest before u judge in general ppl from the 30s-40s, just watch a movie that is very much anticommunist, but if u watch it, it may put a grey area between ur black and white at least for ppl getting information from the west at that time (ie not living in the territories of the actual communist countries):

Btw have u actually read anything from Bauman? I think ud admire him if u understood one page of it... U probably would not understand him, but man he is smart and what he writes is beautiful - what i read at least.

Why is Game Theory emperimentally rejected?

Because--though I'm not as qualified to answer this as D. McCloskey, who btw is a great writer--it's been found that people do not think logically in economics, which is the reason game theory does not work. Cases in point: money illusion--why does it work? Game theory says: double money supply overnight, and, ceri paribus or whatever, prices will double. But they don't. Game theory says: ask somebody to solve the "Monty Hall problem", and they should always change their vote, but they don't. Hence "Behavioral Economics" trumps "Game Theory", and, (this is the surprising part), trumps in the aggregate, meaning almost everybody gets game theory wrong, not just the dumb ones that are cancelled out by the smart ones.

Good question. It's one thing to say the Swedes have gone a bit overboard, but "Experimentally and Experientialy Rejected"- not sure what that means, but if it means there is little to be gained from the study of game theory, I disagree.

I cannot claim knowledge of much of Hirschman's work, but many Development Economists have been consistently wrong. About a lot of things. Did that cause a major re-think for Hirschman? It looks to me that he simply turned to other things.

What he seemed to be good at to me was snarking at the West. Especially people whose politics he did not like. But I probably do him a disservice.

Voice = Talk x Listen

If you lose half your Exit rights, you will try to exercise your Voice rights instead. Halve Exit, double Talk.

But who bothers to listen to people who cannot leave? Halve Exit, quarter Listen.

Halve Exit, Halve Voice.

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