Essays in Trespassing: Economics to Politics and Beyond
Why is there a Nobel prize for economics but not for the other social disciplines? Is it because we are so in debt to economics for the welfare and happiness it has brought about? I think not. The reason for the prestige of economics lies in something quite apart from its practical successes—which are hardly cause for much celebration these days. The reason is that economics, unlike its sister disciplines, claims to be a science. Alone among the social disciplines it searches for the social counterparts of overarching physical laws like the law of gravitation; and alone among the fields of social inquiry, it risks predictions from the application of its generalizations, such as the consequences that can be foretold from the workings of the “laws” of supply and demand.
Why, then, does economics, unlike the natural sciences, fail so miserably to increase our ability to impose our will on the world? The answer can be approached from two points of view. One is that the social universe is inherently much more complex than the natural universe, so that the science of economics cannot amass, or coordinate, the information required to produce a workable model. From this perspective we can assert that if we knew enough about the data of the real world, economics should be able to predict the course of national production at least as accurately as physics predicts the course of a space flight.
There is undoubtedly something in this view because the economic system resembles the physical universe in certain ways, the most important of which is that its human actors often behave in a predictable way—like so many iron filings under a magnetic field—following the arrow of economic advantage, buying cheap and selling dear. If men and women did not behave in this predictable manner, the socioeconomic system would have broken down long ago. But it is also clearly the case that we do not begin to have enough data to represent the facts of their behavior in our minds or in our computers.
It is equally valid, however, to ascribe the failure to reproduce the triumphs of science for another reason, that the object to which economics applies its analytic powers is intrinsically different from that to which natural science applies its scrutiny. The difference is that the elements of the social universe embody something lacking in physical events, namely human will, motive, interest. The root of the unpredictability and unmanageability of the economy, in this view, lies in the fact that human actors can and do change their behavior in ways that iron filings cannot. It follows that all the data in the world will not clarify the movements of the economy unless we can understand the perceptions and desires of its social particles.
It is this uneasy situation of economics, one foot in science, the other in society, that accounts for the importance of the work of Albert Hirschman. Hirschman is a distinguished economist, fully conversant with its claims to science—he is the first economist to have been asked to join the Institute for Advanced Study at Princeton. But Hirschman has always worked outside the boundaries of a strictly scientific view of economics, in that largely unexplored territory where considerations of an interpretative kind are critical. Let me illustrate with this passage from Essays in Trespassing, a recent collection of his writings on diverse subjects:
Suppose that I drive through a twolane tunnel, both lanes going in the same direction, and run into a serious traffic jam. No car moves in either lane as far as I can see (which is not very far). I am in the left lane and feel dejected. After a while the cars in the right lane begin to move. Naturally, my spirits lift considerably, for I know that the jam has been broken and that my lane’s turn to move will surely come any moment now. Even though I still sit still, I feel much better off than before because of the expectation that I shall soon be on the move. But suppose that the expectation is disappointed and only the right lane keeps moving: in that case I, along with my left lane cosufferers, shall suspect foul play, and many of us will at some point become quite furious and ready to correct manifest injustices by taking direct action (such as illegally crossing the double line separating the two lanes).
What has this to do with economics? The title of Hirschman’s essay is “The Changing Tolerance for Income Inequality in the Course of Economic Development.” The “tunnel effect” is an effort to shed light on the attitudes of social groups that are “stuck” in a traffic jam of static income distribution in a developing country. Once a given group begins to move, the evidence of change first brings a sense of enhanced social well-being to other groups. But this will rapidly be followed by deepened resentment if they do not share the movement.
This is certainly not economic science. Hirschman himself goes to considerable lengths to warn that social groups are not drivers in a tunnel. The initial sense of euphoria, for instance, will not arise if there is no fellow feeling among social classes, as there is among the fellow sufferers of a traffic jam. Hirschman’s insight has, therefore, only a limited, not a general, application. Nonetheless it affords something that scientific explanations of income dynamics do not, namely an understanding of the emotions that these dynamics may bring.
Hirschman has always been interested in the motives rather than the “laws” of the economic process. In the late 1950s, when the profession was diagnosing economic development in the third world according to grand models of “balanced growth,” where all the forces in the economy dovetail to produce steady progress—a state of affairs that few economists would have been so ambitious as to suggest for their own advanced countries—Hirschman was the first to emphasize the possibilities of unbalanced growth. In his Strategy of Economic Development, published in 1958 and almost immediately a classic, Hirschman described development as a situation in which “one thing leads to another,” where the very tensions and stresses resulting from uneven advance create sheltered pockets in an economy or promising situations in which entrepreneurs can find opportunities. This was not intended to be a grand “theory” of development. It was, rather, a way of understanding the gradual and lurching fashion in which economic systems, developed as well as underdeveloped, could become more complex and more intricately linked, and thus might be made more productive.
Hirschman’s propensity to overrun the conventional boundaries of economics next emerged in Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States (1970). Conventional economics has never been much concerned with decline. When an enterprise performs badly, the consequences are seen as involving little more than the gradual “exit” of its customers and personnel. But as Hirschman pointed out, that is not always the case. Sometimes dissatisfied customers do not exit but instead raise their “voices” in protest. They may stick with the recreant firm until it mends its ways, or at least until it shows itself incapable of doing so. Before a housewife leaves her favorite supermarket which is overcharging her, she may speak to the manager. If the store changes its ways, she will go on shopping there.
As with the tunnel effect, Hirschman’s ideas of exit and voice are useful in shedding light on political questions such as, for example, political voting theory. Seeking to emulate their economic colleagues, political scientists in the 1960s created a model of political behavior based on the idea of “maximizing” votes among the electorate, much as a firm seeks to maximize the dollars it gets from the marketplace. From this point of view it stood to reason that the Republican Party, for instance, would be acting rationally in choosing a moderate candidate, because such a candidate would naturally get all the right-wing votes which had “nowhere else to go,” and might in addition attract some wavering Democrats.
Yet this scientifically plausible theory was proved wrong when the Republicans nominated Barry Goldwater and (after Hirschman’s book was published) the Democrats chose McGovern; and perhaps it was disproved again by the nomination of Ronald Reagan. The error, as Hirschman pointed out, lay in the assumption that “the ‘captive’ consumer (or voter) who has ‘nowhere else to go’ is the epitome of powerlessness. True, he cannot exit to the other firm or party…, but just because of that, he, unlike the consumer or voter who can exit, will be maximally motivated to bring all sorts of potential influences into play so as to keep the firm or party from doing things that are highly obnoxious to him.” Thus the beleaguered consumer or voter may become an “activist,” bombarding the firm or party with protest, and frequently succeeding in changing its actions.
As in his description of development, in Hirschman’s own intellectual progress one thing leads to another. In the 1970s he found himself increasingly dismayed by the failure of his colleagues to anticipate, much less explain, the political tensions and disruptions that economic development brought. The prevailing view, which Hirschman sought to criticize, was that development was a process that defused and tamed political tensions in the great solvent of growth.
This turned his attention in a direction that at first seemed wholly unrelated to development, namely the attitude of social commentators of the seventeenth and eighteenth centuries toward emerging capitalism. The question about this attitude that interested Hirschman was how avarice and the pursuit of money, long regarded as among the basest and most dangerous of the passions, could come to be entrusted with the motive force and the tutelary responsibility for society’s progress.
The Passions and the Interests: Political Arguments for Capitalism Before Its Triumph (1977), my favorite among Hirschman’s books, provides a striking answer to this question. The answer does not lie in any change in the disdain and disrepute with which avarice was generally held, as witness Adam Smith’s scathing remarks about the “mean rapacity” of merchants in The Wealth of Nations. The change, rather, took place in a gradual decline in the belief that moneymaking was a major force for good or evil. As Hirschman shows, acquisitiveness moved by degrees from the category of an unruly “passion,” like ambition or lust, to that of an “interest”—a domesticated and dependable Judas goat for the dangerous passions.
Smith’s contempt for the rapacity of merchants was therefore entirely compatible with a conviction that their pecuniary “interests” would lead them in directions that would benefit society. Thus the very conception of economic striving changed from that of a potentially disruptive force to that of a regulative, even “civilizing” influence—le doux commerce celebrated by eighteenth-century writers. In Samuel Johnson’s famous words, “There are few ways in which a man can be more innocently employed than in getting money.”
The link with contemporary development now becomes clearer. Like the observers of the eighteenth century, economists of the twentieth century concentrated on the “civilizing” aspect of economic pursuits, to the disregard of their impassioned motives and unruly effects. “In sum,” as Hirschman writes in a reflective chapter of his Essays in Trespassing, “like the ‘innocent’ and doux trader of the eighteenth century, [the underdeveloped] countries were perceived to have only interests and no passions. Once again, we have learned otherwise.”
Hirschman’s recognition of the importance of the expectations we attach to economic activity (commerce as a civilizing rather than disruptive force) provides the link to his latest adventure into socioeconomic psychology. Shifting Involvements seeks clues for the cyclical swings in Western nations between periods of all-out engagement with private ends, mainly moneymaking, and periods of enthusiasm for public affairs. Hirschman explains this as a kind of dialectic of expectation and disappointment, a dialetic in which “men think they want one thing and then upon getting it, find out to their dismay that they don’t want it nearly as much as they thought or don’t want it at all and that something else, of which they were hardly aware, is what they really want.”
Specifically the dialectic is played out between the pattern of disappointments and expectations characteristic of private consumption, especially of expensive durable goods or services, and the corresponding pattern in public life. In the private sphere, many of us eagerly buy expensive things only to discover their unanticipated negative consequences: the long-awaited initial television set is a treasure the first week, becomes taken for granted by the end of the first month, is a bore within the first year, a menace within two. So too, we buy expensive education or health care or foreign travel and encounter the disconcerting realization that education is not always the road to wisdom or fortune; that psychiatry has its limitations; and that package tours are not the grand tour. Thus a diffuse but real sense of disappointment is the all-too-frequent sequel to the acquisition of material wealth; and expensive possessions turn out to be, as Adam Smith warned in his Theory of Moral Sentiments, “vast operose machines” that threaten to crush their possessors.
In this way, Hirschman suggests, periods of mass accumulation of wealth begin with high expectations only to peter out in slowly mounting disillusionments—and so the stage is set for a reversal of course and increased interest in public life. Here, quite unlike what obtains in the private sphere, the pleasures of involvement consist in the effort toward realizing a public good, not in the result for our private fortunes. Our enthusiasm for and engagement with public activity do not derive in many cases from the direct benefits we ourselves will receive if our efforts are successful, but from the satisfactions that spring from participation itself. By contributing money and working for candidates and pressure groups, we may feel that we are advancing a good cause, even if it does not succeed.
And here, of course, lie the seeds of another disappointment. Typically we underestimate the time needed to carry through our projects, with the consequence that we become overcommitted to public life: “Socialism takes too many evenings,” in Oscar Wilde’s cutting remark. Or disappointment may arise for precisely the opposite reason: public life may be too underinvolving. There is often no way of participating in public action except through making contributions or going to meetings or through the limited and usually infrequent act of voting, with the consequent feeling of impotence.
As Hirschman makes clear, these are not the only reasons for disenchantment with our public enthusiasms. The all-too-familiar temptations of corruption and the debunking of public virtue have their own powerful dynamics. But behind them operates the less generally recognized dialectic of hope and disappointment, first impelling us toward, then turning us away from, public life.
Hirschman does not describe this movement to moralize about it. He sees the private sphere as that of Adam Smith’s “prudent” man—the sphere where we cultivate our gardens, not where we feather our nests; and the public sphere as that in which we make useful public efforts, not that in which we build monuments to vanity. In the good society, both spheres must be vigorously attended to, and all that Hirschman wishes to criticize is our tendency to indulge in orgies of privatization or fantasies of public redemption.
As is always the case with Hirschman’s writing, there is much subtlety, imagination, and modesty in Shifting Involvements. Nevertheless, it impresses me less than his previous books. The reason is that I do not believe that the phenomenon of shifting involvements exists in the form that he describes it. There are certainly swings of political temper and changes in what we have come to call “life styles.” But these prevail among different generations, and that is not at all the process of disenchantment that Hirschman describes for a given generation. I simply do not believe (nor does Hirschman present a shred of evidence) that the swing from the feckless Twenties to the New Deal, or from the apathy of the Fifties to the battle for civil rights, or from the commune movement to the reactionary mood of the present, reflects the dialectic that Hirschman describes.
Moreover, within my own experience, I have seen little of that ennui that is supposed to arise from the disappointments of consumption or from the exhuastion of the public impulse. On the contrary, most people I know who have amassed those “operose machines” against which Smith warned us have not turned to the life of public reform, except perhaps in so far as they subscribe larger sums to parties that advocate lower taxes for the rich; and I know of surprisingly few veterans of political causes who have decided, even after decades of disappointment, to let the public good go hang.
How can it be that Hirschman writes so convincingly about our private feelings and yet fails (at least in my view) to expand these insights into a plausible account of social events? The answer, I believe, lies in the endemic difficulties of enlarging insights gained from introspection into generalizations that apply to large-scale social processes. There may be, for example, a dialectic of disappointment of the kind that Hirschman describes, but I suspect that it afflicts most of us while we are alone, reflecting on what we are making of our lives. Once returned to the flux of society, these doubts and hesitations tend to be swept away before what we see as the need to keep up with the Joneses, to fill the expectations we have created for ourselves, or just to give in to inertia.
There are, as I see it, public forces and pressures that wash away, or drown, the kinds of private determinations about which Hirschman writes. Perhaps this is only another way of saying that society itself is a mixture of drama and routine—of some actions that show the characteristics of elation and disappointment that Hirschman elucidates, and of other actions that express the routine, automatonlike responses on which scientific explanation and prediction rest. Efforts to pass from the sphere of private insight to the sphere of public analysis require that we find ways of intellectually linking two quite different kinds of experience. This is a passage that no one has altogether successfully negotiated—not Hobbes, not Shaftesbury, not Adam Smith of the Moral Sentiments, all pioneers like Hirschman in the search for social understanding. If Albert Hirschman has not yet made this passage, however, it is his distinction to have made us aware that a world of passions and interests, of exit and voice, of shifting involvements, of hope and disappointment, lies beneath the behavioral “laws” on which economic science rests. No attempt to make that science a useful instrument can succeed if it does not take these neglected forces into account.