Albert O. Hirschman


Albert Otto Hirschman was an economist and the author of several books on political economy and political ideology. His first major contribution was in the area of development economics. Here he emphasized the need for unbalanced growth. He argued that disequilibria should be encouraged to stimulate growth and help mobilize resources, because developing countries are short of decision making skills. Key to this was encouraging industries with many linkages to other firms.
His later work was in political economy and there he advanced two schemata. The first describes the three basic possible responses to decline in firms or polities in Exit, Voice, and Loyalty. The second describes the basic arguments made by conservatives in The Rhetoric of Reaction.
In World War II, he played a key role in rescuing refugees in occupied France.

Early life and education

Otto Albert Hirschman was born in 1915 into an affluent Jewish family in Berlin, Germany, the son of Carl Hirschmann, a surgeon and Hedwig Marcuse Hirschmann. He had a sister, Ursula Hirschmann. In 1932, he started studying at Friedrich-Wilhelms-Universität, continued at HEC Paris, the Sorbonne, the London School of Economics and the University of Trieste, where he received his doctorate in economics in 1938.
In the summer of 1936, Hirschman spent three months as a volunteer fighting on behalf of the Spanish Republic in the Spanish Civil War. After France surrendered to the Nazis, he worked with Varian Fry from the Emergency Rescue Committee to help many of Europe's leading artists and intellectuals to escape to the United States; Hirschman helped to lead them from occupied France to Spain through paths in the Pyrenees Mountains and then to Portugal.

Career

From 1941–1943 he was a Rockefeller Fellow at the University of California, Berkeley. He served in the United States Army where he worked in the Office of Strategic Services.
from 1946–1952 he was appointed Chief of the Western European and British Commonwealth Section of the Federal Reserve Board.
From 1952–1954 he was a financial advisor to the National Planning Board of Colombia and the next 2 years made a living as a private economic counselor in Bogotá.
Thereafter he held a succession of academic appointments in economics; from 1956–1958 at Yale University, from 1958–1964 at Columbia University, and for 10 years at Harvard University. He worked for the Institute for Advanced Study from 1974–2012 until his death.
He died at the age of 97 on December 10, 2012, some months after the passing of his wife of over seventy years, Sarah Hirschman.

Work

His first major contribution was in the area of development economics with the 1958 book The Strategy of Economic Development. Here he emphasized the need for unbalanced growth. He argued that disequilibria should be encouraged to stimulate growth and help mobilize resources, because developing countries are short of decision making skills. Key to this was encouraging industries with many linkages to other firms.
In his 1967 essay The principle of the hiding hand, Hirschman helped develop the hiding hand principle.
His later work was in political economy, where he advanced two schemata. In Exit, Voice, and Loyalty he described the three basic possible responses to decline in firms or polities.
The second describes the basic arguments made by conservatives in The Rhetoric of Reaction.
In The Passions and the Interests Hirschmann recounts a history of the ideas laying the intellectual groundwork for capitalism. He describes how thinkers in the seventeenth and eighteenth centuries embraced the sin of avarice as an important counterweight to humankind's destructive passions. Capitalism was promoted by thinkers including Montesquieu, Sir James Steuart, and Adam Smith as repressing the passions for "harmless" commercial activities. Hirschman noted that terms including "vice" and "passion" gave way to "such bland terms" as "advantage" and "interest." Hirschman described it as the book he most enjoyed writing. According to Hirschman biographer Jeremy Adelman, it reflected Hirschman's political moderation, a challenge to reductive accounts of human nature by economists as a "utility-maximizing machine" as well as Marxian or communitarian "nostalgia for a world that was lost to consumer avarice."

Herfindahl–Hirschman Index

In 1945, Hirschman proposed a market concentration index which was the square root of the sum of the squares of the market share of each participant in the market. In 1950, Orris C. Herfindahl proposed a similar index, apparently unaware of the prior work. Thus, it is usually referred to as the Herfindahl–Hirschman Index.

Books

In 2001, Hirschman was named among the top 100 American intellectuals, as measured by academic citations, in Richard Posner's book, Public Intellectuals: A Study of Decline.
In 2003, he won the Benjamin E. Lippincott Award from the American Political Science Association to recognize a work of exceptional quality by a living political theorist for his book The Passions and the Interests: Political Arguments for Capitalism before Its Triumph.
In 2007, the Social Science Research Council established an annual prize in honor of Hirschman.