Wednesday, December 12, 2012

More on Hirschman

Several obituaries of Hirschman have already popped up (see here, here, and here for example). Note that both Alex Tabarrok at Marginal Revolution and Rajiv Sethi (who was my econometrics teacher I should note), the economic blogs, emphasize among the many contributions of Hirschman his book Exit, Voice and Loyalty (EVL), his work as a historian of economics (Tabarrok, in particular, praising The Passions and the Interests, PI), and his interdisciplinary work (Sethi, noting his crossing of boundaries of disciplines).

I tend to find exactly that those are the less appealing and more problematic characteristics of Hirschman as a scholar. His analysis of the history of ideas is based on the policy objectives rather than on the theoretical foundations of theories. Hence, classical political economy ideas are treated in terms of their laissez faire component, which would actually make them similar to a lot of the marginalist ideas of a century later.* Note that laissez faire in the period of the rising bourgeoisie is not akin to the same policy once that class is dominant.

Note also that a bourgeois economist like Ricardo could openly suggest that capital and labor had conflictive interests, in a way that only a few years later would be considered unacceptable. Marx, a radical critic of classical political economy, could maintain the core principles of Ricardian economics exactly because of that.

Also, EVL, which shows the breadth of Hirschman's intellectual interests, is a book that emphasizes interdisciplinarity in a way that the material economic preoccupations of agents and social groups are of secondary importance. Classical political economy was in many respects interdisciplinary, in particular because it shed light on the social conflicts inherent in the determination of income distribution.

In my view the more interesting contributions are associated to his early works, in particular his book National Power and the Structure of Foreign Trade (NPSFT), which showed that relationships of dependence and the counterpart, hegemonic power, can arise out of trade relations. For those that follow the aggressive trade policies pursued by developed countries pushing Free Trade Agreements (FTAs) and Bilateral Investement Treaties (BITs) this should not be a surprise. In this context, his analysis of power in NPSFT seems more akin to the preoccupation of the old classical political economists with economic power and social conflict that his analysis in EVL.

Hirschman also wrote one of the first papers, if not the first, showing the contractionary effects of depreciations, and was as a practitioner of development policies for a big push of public investment to kick start the process of industrialization. That agenda for industrialization of the periphery is still open, and his contributions (e.g. linkages) are still relevant. Those are the good things to be remembered, in my view.

* Coherent with his perspective mainstream Tabarrok suggest reading McCloskey's Bourgeois Virtues together with PI. The idea is that capitalism is a cultural phenomenum, that is based on bourgeois values, in Weberian fashion. I have criticized this view in another post (see also Cesaratto's post).

3 comments:

  1. I think you need a little more McCloskey in your life Prof Vernengo. Models are nothing more than metaphors.

    ReplyDelete
    Replies
    1. Hi CMD:
      I know Deidree personally, and have only good things to say about her. However, as an economist, even though she is open to heterodox approaches and pluralistic in her stance, she is what I would call a conservative revolutionary. She believes that culture determines economic outcomes, and not the other way round, which is what I debated in the post. Mind you the fact that models are methapors (but not just that, they are also necessary to guarantee logical coherence; and by the way, there is also qualitative knowledge that you cannot formalize in mathematical ways too; theories may be formailzed by different models, and I was talking not just about models above) does not imply methdologically, as she contends, that anything goes. In fact, for a critical realist (as myself), the existence of an external reality, independent of the views about it that one might have, suggests that logic and empirical evidence are (with all its limitations) the only objective criteria for scientific demarcation.
      Best,
      Matías

      Delete
  2. Hi Prof Vernengo,

    Thanks for the thoughtful reply, but I still think you misunderstand rhetorical economics. Appeals to logic and empirical evidence are rhetorical strategies. You used a rhetorical strategy, by the way. You mentioned knowing Deirdre, which adds to your ethos or character or credibility as a speaker. (I should also mention I was a student of Ziliak's - collaborator and former student of McCloskey's.)

    Truth is really contingent upon the audience. Economists typically use logic or mathematics as their master trope, those in the history department use narrative, and both use empirical data. Both are methods of persuasion, and they appeal to different audiences, but that doesn't mean that one is necessarily preferable to another. The key determinant of which strategy you employ will be the audience.

    Plus, (though I agree with you that empirical evidence is very important, more so in my opinion than logic or mathematical formalism) a boatload of unemployment figures, for example, don't really mean anything unless we are told why they are important. There is no way to prove, "objectively", that being unemployed is a bad thing (I think it is), except for persuasive arguments.

    And if you argue that we, as economists, are searching for causal mechanisms like: Why does unemployment happen? how do we definitively prove something? Hopefully not through statistical significance, which then takes us back to the question of why unemployment is bad. So what if you know what causes unemployment, we still have the more important task of convincing others why it matters.

    How is there any less "truth" in say, an economics haiku than in a mathematical model (although you do say some things can't be formalized)? Math after all is just another language, one that necessarily obscures basic arguments to add to the ethos of a profession or author (economics, economists).

    But, I've never been a fan of critical realism. I can't really say much about external reality (it's like God), I can only really talk about my experiences and the collective experiences of others. As an example, when two people see the color red, each person see's red differently. How can we judge what is truly red? Doesn't the color red exist in external reality? We cant possibly know, and logic can't solve that problem.

    I think Rorty made a good point when he said that objective truth is kind of like God - we don't have much to say about it. Instead, we have argument and justification. Physicists are the pinnacle for science because they can provide repeated justification for their beliefs, like the everyday empirical evidence that we don't float into outer space.

    And, on another topic, do you really think that Deirdre's story for the "Great Fact" as she calls it is simply cultural? In Bourgeois Dignity, she argues thoroughly against Weberian and Cultural explanations. She argues that it was a change in language - how we spoke about each other and about creativity (which probably went on to change European culture). And, her arguments are littered with empirical evidence, where she disproves (not with mathematical formalism) most of the materialistic explanations for the Great Fact (she leaves out the heterodox camp, unfortunately). I actually think her argument fails because she spends so much time on the "Great Fact". Sure, drastically elevated standards of living are great, but as Ziliak told me, "Repeatedly mentioning the beauty of a flower takes something away from it."

    ReplyDelete