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Hirschmans view of
development, or the
art of trespassing
and self-subversion
Javier Santiso
Professor of Political Economy
in the National Foundation for
Political Science, International
Study and Research Centre, Paris.
Professorial Lecturer at the
Johns Hopkins University.
[email protected]

This article analyses the work of Albert Hirschman from

the standpoint of two basic concepts: trespassing and
self-subversion. Hirschman turned these exercises into an
art, pleading his case in a manner which combines curiosity and intellectual humility. In a world accustomed to
think and think of itself through totalizing models, in a
continent where so many ideological models which sought
to open up (or rather, force open) the realities of countries
were put together and taken apart, Hirschmans works and
intellectual attitude represent a healthy and beneficial invitation to take a different view. This is not his only merit,
however. From Chile to Brazil, from Mexico to Argentina,
he passed on his passion for the possible to more than a
few admirers. In the last few years, a great many ministers,
academics and leading members of international organizations have repeatedly praised his contributions. Likewise,
many of the concepts developed by Hirschman his exit,
voice and loyalty triptych, the notion of the tunnel effect and above all his propensity to think in terms of the
possible and his efforts to trespass over and subvert theories (including his own), paradigms and models, and all the
cubist and minimalist mental exercises that are constantly
created and recreated, are healthy sources of inspiration
and interpretation for rethinking the never-ending quest for
development. Lastly, notions like community participation
or social capital, which are now major subjects of discussion, can also be better appreciated, subverted and
self-subverted in the light of Hirschmans work.

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I
Introduction
Trespassing is often used in a negative sense in
the United States: for example, in notice boards that
say No Trespassing!, viewing it as a violation of
private property, but in my view it can have a positive
value: it can mean stepping over the borders between
one discipline and another, without seeing them as rigid
divisions. My last reversal of the accepted meaning is that
of subversion, which is also generally used in a negative
sense: subversion? How terrible!.
Albert Hirschman1
In one of his most famous essays, Isaiah Berlin suggests dividing thinkers into two categories: hedgehogs and foxes (Berlin, 1979). That great
philosopher aimed to include all intellectuals in that
very original classification, inspired by a fragment
from the Greek poet Archilochus: The fox knows
many things, the hedgehog only one thing, but on a
grand scale.
The hedgehogs are those who develop an
all-embracing view of the central world: a coherent
system for analysing and thinking the whole of their
experiences and ideas. The foxes, in contrast, live,
think and act without trying to locate their lives,
ideas and actions within a coherent global system: a
totalizing view of the world. Beyond any doubt, in
the light of his work and life, Albert Hirschman belonged among the foxes: a tremendously free fox

who kept on running incessantly, crossing both mental and real boundaries, intellectual and physical
frontiers, multiplying different views of the world,
constantly engaging in subversion and self-subversion, always trying to swim against the current, no
matter how fierce the ideological storms to be
weathered.
In the 1930s, fleeing from Nazi Germany, he
crossed any number of real frontiers, journeying all
over Europe and studying in France (where his
dream was to study Sciences Po but he finally entered a French business school)2 and in England (at
the London School of Economics), before finally going to Trieste in Italy and fighting against the fascists, first in the French army and later in the U.S.
forces. After that, he crossed the Atlantic to settle in
the United States, where he had a brilliant university

o This study was prepared for the Forum on Development and

Culture held as part of the Annual Meeting of the Board of Governors of the Inter-American Development Bank in Paris, 11-12
March 1999. I should like to express my thanks for their valuable comments and discussions, as well as the documents provided, to Andrs Bajuk, Jess del Ro, Lo Harari, Guy Hermet,
Bernardo Kliksberg, Rafael La Porta, Norbert Lechner,
Florencio Lpez de Silanes, Dani Rodrik, Romain Wacziarg,
and all those who took part in the preliminary forums of the IDB
and Sciences Po organized in Paris, Santiago de Chile and Madrid in 1998. I should also like to express my special thanks to
Enrique Iglesias, Andrs Bajuk, Lo Harari and the IDB for
their invitation to trespass across boundaries and for having
made it possible for me to continue a conversation with Albert
Hirschman that began over five years ago in Berlin and continued at Princeton in January 1999.

1 Albert Hirschman. Entrevista sobre su vida y obra, in IDES

(1996, p. 658). See also Hirschmans last book, Crossing
Boundaries, whose title reflects his defence of these views and
his very special intellectual makeup, with his propensity for
subversion and self-subversion (Hirschman, 1998).
2 As Hirschman himself humorously confessed when receiving
an Honorary Doctorate in Political Science in April 1989:
You will now understand why todays ceremony has a special,
sweet savour for me: sweet as revenge can be. After fifty-six
years and a number of most unlikely detours, the doors of
Sciences Po have finally swung open for me: a fairy tale come
true! My heartfelt thanks for this happy end! (Hirschman,
1995a, p. 115).

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career at Columbia, Yale, Harvard and Princeton. A

tireless traveller, in the 1950s and 1960s he kept on
crossing frontiers, living for some years in Colombia, to which he returned on several occasions and
which inspired his first great essay on the economics
of development: a master-work which continues to
this day to be a classic of the economic literature.
His Latin American experiences in Chile,
Brazil, Peru, Uruguay, Ecuador: indeed, all over the
continent kept on increasing, turning Hirschman
into the most European of United States Latin
Americanists. As time went by, his ideas also began
to spread to other areas of the mind, and his works
gradually crossed the frontiers of a number of other
disciplines, starting with economic science and extending to moral and political sciences. As from the
1970s, after having been responsible for one of the
greatest attempts to subvert the then prevailing theories of development and one of the most amazing attempts at the self-subversion of his own theories,
Hirschman ventured off in other directions. His new
mental journeys led him to formulate original ideas
not only on the economics of development but also
on the history of ideas, on the links between economics and politics, and, in his last essays, on art, joy,
and the significance (not only economic but also political) of sharing a banquet.
Trespassing and self-subversion: Hirschman
turned these exercises into an art, pleading his case
with a combination of curiosity and intellectual humility. When he makes a critique of the dependency
school, for example, he does so on the basis of a critique of his own theories which he had defended in
the past.3 His repeated efforts to avoid being put in
any type of classification, to avoid being enclosed in
a globalizing paradigm which pretends to be the
master key to the understanding of all political, eco-

nomic and social realities, are hailed today both by

academics and development operators. Nevertheless,
the fox keeps on running: Hirschman continues to reject all attempts to canonize his ideas or reduce his
works to a single great central idea, even if that
great idea were to reject the whole notion of great
ideas.4 In a world used to thinking and thinking of itself through totalizing models, whether they be
called dependency theory or Washington Consensus (modelos para armar, as Cortzar would have
said), and in a continent where so many ideological
models which sought to open up (or rather, force
open) the realities of countries have been put together and taken apart, Hirschmans works and intellectual attitude represent a healthy and beneficial
invitation to take a different view.
This is not his only merit, however, as we shall
see below. From Chile to Brazil, from Mexico to Argentina, he passed on his passion for the possible to
more than a few admirers. In the last few years, a
great many ministers, academics and leading members of international organizations have repeatedly
praised his contributions. Likewise, many of the concepts developed by Hirschman his exit, voice and
loyalty triptych, the notion of the tunnel effect
and above all his propensity to think in terms of the
possible and his efforts to trespass over and subvert
theories (including his own), paradigms and models,
and all the cubist and minimalist mental exercises
that are constantly created and recreated, are healthy
sources of inspiration and interpretation for rethinking the never-ending quest for development. Lastly,
as we shall also see below, notions like community
participation or social capital, which are now major
subjects of discussion, can also be better appreciated,
subverted and self-subverted in the light of
Hirschmans work.

4 See, in this respect, McPhersons article on The social scientist as constructive skeptic: On Hirschmans role and
Hirschmans response, A propensity to self-subversion, both
included in Foxley, McPherson and ODonnell (1986).

See Hirschman (1986c and 1978) and also Hirschman (1968),

republished in Hirschman (1971a).

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II
Journeys from economics to
politics and beyond
From the point of view of the history of ideas and of
development economics, Hirschmans intellectual
work is original in a dual sense. It is at once a central
yet also a marginal body of work. Central, because
his reflections on development economics, from the
publication of The Strategy in 1958 up to A bias for
hope in 1971 (including Journeys, in 1963), his reflections on unbalanced growth, and his concepts of
backward and forward linkages have become inevitable pillars of discussions on economic development
(Hirschman, 1958, 1963a and 1971a). Marginal, because in the mainstream thinking of his home discipline, economics, Hirschman became a highly
appreciated but marginalized voice, considered to be
out of the game (that is to say, outside game theory). He remained on the sidelines of the paths which
were later to become superhighways for economists,
econometrics, formalization and the paradigm of the
rational actor.5
However, even though the defeat suffered by development economics, as Krugman notes,6 was not
so much empirical or ideological as methodological
(because this branch of economics became dominated by a discursive and non-mathematical style at a
time when formalization was advancing rapidly in all
the other branches), Hirschman fully accepted his intellectual exile. His marginalization from this discipline similar to that of some other development
economists, such as Myrdal, for example was voluntary: Hirschman simply opted out. He ceased to
run along the superhighway (which he had travelled
at one time) and left it to travel along other paths and
enjoy scenery which was not as smooth and level as
that of the mathematical formalizations but was
much more colourful, with its economic aspects enriched by political and moral dimensions, and vice
versa.
5 For an epistemological analysis of this evolution towards
growing formalization, see McCloskey, 1994.
6 See Krugman (1994 and 1992). See also Hirschmans own essays on the evolution of development economics (especially
Hirschman, 1981b).

Returning to the origins of political economy, to

Adam Smith before The Wealth of Nations, when he
wrote The Theory of Moral Sentiments,7 Hirschman
constantly insists in his work on the changes in individuals preferences, sounding their passions and interests (Hirschman, 1991) and their propensities to
mobilize in common causes and undertake collective
action or, on the contrary, to withdraw into the private sphere (Hirschman, 1982). The topography of
economic science, as reflected each year in the
award of the corresponding Nobel Prize, indicates
that this type of actor, who recurs throughout
Hirschmans work, may be having better luck now
(or at least not being so completely forgotten). Economists like Ronald Coase and his theory of transaction costs, Douglass North and his economic
institutionalism, or Amartya Sen and his economic
ethics represent a type of actor closer to that defended by Hirschman than to that preferred by
Becker.8 Likewise, in the area of international political economy or development economics, studies are
now coming out which combine esprit de gometrie
with esprit de finesse and, as Hirschman would say,
complicate the economic discourse. One example,
among many others, is that of the studies of Rodrik.9
7 Smith, 1976 (originally published in 1759). As Ronald Coase
(Coase, 1976, pp. 545-546) says in one of his essays, it is a mistake to believe that Adam Smith saw mankind as an abstraction,
as an economic man whose only aim is to pursue his own interest: Smith would not have considered it reasonable to treat a
man simply as a maximizer of rational benefits. Curiously
enough, this work by Smith was less successful and less
well-known than The Wealth of Nations. For example, its translation into French has been out of print since 1860, when the
translation made in 1789 by Sophie de Grouchy, Marquise de
Condorcet, was republished.
8 Amartya Sen, in particular, expounded at length throughout his
work on his concept of the economic actor, criticising the neoclassical and utilitarian view of actors as rational fools in a very
well-known article (Sen, 1977); see also Sen, 1987. A more
classical view of the economic actor may be found, for example,
in Gary Beckers speech when he received the Nobel Prize
(Becker, 1996) and in Stigler and Becker, 1977.
9 See, for example, the most recent essays by Rodrik (1998a) or
the studies assembled in Sturzenegger and Tommasi (eds.),
1998.

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III
From being a good revolutionary
to a good liberal?
What is beyond any doubt is that during the lost decade Hirschmans work won a special cachet, particularly in Latin America and among academics and
development operators in general.
From the 1980s on, there are abundant tributes
to his work: tributes which in no way represent a
form of totemization of his figure, as Foxley,
McPherson and ODonnell (1986) make clear in the
introduction to their book on Hirschmans thinking.
Indeed, when there were attempts at totemization,
Hirschman himself energetically rejected them, as he
did in his address at the meeting held by the World
Bank in the early 1980s to pay homage to the pioneers of development.10 In April 1984, a congress devoted entirely to Hirschman was organized in the
University of Notre Dame. In November 1989, with
the support of the IDB, another international congress
was held at the Instituto Torcuato di Tella, in Buenos
Aires, which issued an invitation to rethink development strategies in the light of Hirschmans thinking.11 Other meetings followed, such as those at
ECLAC, or at MIT, where an important meeting of
economists was held to re-examine development experiences in the light of his work.12
These (re-)encounters were also sometimes expressions of gratitude not only for the work of a
thinker but also for the efforts made by a man who
devoted time and energy, in the most difficult moments of the military dictatorships, to supporting
Latin American democrats and the intellectuals and
institutions of the region. With the return of democracy to Latin America, many of those intellectuals
likewise returned to leading political and economic
positions. For this reason, this rediscovery of

Hirschman in the 1980s is not only something which

is important from the point of view of the history of
ideas, but also from that of the practical application
of political economy. Many of those intellectuals
who took the opportunity to express their gratitude to
Hirschman and the debt they owed to him did indeed
become ministers or even presidents of newly democratic republics in the late 1980s and the 1990s.
Among those who participated in some of the meetings in question were, for example, the former Minister of Finance of Chile and now Senator, Alejandro
Foxley, and the important Brazilian personalities
Fernando Henrique Cardoso (now President of
Brazil), Pedro Malan (Minister of Finance) and Jos
Serra (Minister of Health): the last-named person
was a research assistant of Hirschman in the Institute
for Advanced Studies in Princeton, while he was
completing his Doctorate at Cornell University.
During the lost decade Latin America nevertheless gained something that was very valuable.
Thus, the continent underwent a conversion to
possibilism.13 Sometimes voluntarily and deliberately, but other times without knowing or wanting it,
like Monsieur Jourdain in Molires play, economic
policies became eminently pragmatic. Chile, perhaps
more than any other country, is a good illustration of
this great transformation in Latin America. That
country went through a torrent of paradigms, moving from a revolution in liberty to a socialist revolution and then changing once again to a liberal
revolution. As from the 1980s, however, economic
policies became more pragmatic, and the country
built up a store of heterodox approaches. Like
other countries of the region, Chile did not in fact
move from the paradigm of the good revolutionary
to that of the good liberal: what sank into crisis in
the 1980s was precisely the policy of the impossi-

10

Especially when those attempts were based on erroneous interpretations of his theories (Hirschman, 1984, p. 104 et seq.).
11 All these meetings gave rise to essays which were collected
in Foxley, McPherson and ODonnell (eds.), 1986, and in Teitel
(ed.), 1992.
12 This meeting gave rise to a publication which has already
been mentioned earlier (Rodwin and Schn (eds.), 1994).

13 For a defence and illustration of this theory, see Santiso

(1997).

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ble the idea of promoting economic policies formulated and implemented on the basis of intangible
macro-paradigms.
Thus, in the early 1980s the land of the Chicago
Boys, which had been presented as the lair of
neoliberalism in the region, nationalized its banks
and thereby patently illustrated Hirschmans idea of
the unintended consequences of human actions and
the importance of possibilism in economic policy. As
Carlos Daz-Alejandro wrote with regard to that period, the clearest example of this paradox is Chile,
which, though guided by capable economists committed to laissez-faire, has shown to the world a path
which is more in the direction of a de facto socialized banking system. Argentina and Uruguay display

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similar tendencies, which are also clearly discernible

in other developing countries (Daz-Alejandro,
1986). Years later, when the Chicago Boys stepped
down with the fall of the military regime, the new
authorities in Chile, instead of repudiating the economic legacy of that regime in the field of economic
engineering and reform, have continued to combine
privatization with regulation and openness to trade
and capital flows with controls on capital (through
the famous system of compulsory reserves which
was eliminated in 1998, when everybody was pointing towards that model as the way to go in order to
prevent contagion with financial crises),14 thus toning down the idea of growth with equity in line with
possibilism.

IV
A passion for the possible
We could give many more examples of this turn towards possibilism which has taken place and continues to take place in the region. As Hirschman
himself said in his last essay, on the evolution of development economics in Latin America (illustrating
his ideas with examples from Argentina, Brazil and
Chile): In an earlier article, I talked about contrasting switches from one set of beliefs to another. This
time I am concerned with a more fundamental, if less
easily defined, shift from total confidence in the existence of a fundamental solution for social and economic problems to a more questioning, pragmatic
attitude from ideological certainty to more
open-ended, eclectic, skeptical inquiry (Hirschman,
1987).
The fact that Hirschmans work has now taken
on renewed importance is due precisely to the fact
that a very profound change has taken place in Latin
America in the last few decades. The ideological disarmament which culminated with the fall of the
Berlin Wall in 1989 also brought into question a certain cognitive style which was particularly clear in
the discussions and actions for promoting development, especially in Latin America: a style described
by Hirschman in his essays (on the basis of his observations of concrete cases in Brazil, Colombia and
Chile in the late 1950s and early 1960s) as
rupturist and centered essentially on glimpsing re-

ality through a prism of paradigms: a non- incremental style of political economy made up of repeated
failed attempts which gave rise to a complex of failure and a leaning to pessimism, an obsession with
failure which it was sometimes sought to overcome
through ideological escalades involving what
Hirschman called la rage de vouloir conclure (an
urge to get things finished): attempts to speed up development through pseudo-creative answers, integrated, definitive and rapid solutions which took no
account of possible cumulative sequences or the lessons of experience.15
The magic key for opening the door of the paradise of development was never found, possibly because for many years the idea was to find a single
master key that would open all doors. An attempt
was made to apply the same recipe sweet or savoury, depending on the culinary fashion of the moment to all the countries of Latin America, in
accordance with the guiding light being emitted by

14

With regard to these economic policies in particular, see Edwards and Lederman (1998), and with specific regard to controls on capital, see Edwards (1998).
15 See the masterly essay Problem solving and policy-making:
A Latin American style? (Hirschman, 1963b).

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some far-off economic lighthouse of the North, and

to serve all the countries of the continent the same
highly ideologized dishes, originally warmed-up in
some distant American or European university:
dishes that were successfully and cunningly reheated
on numerous occasions for the more tropical or
mountainous climes of Latin America.
There are no absolutely suitable development
sequences: some are simply worse than others, depending on the local context. There are no systematic
links between political democracy and economic development,16 nor global laws of change which are

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valid for all. Perhaps it would be better, adds

Hirschman, to eschew supposedly ideal sequences
and opt instead for a type of reformism which is not
only cumulative but also adaptive: looking for uniform solutions to development problems invariably
leads us astray; this is so for the imperatives of simultaneity and sequentiality alike, for the insistence
on integrated planning as well as for the injunction to
postpone certain tasks in the name of one thing at a
time. With this conclusion I can lay claim to at least
one continuity in my thought: the refusal to define
one best way (Hirschman, 1990).

V
A little more reverence for life
One of Hirschmans leitmotivs ever since the Strategy is that individuals and institutions become actors
in development if they participate actively in it: that
is to say, they do not only participate reactively but
also creatively. For Hirschman, the most important
thing is learning by doing. Successes and failures are
both valuable paths of learning; the obstacles standing in the way of development can become vectors to
it, and there are blessings in disguise and unintended
consequences that stem from what might at first sight
seem a failure or obstacle.17 Likewise, Hirschman argued that in some cases development can be
achieved without having predetermined objectives or
a full knowledge of how to attain them. Indeed, the
lack of knowledge can be a blessing in disguise: if
the institutions or individuals involved in development projects were aware of all the difficulties that
they would have to cope with, they would probably
decide to give up, or not even to start trying. This is
the famous principle of the hiding hand which he
proposes in one of his essays, referring indirectly to
Smiths invisible hand (Hirschman, 1967).

16 See in this respect the clear views expressed in Hirschman

(1994). For an analysis based on more quantitative data, see also
the essays by Rodrik (1998b), Przeworski and Limongi (1997)
and Barro (1996) and the important works by Alesina (1997),
Tavares and Wacziarg (1996) and Alesina and Perotti (1994).
17 These ideas were developed in an introduction to possibilism
(Hirschman, 1971d).

This explains his ongoing interest and preference for small changes and gradual transformations,
which have only come to be viewed as such because
we have got used to living in a world that favours
spot comparisons, reduces distances and compresses
time. These mechanisms enormously encourage and
amplify the obsession with failure: a kind of complex
of impotence in the face of the work to be done and
the journey to be made (Hirschman, 1981c). It also
explains his repeated insistence on greater acceptance and consideration of actual situations and experiences. In all these matters, writes Hirschman
with respect to development economics, I would
suggest a little more reverence for life, a little less
straitjacketing of the future, a little more allowance
for the unexpected and a little less wishful thinking (Hirschman, 1971c).
This involves a broader concept of who the actors in change are (not just the developers but also
the developed), with fuller and better participation
by its main beneficiaries. Studies of concrete cases
confirm the greater effectiveness of participative
programmes. According to a World Bank report on
121 projects for providing rural areas with drinking
water, the projects with a high degree of participation (21% of the total) registered levels of up to 81%
in efficacy and achievement of their objectives,
while the projects with a low degree of participation
(31% of the total) only had a level of efficacy of

18

See the examples cited by Kliksberg (1998).

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3%.18 The participative municipal budgeting project

in Porto Alegre, which has become an international
reference model, also confirms this greater effectiveness of participative projects, even when they involve large groups of people (1,300,000 persons in
this case). Community participation, in both the
identification of problems and the selection of priorities and evaluation of results, made it possible to allocate resources more efficiently. Thus, between
1989 and 1995 the coverage of drinking water supply
rose from 80% to 98% and that of sewerage systems
from 46% to 74%.19
Substantial results were also obtained in a
participative rural preventive health project carried
out in Cear (in the Northeast of Brazil) from 1987
on: infant mortality was reduced by 36% (from 102
per thousand to 65 per thousand) and the rate of coverage of vaccination rose from 25% to 90% of the
population.20 Finally, in the Villa El Salvador project
in Peru, through a major community effort it was
possible over a period of two decades to construct
much of the necessary physical infrastructure in a
settlement established on a stretch of sandy wasteland outside Lima. Altogether, the inhabitants constructed over 38,000 dwellings, 60 community
centres, a similar number of educational centres, and
41 integrated public health and educational centres.
It was also possible to reduce illiteracy drastically
to only 3.5%, which is well below the national
average.21
Another important aspect noted by Hirschman is
that it is not only the concrete obstacles to change
that prevent people from following the paths to development; in many cases it is the obstacles represented by the perceptions of change that prevent
this (Hirschman, 1971b). The obsession with reforms from above, with macro-reforms that promise
a great leap forward rather than a mere step ahead,
increases the risk of disappointment, in some cases
because the goals are hard to achieve, in other cases
because the dazzling leap forward that was announced turns into an embarrassing fall or the initial
energetic impulse gets bogged down in a mass of un-

19

For details of this experiment in participative democracy, see

the doctoral thesis by Marques (1997).
20 See, in this respect, Tendler and Freedheim (1986 and 1994)
and, in particular, Tendler (1997).
21 With particular respect to this case, see Franco (1993).

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foreseen impediments. This propensity causes a kind

of cognitive fog which covers up or blurs the authorities vision of past examples and future possibilities
not only of reforms from below but also of the
valuable lessons that can be drawn from concrete experiences. This is why it is essential not only to be
aware of past examples of successful development
but also to disseminate them, to highlight possibilities, and perhaps help in this way to self-subvert
some of our most deeply-rooted beliefs.
These considerations have some practical consequences. Firstly, dynamically involving the beneficiaries of development programmes means not only
ensuring their participation in the implementation of
the programmes but also integrating them ex ante
into the design process and ex post into subsequent
control and evaluation. Like the samba or the tango,
development is not something one can learn by correspondence. It requires a shared process of active
and retroactive learning by doing. Likewise, development cannot be danced alone: it calls for a couple
the developer and the developed who learn by
doing: they learn about themselves, about their partner, and about the action which has been outlined,
implemented and evaluated between them, so that
both of them thus increase their accumulated store of
knowledge: their savoir faire and faire savoir.
Finally, the dance of participative development also
means respecting the three steps in the participation
process: one, the preparation of the list of priorities;
two, the implementation of the sequence thus established, and three, the evaluation of the achievements,
errors and omissions. In each of these three steps
there must be discussion and negotiation between the
two partners.
Participative processes undoubtedly involve difficulties and costs: in terms of time, for example, decisions and actions may take longer. However, their
virtues outweigh these disadvantages not only from
the point of view of operational efficiency but also in
terms of economic ethics, for as the recent studies by
Alesina (1997) and Boone (1994) show, there is a
considerable waste of outside aid when there is an
increase in the number of intermediate links (Alesina
and Dollar, 1998). Ensuring greater participation by
the final beneficiaries means ensuring a form of development which really does benefit them rather than
the intermediaries. Furthermore, involving the population not only from the beginning of the project but
also from the stage of its conception and preparation
makes it possible to weigh not only its economic but

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also its political and social impact: how will outside

aid change the local political balance? how will it affect individual social capital? how may it consolidate
or, on the other hand, adversely affect the social cohesion of the community?
Secondly, making known successful examples
allows the range of possibilities to be expanded. It
makes it possible to introduce a bias for hope and to
pay greater attention to unexpected effects which
might otherwise have remained concealed, covered
by the mantle of theories and theorems. Above all,
however, making successful past experiences known
makes possible feedback in the learning process.
Cognition is also recognition. Not only should there
be external publicity, but also internal publicity, both
inward and outward, aimed both at the community of
developers and at the communities of developed.
In many cases, one learns by doing, inventing and
imitating. Making experience known means opening
up other possibilities of learning through imitation:
when one learns about other peoples experience one
can try to imitate or repeat them, to invent new
things on the basis of them, to take another step forward, to improve on what has already been done.
Both the Cear project in the Northeast of Brazil
and the Villa El Salvador project in Peru illustrate
the virtues not only of community participation but
also of cognition which is recognition knowledge

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which is acknowledged by others who come after. In

both these cases, a participative learning process was
set in motion which contained components of promotion (by the developers) and imitation (by the
developed). Above all, however, these examples
display imitative components. Both projects have received world awards: the Villa El Salvador project
received an award from UNESCO, in addition to the
Prncipe de Asturias prize, while the Cear project
received the Maurice Pat Prize from UNICEF. These
awards gave a shot in the arm both to cognition and
to recognition and raised the individual and collective self-esteem of all the participants, strengthening
their degree of involvement and encouraging other
similar actions. A major exercise of living memory
remains to be carried out in order to identify, document, review and disseminate these successful experiences and increase the stock of accumulated and
shared knowledge. This could be achieved through,
for example, the award of an international prize. As
Bernardo Kliksberg notes, the establishment of a
prize of this kind in Canada led to the submission of
68 applications. This proposal could be self-subverted by also ensuring feedback based on unsuccessful experiences, where the award would be made
for the relevance of the analysis in question or the indication of a possible solution to the problem thus revealed.

VI
Social capital, concord and discord:
the social virtues of times of
sharing and of conflict
One of the central themes in Hirschmans last essays
is that of the shifts in human actions between private
interest and public action. In a first essay, the division between the two spheres was categorically asserted. Hirschmans aim was to understand how
people passed (trespassed) from one sphere to the
other and what were the final motives of those shifts
in preferences (Hirschman, 1982). In later essays he
gradually toned down this dichotomy, ending up by
self-subverting his thesis and showing how the two
spheres could merge and combine with each other

(using in particular the example of public banquets,

as we shall see below). These last essays offer some
particularly stimulating ideas that could enrich the
current debates on social capital.
Hirschman does not mention the notion of social capital directly.22 He only mentions it on one
occasion, and that is in an essay devoted not to the

22

Indeed, this is a concept which is hard to catch in the conceptual net. See Santiso, 1998.

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virtues of cooperation but to those of social conflict.23 In his essays, Putnam stresses the virtues of
social capital such as the links of confidence that individuals forge with each other and the propensity to
cooperation and peaceful coexistence. Similarly, the
essays corroborating the existence of correlations between economic performance and the density of associative life and the confidence in themselves and in
others that individuals in different societies possess
are presented ultimately as a more elaborated version
of the old theory of le doux commerce.24
Hirschman invites us to indulge in a healthy exercise of self-subversion. It is perfectly true that horizontal or vertical links of confidence between
individuals, or between them and institutions, are essential for cementing coexistence. Likewise, as
Knack and Keefer point out, a high level of mutual
confidence allows individuals to reduce the time and
cost involved in protecting themselves against the
possible risks arising from commercial or
non-commercial transactions with others.25 However,
just like concord, discord can also foster social capital. Conflict and discrepancy, says Hirschman, may
be even more effective in creating social capital than
the peaceful cooperation referred to by Putnam, and
they may also finally be more relevant indicators of
the vitality and cohesion of a society. The secret of
vitality, writes Hirschman, of pluralistic market society and of its ability to renew itself may lie in this
conjunction (of both bargaining and arguing) and in
the successive eruption of problems and crises. [society] cannot pretend to establish any permanent order or harmony; all it can aspire to accomplish is to
muddle through from one conflict to the next
(Hirschman, 1995a).
In order to understand the mechanisms of the
creation of social capital, then, we must pay due attention to conflicts. We must discriminate between
conflicts which create such capital and those which

23

See Hirschman (1995b). In that essay he mentions Putnam

(1993). This idea of conflicts as essential factors in socialization
has also been developed by authors such as the early 20th
century sociologist Georg Simmel, who was a contemporary of
Max Weber, or the French philosopher Marcel Gauchet. See in
this respect Simmel (1995) and Gauchet (1980).
24 This theory was extensively analysed by Hirschman (1997) in
one of his most interesting essays.
25 See Knack and Keefer (1997), Alesina and Wacziarg (1998)
and Helliwell and Putnam (1999).

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destroy it; we must combine quantitative and qualitative analysis in order to measure the real importance
of this virtuous conflict, and we must take account
not only of the quantity but also the quality of conflicts. Although it is necessary to analyse in economic, political and moral terms how societies
ensure coexistence (by sharing time, for example, attending a concert or visiting a caf,26 sharing attendance at a play or sharing a coffee in a public place),
it is also necessary to gain a better understanding of
the institutions and mechanisms that regulate social
conflicts in Latin America. At the national level,
democratic regulation mechanisms are one example,
while judicial mechanisms are another. All of these
have to do with vertical confidence, between individuals and the national institutions. Attention should
also be paid, however, to the mechanisms of horizontal confidence i.e., between individuals, especially
in Latin America. In this region, as Roberto Da
Matta emphasizes in his works, special importance is
assumed not so much by the vertical confidence
mechanisms as by those governing horizontal confidence: that is to say, inter-personal, informal relations rather than institutionalized or formalized
relations (Da Matta, 1983).
Likewise, these generalizations should be
self-subverted on the basis of comparative analyses
between the different Latin American countries. The
studies on mechanisms for the regulation of trade
conflicts suggest that there are differences between
countries like Argentina, where businessmen, like

26

Although there is extensive sociological literature on coexistence, and especially on the sociological aspects of cafs, analyses in economic terms are much fewer, with the notable
exception of those by some economists such as Tibor Scitovsky.
In an admirable work, Scitovsky notes that in the so-called developed economies there is some degree of atrophy of social
capital if we measure it as time capital: that is to say, activities
involving the sharing of time. Time budget studies indicate that
between 1934 and 1996 (the period covered by the data given by
that author), the time devoted to meals in those countries went
down considerably, from 107 to 70 minutes per day, while the
time devoted to recreative strolls went down from 22 to 1 minute; Scitovsky also mentions in his study the frequency and
length of Frenchmens visits to cafs (see Scitovsky, 1976, especially pp. 161-163 and 241-245). These studies represent an
invitation to make more detailed comparative studies, in terms
of time budgeting, on the forms of cultural behaviour observed
in Latin America and perhaps thereby confirm the idea that social capital, in the sense of time capital, may be distributed
better in more traditional societies where holistic activities
predominate over individualistic ones. For an introduction to
the economic analysis of the arts, see Throsby (1994), pp. 1-29.

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those in Spain and France, prefer to settle their disputes out of court, and Colombia, where businessmen (as in the Scandinavian or English-speaking
countries) prefer judicial settlements.27 It is necessary not only at the national but also at the local

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level to gain a better understanding of how the different rules of coexistence which regulate discord
and concord and which help to create or destroy the
famous social capital are linked up, assimilated
and implemented.

VII
The economic, social and political
virtues of banquets
Although economists are agreed on the importance
of civism, confidence or respect for shared
ethical rules in order for the economy to operate
efficiently, it is not so easy to understand what actually takes place when these inputs are activated.
The learning by doing model proposed by
Hirschman and originally inspired by Arrow
(1962) allows us to reconsider this aspect, with
emphasis on the accumulative process that is set in
motion when that very special resource or capability called social capital is activated.
Just like physical, economic, financial and
also human capital, social capital can be created or
destroyed, increased or diminished. All societies
both poor and rich, both those that lack efficient
educational systems and those that do have them
possess this very special kind of capital which, unlike other forms of capital, increases with use and
diminishes if not used. Love, civism, confidence or ethical rules are not limited resources
and do not decrease with use, as also is the case of
skills, which increase when they are used. Love
or civism writes Hirschman are not limited or
fixed resources as other factors of production may
be, they are resources whose availability, far
from dimishing, increases with use (Hirschman,
1986a).28

27 With regard to the importance of legal systems for settling

business conflicts, see the pioneering comparative studies by La
Porta and Lpez de Silanes (1998).
28 Originally in French.

A particularly interesting example of the foregoing is that of banquets, whose virtues are not
only alimentary but also political and social, as
Hirschman points out in an inspired article
(Hirschman, 1997). Banquets allow him to
self-subvert his idea of the clear and categorical
difference between the public and private spheres,
while at the same time highlighting the virtuous
dynamic that they activate. Although traditionally
considered as private acts, banquets have in fact
played, and continue to play, an eminently public
role. They represent notable social acts in which it
is sometimes just as important to know who you
are eating with as what you are eating. They create
and recreate social capital and promote coexistence among their various participants; their virtues are not only civilizing according to
sociologists such as Simmel and Elias, among
others but also eminently political. The experience of sharing a meal is frequent, repeated and
lasts a certain length of time, and it allows the participants to get used to seeing each other, talking to
each other and gathering together around a table or a
barbecue, indoors or out.
Such an experience is above all an action of
time-sharing, a community action par excellence,
whose external benefits would of themselves justify some form of subversion (like those justified
by Scitovsky, as Hirschman recalls, for the benefit
of the arts). Indeed, in Ancient Greece, as banquets
were considered the maximum manifestation of social and public links, they were subsidized by
wealthy families; eating together was considered
an institution which brought out the continuing ex-

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istence of political power in democracy. Likewise, in the early years of the French Republic
banquets also had political functions and were
seen as evidence of an ethic of coexistence which
could help to consolidate a feeling of belonging
and were occasions for learning in the political
sphere.29

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Although the foregoing should not be taken as

an invitation to subsidize banquets in order to create
and recreate social capital (as Hirschman points
out, there have also been banquets which were not
virtuous at all, such as for example those held by the
Nazis), it does prompt one final question: how can
we ensure greater participation?

VIII
Social capital and participation.
A reinterpretation on the basis of Hirschmans
triptych: exit, voice and loyalty
Finally, the following is an interpretative exercise
based on the triptych prepared by Hirschman in the
early 1970s in his famous essay Exit, Voice and Loyalty: Responses to Decline in Firms, Organizations
and States. In that work, Hirschman seeks to understand how economic systems (firms) and political
systems (states) deal with the defection of their clients or citizens. He seeks to do so on the basis of
three possible responses by dissatisfied clients or citizens: exit (the client or citizen leaves, stops buying
the product or ceases to participate in his national
community of origin); voice (the client protests and
expresses his dissatisfaction; the citizen engages in
demonstrations or organizes a strike), or the client or
citizen remains loyal in spite of everything (he sticks
with the product or continues to function as a citizen).
This interpretative model has been widely used
and re-used to explain not only economic but also
political phenomena. For example, shareholders may
very easily decide to get rid of their stocks on the
stock exchange (exit), especially when they do not

29

With regard to Ancient Greece and French Republicanism,

see Schmitt Pantel (1992) and Ihl (1996 and 1998). Not only is
it important to know what one is eating, and with whom, but
also how one is eating; the different forms of cuisine are characteristic of different types of societies, as the anthropologist Jack
Goody pointed out in Cooking, cuisine and class. A study in
comparative sociology (Goody, 1982).

have any influence on the running of the firm (corporate governance), that is to say, they have no possibility of raising their voice. The same interpretative
model also makes it possible to explain the mechanisms whereby international financial crises spread,
as we ourselves have suggested (Santiso, 1999). In
the case of a married couple, when there are facilities
for obtaining a divorce the propensity for expressing
their feelings (voice) may be less, and fewer efforts
will be made to communicate and to seek a reconciliation. On the basis of this triptych, Hirschman himself has given us an original interpretation of the fall
of the Berlin Wall, which sparked off a massive exit
from Communist systems in general (Hirschman,
1993).30 In that same study he also took the opportunity to self-subvert his initial thesis, demonstrating in
particular that in this case exit and voice are not
strictly contradictory phenomena or mutually exclusive responses, but adaptive or reactive responses
which can be combined or even strengthen each
other.
This analytical scheme can also be applied to
many of the problems that arise in the field of development. The dilemma is always the same: how to
foster loyalty when, for example, trying to introduce
participative models. One of the most important aspects is that of encouraging the beneficiaries to ex-

30

For other examples, see Hirschman, 1981a and 1986b.

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press their views (voice), both in the formulation of

participative programmes and in their implementation and evaluation. In this way it is possible to reduce the likelihood of exit, i.e., the likelihood of
failure and defection. The key lies in creating a
mechanism which makes it possible to strengthen
loyalty and confidence and thus ensure more and
better participation. As Hirschman says, fostering
voice is not an easy matter: it usually costs more
than exit in terms of time, effort and money. Only in
configurations where there is a high level of loyalty
can voice be less costly than exit, when the latter
means giving up the essence of ones own identity.
At all events, voice is preferable to exit, however.
Favouring voice in participative programmes makes
it possible, throughout the three steps of the dance,
to collect more information on the real needs of the
beneficiaries of such programmes and to ensure
better execution and evaluation of the programme by
favouring immediate feedback.
This analytical scheme is particularly important
for going more deeply into a problem currently encountered when dealing with development. In a globalized, interconnected world in which frontiers are
much less clearly marked than before, differences in
standards of living stand out even more vividly: even
in the remotest villages in the Mayan reserve of Sian
Kaan, for example, the inhabitants are aware
through some satellite that there is something more
out there in the world. The satellite dishes are continually and insistently focussed on that outer space.
Although exit phenomena (migrations) were always
important factors, nowadays the challenge of the
brain drain is even greater. Latin America, for example, has gone from a situation where it was a recipient of immigrants to one where it is suffering from
massive emigration, especially of its most highly
qualified citizens. In other words, it is losing its most
vital forces of human and social capital, especially in
the case of Central America.
A recent study by the International Monetary
Fund shows that emigrants from those countries to
the United States tend to be more highly qualified
than the national average of their countries of origin.
Generally speaking, the rates of emigration of highly
qualified inhabitants from the countries of Latin
America and the Caribbean are high (generally over
10% and in some cases even over 50%). The country
with the biggest brain drain is Guyana, where over
70% of the inhabitants with higher (tertiary) educa-

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tion have gone to the United States. It is followed by

Trinidad and Tobago (60%), El Salvador (26%),
Panama (19.5%), Nicaragua (19%), Honduras
(16%), the Dominican Republic (14%) and Guatemala (13.5%). Mexico and Colombia also register
substantial rates (10.5% and 6%, respectively, in
contrast with the rates for Argentina, Chile and Uruguay, which are 2%, 3.5% and 4% respectively
(Carington and Detragiache, 1998).
In the field of education, as the last report by the
Inter-American Development Bank shows, this
Hirschmanian reading of the situation suggests that
there are difficulties in terms of exit, voice and loyalty.31 The studies show that the high-income families avoid using public education. In these higher
income groups, only 40% of their children, and in
some countries as little as 25%, attend public
schools. There are cases of forced withdrawal from
school, such as those caused by financial crises or
macroeconomic shocks, which lead to a serious loss
of human capital by obliging young people to enter
the labour market before their time (premature exit
of students) or by causing the dismissal of workers
and thus depriving firms of the capital represented by
the workers accumulated knowledge (exit from the
labour market) (see Mrquez, 1998).
Here, as in the examples given earlier, a central
aspect is the need to give voice priority over exit. In
the case of education, for example, greater rights
could be given to beneficiaries in order to provide
them with opportunities to make their voices heard
and make known their dissatisfaction with the school
system and the reasons for it. The school councils set
up in El Salvador, Nicaragua, Brazil and Bolivia are
an example of a possible response to this, as they ensure the participation of parents by giving them responsibilities that extend from the election of
directors to the management of financial resources
and participation in mechanisms for the evaluation of
the teaching staff. Likewise, at the level of higher education, participative systems could be established
for the involvement of students in the process, especially in the evaluation of professors and of proposed

31 The following examples are taken from the Inter-American

Development Banks 1998-1999 report on economic and
social progress in Latin America (IDB, 1998, pp. 57, 109 and
142 et seq.).

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study programmes, while taking a number of precautions to ensure that there is no involuntary
self-subversion of the purpose of these evaluative
mechanisms.
The analysis could be self-subverted by noting
that in many cases the problem is not to prevent peo-

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ple from leaving but rather to favour their entry. For

example, measures could be taken to promote the incorporation of micro-entrepreneurs into credit markets (through micro-credit banks, among other
initiatives) or to promote the entry of women into
stable labour markets.

IX
Conclusion
In dealing with the multiple and complex problems of
development we have learnt that we must fashion
generalizations at all kinds of ranges and be deaf, like
Ulysses, to the seductive chant of the unique paradigm
Albert Hirschman (1995a)
As we have tried to show here, Hirschmans works
encourage us to review the road ahead and the paths
already travelled in the light of practical experience.
The distribution of income and wealth is very unequal in Latin America, as noted in the IDB report,
which calls upon us to take advantage of the demographic opportunities existing today in order to speed
up development.
The regions achievements in terms of structural
change contrast sharply, however, with the uneven
progress made in the solution of these distributional
disparities. The structural reforms which have been
made have succeeded in synchronizing the clocks of
the Latin American countries with world time. Many
inhabitants of the region, however, still lack the minimum instruments needed for taking advantage of
that synchronization, in terms of education, health
and income. The 1990s brought surprising structural
achievements, with far-reaching reforms, but they
were also years of brutal crises, with growth rates
that did not benefit all sectors of the Latin American
population alike. The most amazing feature has been
the tolerant attitude of the sectors whose situation did
not improve.
Perhaps this is yet another example of the tunnel
effect, which we want to overcome. As long as people are in the tunnel of underdevelopment but have

some reason to hope that they may eventually

emerge from it, because they know that some passengers have done so, moving up from economy to
business class in other words, as long as there are
mechanisms for rising socially the tunnel effect
works and the capacity for tolerating inequality may
be very great. That capacity for toleration may be
eroded, however, if the end of the tunnel is never
reached and there are no more cases of moving up
from economy to business class. As long as the tunnel effect lasts writes Hirschman, everybody
thinks they are doing better, both those who have got
rich and those who have not.But this tolerance is a
loan which eventually expires. It is granted in the expectation that, with time, the disparities will grow
smaller. But if this does not happen there will undoubtedly be problems and maybe even disaster
(Hirschman and Rothschild, 1973).
It may be that the tunnel effect is wearing off in
Latin America. It may also be that this will not lead
to disaster. Once again it will be necessary to invent
and imagine forms of trespass and self-subversion
and to keep on searching, with curiosity and humility, ignoring like Ulysses the sirens insistent song.
In order to do this, it will not be enough merely to
put wax in our ears. Perhaps what we will really
need is a bias for hope and a little more reverence for
life.
(Original: Spanish)

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