Psychology fails to trump the multiyear, structural development plan: Albert Hirschman’s largely frustrated efforts to place the “ability to make and carry out development decisions” at the center of the development economics of the late 1950s and the 1960s

Economists in the 1950s differed on “backwardness” and how best to intervene. World Bank economists favored planning, but one dissenter, Albert Hirschman, held the conviction that the basis for success lay in a desire for change and the will to face down difficulties. In 1959 Hirschman’s approach was rejected as more psychology than economics by a leading representative of detailed plans and removing “obstacles” such as short-ages of foreign exchange and domestic savings. Ironically, RAND psychologists had just shown that team training with simulations plus daily debriefings that encouraged team input, improved performance under stress, roughly in line with Hirschman’s “psychological attitudes” and willingness to face down difficulties.

Duke Scholars

Author Neil de Marchi Economics