Hirschman’s Hiding Hand

Here’s a little story from Hirschman’s biography. It’s a perfect illustration of his idea that one should not be fixated by potential challenges.

One evening he went to a dinner party in Santiago. Wishing to catch up with Véliz, who’d recently returned to Chile, Hirschman asked his hosts for Véliz’s phone number. The host didn’t have it and dismissed the telephone book as a list of numbers for people who had died or left the country. Everyone laughed and enjoyed the meal. The next morning, in his hotel, Hirschman spied the phone directory in his room. Curious, he looked up Véliz, dialed the number, and quickly found the voice of his friend at the other end of the line.

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On the same theme, here’s an excerpt from Malcolm Gladwell’s review of the biography:

“The Principle of the Hiding Hand,” one of Hirschman’s many memorable essays, drew on an account of the Troy-Greenfield “folly,” and then presented an even more elaborate series of paradoxes. Hirschman had studied the enormous Karnaphuli Paper Mills, in what was then East Pakistan. The mill was built to exploit the vast bamboo forests of the Chittagong Hill Tracts. But not long after the mill came online the bamboo unexpectedly flowered and then died, a phenomenon now known to recur every fifty years or so. Dead bamboo was useless for pulping; it fell apart as it was floated down the river. Because of ignorance and bad planning, a new, multimillion-dollar industrial plant was suddenly without the raw material it needed to function.

But what impressed Hirschman was the response to the crisis. The mill’s operators quickly found ways to bring in bamboo from villages throughout East Pakistan, building a new supply chain using the country’s many waterways. They started a research program to find faster-growing species of bamboo to replace the dead forests, and planted an experimental tract. They found other kinds of lumber that worked just as well. The result was that the plant was blessed with a far more diversified base of raw materials than had ever been imagined. If bad planning hadn’t led to the crisis at the Karnaphuli plant, the mill’s operators would never have been forced to be creative. And the plant would not have been nearly as valuable as it became.