Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States / Edition 1

by Albert O. Hirschman

Overview

An innovator in contemporary thought on economic and political development looks here at decline rather than growth. Albert O. Hirschman makes a basic distinction between alternative ways of reacting to deterioration in business firms and, in general, to dissatisfaction with organizations: one, “exit,” is for the member to quit the organization or for the customer to switch to the competing product, and the other, “voice,” is for members or customers to agitate and exert influence for change “from within.” The efficiency of the competitive mechanism, with its total reliance on exit, is questioned for certain important situations. As exit often undercuts voice while being unable to counteract decline, loyalty is seen in the function of retarding exit and of permitting voice to play its proper role.

The interplay of the three concepts turns out to illuminate a wide range of economic, social, and political phenomena. As the author states in the preface, “having found my own unifying way of looking at issues as diverse as competition and the two-party system, divorce and the American character, black power and the failure of ‘unhappy’ top officials to resign over Vietnam, I decided to let myself go a little.”

Product Details

ISBN-13:	9780674276604
Publisher:	Harvard University Press
Publication date:	02/01/1972
Edition description:	New Edition
Pages:	176
Product dimensions:	5.50(w) x 8.25(h) x 0.50(d)

About the Author

Albert O. Hirschman was Professor of Social Science, Emeritus, at the Institute for Advanced Study in Princeton, following a career of prestigious appointments, honors, and awards. Perhaps the most widely known and admired of his many books are Exit, Voice, and Loyalty (Harvard) and The Passions and the Interests (Princeton).

Table of Contents

• 1. Introduction and Doctrinal Background
  • Enter “exit” and “voice”
  • Latitude for deterioration, and slack in economic thought
  • Exit and voice as impersonations of economics and politics
  
  
  
  
• 2. Exit
  • How the exit option works
  • Competition as collusive behavior
  
  
  
  
• 3. Voice
  • Voice as a residual of exit
  • Voice as an alternative to exit
  
  
  
  
• 4. A Special Difficulty in Combining Exit and Voice
• 5. How Monopoly Can Be Comforted by Competition
• 6. On Spatial Duopoly and the Dynamics of Two-Party Systems
• 7. A Theory of Loyalty
  • The activation of voice as a function of loyalty
  • Loyalist behavior as modified by severe initiation and high penalties for exit
  • Loyalty and the difficult exit from public goods (and evils)
  
  
  
  
• 8. Exit and Voice in American Ideology and Practice
• 9. The Elusive Optimal Mix of Exit and Voice
• Appendixes
  • A. A simple diagrammatic representation of voice and exit
  • B. The choice between voice and exit
  • C. The reversal phenomenon
  • D. Consumer reactions to price rise and quality decline in the case of several connoisseur goods
  • E. The effects of severity of initiation on activism: design for an experiment (in collaboration with Philip G. Zimbardo and Mark Snyder)
  
  
  
  
• Index

What People are Saying About This

I read Exit, Voice, and Loyalty with absolute fascination and found that it pulled together, in organized form, many random glimmerings that I had previously understood only dimly.

Carl Deutsh

Some leading economists have moved toward a more explicit consideration of political problems. Albert O. Hirschmann's book Exit, Voice, and Loyalty will prove, I believe, an outstanding contribution…to political theory.
—(Carl W. Deutsh, Past Presidential Address to the American Political Science Association)

Joseph Kraft

I read Exit, Voice, and Loyalty with absolute fascination and found that it pulled together, in organized form, many random glimmerings that I had previously understood only dimly.

Stanley Hoffmann

There is, of course, no substitute for a mind that's as original, playful, subtle, and fresh as Hirschmann's.

Kenneth J. Arrow

Professor Hirschman's small book is bursting with new ideas. The economist has typically assumed that dissatisfaction with an organization's product is met by withdrawal of demand, while the political scientist thinks rather of the protests possible within the organization. Hirschman argues that both processes are at work and demonstrates beautifully by analysis and example that their interaction has surprising implications, a theory that illuminates strikingly many important economic and political phenomena of the day. The whole argument is developed with an extraordinary richness of reference to many societies and cultures.

John Kenneth Galbraith

This is a marvelously perceptive essay which illuminates some of the most interesting economic and social questions of our time. I have read it with enormous interest and admiration, and the further pleasure that one has in being with an author who can think things through.

Editorial Reviews

This is an imaginative little book. Its message should be of use to economists, political scientists, and all those interested in policy questions related to these areas. Hirschman starts his argument by assuming that in time all organizations (firms, bureaus, political parties, governments, and so on) develop slack and experience a deterioration in the quality of their output. The clients of a declining organization have two options for reversing this trend: exit and voice. And much of the book is devoted to an explication of the ways in which these options operate, their relative advantages and weaknesses, the interdependence between them… It is in these discussions of current problems and institutions, however, that I find the book most rewarding. His basic point, that there exists a symbiosis between exit and voice, is certainly valid and significant. Its importance gets driven home by the way Hirschman applies the idea to various current issues. One emerges from the book feeling he has obtained a new analytic insight into policy questions which can be applied again and again.

Public Policy - Dennis C. Mueller

One of the masterpieces of contemporary political thought.

New Yorker - Malcolm Gladwell

Professor Hirschman’s small book is bursting with new ideas. The economist has typically assumed that dissatisfaction with an organization’s product is met by withdrawal of demand, while the political scientist thinks rather of the protests possible within the organization. Hirschman argues that both processes are at work and demonstrates beautifully by analysis and example that their interaction has surprising implications, a theory that illuminates strikingly many important economic and political phenomena of the day. The whole argument is developed with an extraordinary richness of reference to many societies and cultures.

Kenneth J. Arrow

This unusual and subtle book is…an exercise in interdisciplinary analysis focused on the interaction between market and non-market forces affecting the process of development and decline… Professor Hirschman develops a theory of loyalty as a key factor in the interaction between voice and exit: loyalty is shown to postpone exit and to make voice more effective through the possibility of exit.

The Economic Journal

There is, of course, no substitute for a mind as original, playful, subtle, and fresh as Hirschman’s.

Stanley Hoffmann

Hirschman’s work changes how you see the world. It illuminates yesterday, today, and tomorrow… His most important [book].

New York Review of Books - Cass R. Sunstein

A 126-page burst of lucidity… [Hirschman’s] masterwork.

Wall Street Journal - Roger Lowenstein

I read Exit, Voice, and Loyalty with absolute fascination and found that it pulled together, in organized form, many random glimmerings that I had previously understood only dimly.

Joseph Kraft

This is a marvelously perceptive essay which illuminates some of the most interesting economic and social questions of our time. I have read it with enormous interest and admiration, and the further pleasure that one has in being with an author who can think things through.

John Kenneth Galbraith

One of the masterpieces of contemporary political thought.

New Yorker - Malcolm Gladwell

One of the masterpieces of contemporary political thought.
— Malcolm Gladwell

New Yorker

This is an imaginative little book. Its message should be of use to economists, political scientists, and all those interested in policy questions related to these areas. Hirschman starts his argument by assuming that in time all organizations (firms, bureaus, political parties, governments, and so on) develop slack and experience a deterioration in the quality of their output. The clients of a declining organization have two options for reversing this trend: exit and voice. And much of the book is devoted to an explication of the ways in which these options operate, their relative advantages and weaknesses, the interdependence between them… It is in these discussions of current problems and institutions, however, that I find the book most rewarding. His basic point, that there exists a symbiosis between exit and voice, is certainly valid and significant. Its importance gets driven home by the way Hirschman applies the idea to various current issues. One emerges from the book feeling he has obtained a new analytic insight into policy questions which can be applied again and again.
— Dennis C. Mueller

Public Policy

This unusual and subtle book is...an exercise in interdisciplinary analysis focused on the interaction between market and non-market forces affecting the process of development and decline...Professor Hirschman develops a theory of loyalty as a key factor in the interaction between voice and exit: loyalty is shown to postpone exit and to make voice more effective through the possibility of exit.

Economic Journal