Exit, Voice, and Loyalty: A Review

When capable people realize you are a loser, they will just exit. They won’t say anything. They won’t try to change you.

The opportunities you’ve missed out on? You won’t even know what you lost.

Rob Henderson writes:

I listened to an online lecture by one of my former professors about the collapse of the Soviet Union. He cited a specific book, calling it one of the top 3 most important books a student in the social sciences should read.

The title, released in 1970, is called Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States by the economist Albert Hirschman.

This is a summary and commentary on this fascinating book.

As the title of the book suggests, Hirshman aims to delineate people’s options when they are no longer satisfied with their employer, organization, or country. The two key options are exit and voice.

“Exit” means leaving the decaying organization and going elsewhere. “Voice” means expressing your discontent and trying to improve the organization.

Hirschman writes, “Under what conditions will the exit option prevail over the voice option, and vice versa?”

Generally, exit is used in economics and voice is used in politics. A dissatisfied customer of one product can purchase another (exit). A voter dissatisfied with one politician can express their unhappiness (voice) by voting for someone else.

Still, both options might be available in either domain.

An unhappy customer can call a firm or stage a boycott. A dissatisfied citizen can withdraw from the system or “change products” by moving to another country.

Voice is messier than exit. It is defined as any attempt to change, rather than escape from, an objectionable state of affairs. This can include petition, calling up the relevant authorities (manager, congressman, etc.), or protests to mobilize public opinion.

There is a continuum of voice, ranging from faint grumbling to violent rioting. Rather than just switching over to support the competition, dissatisfied members of an organization can “kick up a fuss” in an attempt to force the organization to respond…

People’s decisions to exit are often determined by the effectiveness of voice.

If organization members believe that voice works, then they’ll postpone exit. But voice relies on the threat of exit.

It’s important to understand that if you use voice, you can always exit later. But if you use exit, you’ve usually lost the opportunity to use voice—you’re no longer a member, so the organization no longer cares what you think.

So in some situations, exit is a last resort only after voice has failed.

The presence of exit can reduce the use of voice. For example, in advanced economy with many options, if we are unhappy with a product, we can switch to another. For this reason, voice is rarely used in the realm of business.

Exit can also accelerate decline. This is because, oftentimes, those who exit are the most quality-conscious and resourceful members.

Suppose that public schools deteriorate.

As a result, increasing numbers of education-conscious parents with means send their kids to private schools. Public schools might respond by improving their schools. But this response is now less effective because the public school’s most concerned and affluent parents have left.

People who care most about a product and who would be the most active and reliable members are often the first to exit in response to deterioration. They have more options—why stay?

The exit of capable and affluent people can paralyze the effectiveness that voice would have provided.

This applies to dating as well. Attractive and interesting people are more fickle because of the vast pool of options available to them. They are, relative to less desirable people, more likely to use exit (“it’s over”) rather than voice (“let’s talk this out”) in their relationships.

This also seems related to the “brain drain” phenomenon. I grew up in one of the poorest and most crime-ridden parts of California. I’m probably not moving back there. And this is occurring everywhere. Capable and curious people born into meager surroundings are opting for exit.

For voice to work—for their views to be taken seriously—they have to (or are told they have to) first graduate college.

They go off to college surrounded by similar people. It is rare for them to want to go back home after such an experience. This is happening not just in the U.S., but around the world. As travel has become easier and more affordable, more poor but capable people exit their communities in search of fulfilling economic, romantic, and social opportunities.

* Suppose you are living in a crumbling neighborhood.

Your community used to be beautiful, but now it is turning into a shantytown. Hirschman suggests, if you have the means, you may be willing to pay twice as much or more to live in a place that was as good as your neighborhood had been back when you’d first moved in.

Those who value cleanliness, safety, good schools, and so on are often the first to move out of a neighborhood at the first sign of decline. The neighborhood loses its most quality-conscious members.

* Societies with flexible class mobility are more likely to use exit (leave their surroundings) rather than voice (attempt to improve their surroundings). Which means cleavages between upper and lower classes tend to widen in upwardly mobile societies.

* Gangs are known to kill members who leave. In The Sopranos, Eugene Pontecorvo begs Tony to let him exit their criminal organization. Why didn’t Eugene simply leave without asking? Because Tony would send someone to kill him.

There is a tradeoff to raising the cost of exit, however. Eliminating exit can also suppresses voice. This is the case in totalitarian states and gangs.

Eliminating voice and exit deprives the organization of recuperating mechanisms. Any increase in organizational coercion comes with a cost in terms of the flow of information to powerholders.

* Americans have historically favored exit over voice. In fact, the U.S. owes its existence to millions of people choosing exit. The book quotes the political scientist Louis Hartz:

“The men in the seventeenth century who fled to America from Europe were keenly aware of the oppressions of European life. But they were revolutionaries with a difference, and the fact of their feeling is no minor fact: for it is one thing to stay at home and fight…it is another to leave it far behind. It is one thing to try to establish liberalism in the Old World, and it is another to try to establish it in the New.”

Hartz also wrote, “In a real sense physical flight is the American substitute for the European experience of social revolution.”

Americans prefer the neatness of exit over the messiness and heartbreak of voice, and it has “persisted throughout our national history.”

Why raise your voice and get into trouble when you can quietly extricate yourself from the situation?

The traditional American idea of social mobility is similar. The successful individual who begins at the bottom and necessarily leaves his own group as he rises into the next group.

This exit by capable people weakens the power of voice for those who they leave behind.

About Luke Ford

I've written five books (see Amazon.com). My work has been followed by the New York Times, the Los Angeles Times, and 60 Minutes. I teach Alexander Technique in Beverly Hills (Alexander90210.com).
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