Subjectivism and Economic Analysis: Essays in memory of Ludwig ...

MAURIZIO CASERTAtheories are discarded. It only shows that learning and equilibriumare not necessarily incompatible.ConclusionThe fundamental proposition of this chapter is that learning andequilibrium are not incompatible ideas. This is argued starting fromHarm’s notion of equilibrium where, however, equilibrium andlearning are said to be incompatible. The argument rests on theequal treatment of economic analysts and economic agents. Just aseconomic analysts cannot afford a fully comprehensive theory of theeconomy, but need to set clear limits to what they can say in anorderly way, so economic agents form theories which cover only asubset of the messages received from the economy and nature. Noone could deny, however, that while theories are propounded andapplied by economic analysts, a process of learning is taking placeaimed at generating new and better theories. Similarly, no one coulddeny that economic agents, while using the available theories foraction, continually process information that has not yet found itsway into a theory. The question posed in this chapter is whether thisrecognition bears any relevance to the notion of equilibrium. Theanswer is that it does, and that the notion of provisional equilibriumis thus substantiated.Another question concerns the relevance of the notion ofprovisional equilibrium to the method of analysis. The answer againis in the positive. It has been argued that a method of analysis basedon a multiplicity of models or regimes proves adequate for thepurpose of fitting the creation of new theories into an analyticalframework. It must also be noticed that such an approach iscompatible with the axiom of the purposeful individual typical ofLachmann’s thinking.AcknowledgementsI wish to thank Gary Mongiovi and Roger Koppl for helpfulcomments and suggestions. However, the responsibility for theviews expressed in this chapter lies entirely with the author.Notes1 See, for example, Lachmann 1976.2 See Lachmann 1990:137.122