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

ROGER KOPPL AND GARY MONGIOVILachmann’s radical subjectivism led him to oppose ‘late classicalformalism’ and what he called the ‘Neo-Ricardiancounterrevolution.’ Lachmann coined the term late classicalformalism’ in 1971 to characterise neoclassical economists who had‘adopted an arid formalism as their style of thought, an approachwhich requires them to treat the manifestations of the human mindin household and market as purely formal entities, on par withmaterial resources’ (Lachmann 1971a:181). This formalism,Lachmann argued, had drained the theory of any value. The theory‘has nothing to say’ when ‘confronted with real problems’ (ibid.:182). He quotes Mises’s diagnosis that the theory is ‘A superficialanalogy…spun out too long, that is all’ (ibid.: 182). Lachmann’ssumming up is scathing: ‘From Walras to Samuelson we find thesame manner of reasoning, the same arbitrary assumptions, thesame unwarranted conclusions’ (ibid.: 189).Lachmann’s radical subjectivism led him to criticise the ‘Neo-Ricardian counterrevolution’. As Lachmann used the term, ‘Neo-Ricardianism’ identified the Cambridge followers of Piero Sraffaand Joan Robinson, the UK side of the Cambridge-Cambridgecontroversy. Lachmann did not carefully distinguish KeynesianCambridge economists from Sraffian Cambridge economists, acurious lapse in view of the important methodological differencesthat distinguish the two traditions. His criticisms relate, in any case,mainly to the Sraffian branch, and were directed at what heregarded as its excessive formalism, at its attachment to the conceptof equilibrium, and at its emphatic rejection of subjectivism: ‘A styleof economic thinking in which there is no place for humanpreferences, let alone time preferences, is hardly acceptable to theheirs of Menger’ (Lachmann 1977:29). Nevertheless, he didrecognise some points of common ground between Austrian andSraffian criticisms of orthodoxy, in particular concerning theinadequacy of the neoclassical treatment of capital as a valueaggregate;but of course he differed with the Sraffians on howeconomic theory might be reconstructed to avoid capital-theoreticproblems.For Lachmann ‘it is intelligibility and not determinateness thatsocial science should strive to achieve’ (Lachmann 1943:68). Wemust take account not only of the ‘subjectivism of wants’ (that is,preferences), but also the ‘subjectivism of interpretation’. Theproper aim of economic theory, then, is to make events intelligibleby showing why, in a given episode, a set of facts were interpreted byagents in a particular way.6