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

LACHMANN’S POLICY ACTIVISMinvestment opportunities actually owe their existence to the failure ofpast capital combinations to achieve the purposes for which they weredesigned’ (1956:9–10).8 Kirzner (1966) provides an overview of the basic conceptual issues ofconcern in alternative formulations of capital theory. Also see Lewin(1994).9 This, of course, is the theme of Hayek’s Nobel Lecture, The pretense ofknowledge’ (Hayek 1974).10 Of course, this analysis minimises or denies that the very subjectivismof expectations that makes speculative markets suspect as coordinatingdevices should be generalised to confront policy makers aswell. In Austrian analysis it is often argued that questions of incentivescannot legitimately be separated from questions concerningknowledge acquisition. For the sake of argument, however, we assumethat one can address these questions separately. Public choice theory,for example, often assumes perfect information on the part ofgovernment officials, but then asks the analyst to consider theincentive system. Austrians, on the other hand, typically assumebenevolence on the part of policy makers, but then examine thedifficulties of information acquisition. A full-blown theory of policymaking would have to account for both information and incentives,but the usefulness of intellectually isolating these problems andexamining the implications cannot be denied.11 It is for precisely this reason that the principle of charitableinterpretation is inapposite in this case—the policy conclusions inCapital and Its Structure (Lachmann 1956) and elsewhere run againstthe grain of what we know to be the knowledge-theoretic thrust of theLachmannian research programme. There can be little question butthat we are engaged in immanent criticism of Lachmann and find hisconclusions wanting.ReferencesGarrison, R. (1986) ‘From Lachmann to Lucas: on institutions,expectations, and equilibrating tendencies’, in I.M.Kirzner (ed.)Subjectivism, Intelligibility, and Economic Understanding: Essays inHonor of Ludwig M. Lachmann on His Eightieth Birthday, New York:New York University Press, pp. 87–101.——(1994) ‘Interview’, in B.Snowdon, H.Vane and P.Wynarczyk AModern Guide to Macroeconomics: An Introduction to CompetingSchools of Thought, Aldershot, UK: Edward Elgar Publishing, pp. 383–97.Hayek, F.A. (1974) ‘The pretense of knowledge’, in New Studies inPhilosophy, Politics, Economics and the History of Ideas, Chicago:University of Chicago Press (1978), pp. 23–34.Kirzner, I.M. (1966) An Essay on Capital, New York: Augustus M.Kelly.Lachmann, L.M. (1935) ‘Capital structure and depression’,unpublishedM.Sc.(Econ.) thesis, London University .——(1937) ‘Uncertainty and liquidity-preference’, in D.Lavoie (ed.)181