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

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INTRODUCTIONits deep insight and meticulous argument. Trained in both sociologyand economics, Csontos had an extraordinary grasp of the complexrelationship between Weber and the Austrians. In the essayposthumously published as Chapter 5 of this volume, Csontos usedhis rich understanding of Weber’s writings on the method of idealtypes to argue for a weaker version of methodological dualism thanthat adopted by Lachmann. Because Lachmann neglected Weber’sdistinction between subjectively and objectively rational ideal types,Csontos argued, he wrongly imagined his notion of ‘Plan’ to be adeparture from Weber’s ideal type. The notion of ‘intentionalexplanation’ covers all these cases and brings Lachmann’s notion ofPlan back under the umbrella of cause and effect. The logical structureof explanation is just about the same in the natural and social sciences.Drawing on his earlier work with Victoria Chick, Maurizio Casertain Chapter 6 develops the idea of ‘provisional equilibrium’ (Chickand Caserta 1994). This concept is an attempt to address the problemof novelty. ‘As soon as we permit time to elapse we must permitknowledge to change,’ Lachmann argued, ‘and knowledge cannotbe regarded as a function of anything else’ (Lachmann 1959:92). InLachmann’s system the flow of time and novelty implied that marketequilibrium is at best fleeting. Through the device of partialspecification, however, provisional equilibria can be defined. Theseequilibria are provisional because they may be upset by factors thatare internal, but not fully specified. Caserta illustrates with an openeconomymacroeconomic model.In Chapter 7, Carlo Zappia uses Karen Vaughn’s recent survey ofAustrian economics as a springboard for a critical assessment of trendswithin the school. Vaughn’s book, Austrian Economics in America:The Migration of a Tradition, is an internal history of the Americanrevival of the Austrian school told by one of its most importantleaders. Vaughn concludes her survey with an endorsement ofLachmann’s ‘clarion call’ to build from a more radical subjectivismof real time and incomplete knowledge. Zappia ranges beyond theself-imposed limits of Vaughn’s survey to encourage Austrians toincorporate the ideas of such figures as Bowles and Gintis. Unlikemost Austrians, who distinguish ‘information’ from ‘knowledge’ (see,for example, Thomsen 1992), Zappia argues that a carefulconsideration of the economics of information greatly weakensAustrian arguments against equilibrium models.Steven Horwitz in Chapter 8 unites Lachmann’s two mostimportant book-length essays: Capital and Its Structure (1956) andThe Legacy of Max Weber (1971b). Horwitz draws on the Austrian9
ROGER KOPPL AND GARY MONGIOVItheory of capital to criticise lingering elements of objectivism inLachmann’s account of institutions. We often recognise a kind ofhierarchy among institutions that puts some in the background ashigher-order and unchanging and others in the foreground as lowerorderand subject to change. This hierarchy, however, is entirely‘subjective’. Which institutions are background depends on theproblem at hand and the perspective adopted. No one ‘true’ hierarchyexists. Horwitz illustrates with the history of banking. Institutionalchanges have come about through a kind of dialectic between legaland market institutions. During this dialectic, each set of institutionshas been background to the other. The whole institutional structureis characterised by the kind of complementarities and multispecificitydiscussed in the Austrian theory of capital.Lachmann has sometimes been called an ‘Austro-Keynesian’. InChapter 9, Peter Boettke and Steven Sullivan ask if such a positioncan be maintained consistently. Can one advocate radical subjectivismin economic method and Keynesian interventions in economic policy?Drawing, in part, on Lachmann’s 1935 MSc thesis, ‘Capital Structureand Depression’, they show that such a position was adopted byLachmann. They argue, however, that a non-interventionist policypreference is more consistent with radical subjectivism.In Chapter 10, Jochen Runde and Jörg Bibow enrich Lachmann’sanalysis of the influence of expectations on share prices. Lachmann’stheory, as developed in Chapter 2 of his Capital and Its Structure(1956), concerns the role of divergent or convergent expectationsabout the value of a financial asset. Drawing on J.M.Keynes andE.M.Miller, Runde and Bibow distinguish between the expectationof a share’s future price and the appraisal of its ‘correct’ value.Liquidity, carrying costs, risk aversion and estimates of the riskaversion of others are just some of the complicating factors drivingthis distinction.Each chapter responds to Lachmann’s work in a different andchallenging way. We submit them to the reader in the hope that heor she will share our enthusiasm for them. We hope the reader willalso share our continually enriched appreciation of the ideas of oneof the most impressive scholars we have been privileged to know,Ludwig Lachmann.AcknowledgementsThe editors wish to express their gratitude to Don Lavoie, whoprovided the photograph of Professor Lachmann, which appears in10
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MISES AND LACHMANN ON HUMAN ACTIONc
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4LACHMANN ON THESUBJECTIVISM OF ACT
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THE SUBJECTIVISM OF ACTIVE MINDSThe
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THE SUBJECTIVISM OF ACTIVE MINDSsho
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THE SUBJECTIVISM OF ACTIVE MINDStha
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THE SUBJECTIVISM OF ACTIVE MINDSour
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THE SUBJECTIVISM OF ACTIVE MINDSor
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THE SUBJECTIVISM OF ACTIVE MINDSa p
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THE SUBJECTIVISM OF ACTIVE MINDSact
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THE SUBJECTIVISM OF ACTIVE MINDSexp
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THE SUBJECTIVISM OF ACTIVE MINDSLan
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SUBJECTIVISM AND IDEAL TYPESthis or
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SUBJECTIVISM AND IDEAL TYPESof Gott
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SUBJECTIVISM AND IDEAL TYPESIn the
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SUBJECTIVISM AND IDEAL TYPESsuffici
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SUBJECTIVISM AND IDEAL TYPESAccordi
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SUBJECTIVISM AND IDEAL TYPESto his
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SUBJECTIVISM AND IDEAL TYPESEconomi
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SUBJECTIVISM AND IDEAL TYPESanswer
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SUBJECTIVISM AND IDEAL TYPES1 B wan
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SUBJECTIVISM AND IDEAL TYPESconclus
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SUBJECTIVISM AND IDEAL TYPESOn the
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SUBJECTIVISM AND IDEAL TYPES——(
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ENDOGENOUS CHANGEIntroductionAmong
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ENDOGENOUS CHANGEconsequences. If,
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ENDOGENOUS CHANGEHahn’s notion of
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ENDOGENOUS CHANGEentertain theories
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ENDOGENOUS CHANGEwords, is it possi
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ENDOGENOUS CHANGEX=X (L*,X*) [1]w=X
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ENDOGENOUS CHANGEP=Wa 0+rP(K/X)wher
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ENDOGENOUS CHANGEThere is no room i
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ENDOGENOUS CHANGEmodel that Dutt ha
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ENDOGENOUS CHANGE3 The difficulty i
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7RADICAL SUBJECTIVISMAND AUSTRIANEC
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RADICAL SUBJECTIVISMdecisions under
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RADICAL SUBJECTIVISMconsidered as
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RADICAL SUBJECTIVISMnot simply enta
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RADICAL SUBJECTIVISMperformed by th
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RADICAL SUBJECTIVISMeconomic theory
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RADICAL SUBJECTIVISMAustrian resear
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RADICAL SUBJECTIVISMoutcomes of the
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RADICAL SUBJECTIVISM——(1990)
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8HIERARCHICALMETAPHORS IN AUSTRIANI
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HIERARCHICAL METAPHORScoordination
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HIERARCHICAL METAPHORSpioneering ef
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HIERARCHICAL METAPHORSbe understood
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HIERARCHICAL METAPHORSlegal order.
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HIERARCHICAL METAPHORSMany of these
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HIERARCHICAL METAPHORSBanking and t
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HIERARCHICAL METAPHORSdemand’, th
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HIERARCHICAL METAPHORS(eds) (1993);
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HIERARCHICAL METAPHORS——(1988)
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9LACHMANN’S POLICYACTIVISMAn Aust
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LACHMANN’S POLICY ACTIVISMLachman
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LACHMANN’S POLICY ACTIVISMcapital
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LACHMANN’S POLICY ACTIVISM‘plan
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LACHMANN’S POLICY ACTIVISMcapital
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LACHMANN’S POLICY ACTIVISMwithdra
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LACHMANN’S POLICY ACTIVISM…Supp
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LACHMANN’S POLICY ACTIVISMchain o
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LACHMANN’S POLICY ACTIVISMKnowled
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LACHMANN’S POLICY ACTIVISMinvestm
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10EXPECTATIONS ANDSTOCK MARKET PRIC
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EXPECTATIONS AND STOCK MARKET PRICE
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INDEXaction: individual 32-3, 38-9,
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INDEXefficient allocation/co-ordina
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INDEXmarket 119-20; theory of value
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INDEX19; stock market expectations1
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