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

ROGER KOPPLanimated by the spontaneous activity of a free human mind.Lachmann’s recognition of this problem led him to his ‘subjectivismof expectations’ according to which expectations must be seen asneither data nor variables. They are ‘interpretations’, each one moreor less unique to the interpreting individual. Lachmann calls forthick description.The personal and interpretive quality of expectations spellstrouble for any theory of expectations. We seem to require a detailedpsychological portrait of each economic actor if we are to sayanything at all about the market process. Moreover, each actorseems to require the same sort of psychological detail in his mentalportrait of each of his fellow actors.Schutz’s discussion of anonymity shows that we do not alwaysneed to rely on a psychologically rich picture of economic actors.Both economic actors and economic analysts may sometimes forgothick description in favour of thin description. When the observer orhis subject requires reference to non-anonymous types, we may notbe able to say much about expectations. In that case the results ofthe market process will be hard to predict.In other words, the ‘Lachmann problem’ is more acute in somecontexts, less acute in others. When it is most acute, the marketprocess will be hard to fathom and economic theory of limitedpredictive value. When the Lachmann problem is least acute, themarket process will be more transparent and economic theory willhave greater predictive value.F.A.Hayek and the Lachmann problemI have argued that sometimes thin description is good enough. Thetrick is to know when. On this point, to my knowledge, Schutz issilent. Lachmann did emphasise institutions, calling them ‘nodalpoints’ to guide the individual. I think he was right about that, butthe notion of nodal points is not a very detailed analysis. I think itis fair to say that ‘radical subjectivism’ has so far failed to tell usmuch about when economic actors might get along withanonymous types.Perhaps we should not be surprised if radical subjectivism has nottold us when thin description is enough. A radically subjectivistaccount would have to run in terms of the thoughts of economicactors. What we want to know is when those thoughts employ nonanonymoustypes. But a radically subjectivist account would beobliged to begin with the thoughts of the agent. It is hard to see how72