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

SUBJECTIVISM AND IDEAL TYPESEconomists, argues Weber, take it for granted that people, ingeneral, act purposefully or intentionally. 5 This, Weber might havesaid, is a theoretically more fruitful hypothesis than (aping thenatural sciences) to conceive of human actors as puppets on thestrings of obscure psychological stimuli or of mysterious socialforces. 6Second, economists not only assume that people in general arecapable of intentional action, but they add to this the furtherassumption that people—at least in economic matters or, moregenerally, in matters relating to their own interests—do actcalculatively, that is, in this sense rationally. In Weber’s words:Marginal utility theory, in order to attain specific objects ofknowledge, treats human action as if it ran its course frombeginning to end under the control of commercialcalculation—a calculation set up on the basis of all conditionsthat need to be considered. It treats individual ‘needs’ and thegoods available (or to be produced or to be exchanged) fortheir satisfaction as mathematically calculable ‘sums’ and‘amounts’ in a continuous process of bookkeeping. It treatsman as an agent who constantly carries on ‘economicenterprise’, and it treats his life as the object of his ‘enterprise’controlled according to calculation. The outlook involved incommercial bookkeeping is, if anything, the starting point ofthe constructions of marginal utility theory.(Weber 1908:32)If individual people, in the light of everyday experience, really do actintentionally and calculatively, then in the great majority ofeconomically relevant cases, we can regard their actions as means toachieve a desired end. 7 This is equivalent to saying that we canfrequently explain individual actions and collective outcomes byreferring to the particular ends people are seeking to achieve. Wecan call explanations couched in terms of means and goalsintentional explanations of individual actions and teleologicalfunctionalexplanations of collective outcomes.In a similar vein, Lachmann suggests, ‘actors, individuals as wellas groups, pursue many purposes simultaneously and have toestablish an order of priority among them. Moreover, the manifoldconstraints imposed upon the pursuit of our ends by the scarcity ofmeans as well as by the ubiquitous presence of obstacles, actual orpotential (negative means), compels all of us to bring all our means93