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

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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
LÁSLÓ CSONTOSand ends within the framework of a comprehensive computationbefore we set out on our course of action’ (Lachmann 1971:34).The social sciences, according to Lachmann, should follow whathe calls the praxeological method. In a brief outline of the scope andnature of this method, Lachmann presents the followingcharacterisation:Human action is not determinate, but neither is it arbitrary.It is bounded, firstly, by the scarcity of means at the disposalof actors. This circumstance imposes a constraint on thefreedom of action. It is bounded, secondly, by thecircumstance that, while men are free to choose ends topursue, once they have made their choice they must adhere toit if consistent action with a chance of success is to bepossible at all. In other words, human action is free within anarea bounded by constraints. Obstacles of various kindsfurther limit the area of freedom.(Lachmann 1971:37)The praxeological method has to take these circumstances intoaccount. Causal explanation in the field of action cannot hope toattain determinateness, but this does not mean that we must giveup all hope of explanation. What we may hope to accomplish hereis to be able to show to what ends, means and obstacles humanaction is oriented. Orientation thus emerges as a concept asfundamental to praxeological study as determinateness is tonatural science (ibid.: 37).Let me try to elucidate the logical structure of the abovearguments and the logic of teleological explanations of individualhuman action with the help of a simple example. 8 Suppose weobserved the conduct of a certain individual, B, and we found, afterintentionalistically interpreting her action, that she did x, where xdenotes a particular action type or action. In other words, wesuppose that we have succeeded in giving an empirically soundanswer to a ‘What did B do?’ type of question, and the answer,astonishingly enough, turned out to be: ‘B did x.’Now suppose that, as good and curious scholars, we do not stophere, but go a step further, and decide to find out: ‘Why did B do x?’How can we answer, or, for that matter, how do economists answerthese kinds of ‘Why?’ questions? Of course, by constructing idealtypes of human action and putting forward empiricalgeneralisations, Weber replied. Lachmann, however, finds this94
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SUBJECTIVISM ANDECONOMIC ANALYSISTh
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SUBJECTIVISM ANDECONOMICANALYSISEss
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CONTENTSNotes 57References 594 Lach
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CONTENTS10 Expectations and stock m
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1INTRODUCTIONRoger Koppl and Gary M
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INTRODUCTIONdirection of Israel Kir
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INTRODUCTIONand revising plans, det
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INTRODUCTIONAs the language of Lach
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INTRODUCTIONits deep insight and me
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INTRODUCTIONthe frontispiece to thi
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SUBJECTIVISM IN ECONOMICS AND THE E
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3MISES AND LACHMANNON HUMAN ACTIONS
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MISES AND LACHMANN ON HUMAN ACTIONM
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MISES AND LACHMANN ON HUMAN ACTIONm
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MISES AND LACHMANN ON HUMAN ACTIONA
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MISES AND LACHMANN ON HUMAN ACTIONt
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MISES AND LACHMANN ON HUMAN ACTIONH
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Page 74 and 75: 4LACHMANN ON THESUBJECTIVISM OF ACT
Page 76 and 77: THE SUBJECTIVISM OF ACTIVE MINDSThe
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Page 92 and 93: THE SUBJECTIVISM OF ACTIVE MINDSLan
Page 94 and 95: SUBJECTIVISM AND IDEAL TYPESthis or
Page 96 and 97: SUBJECTIVISM AND IDEAL TYPESof Gott
Page 98 and 99: SUBJECTIVISM AND IDEAL TYPESIn the
Page 100 and 101: SUBJECTIVISM AND IDEAL TYPESsuffici
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Page 104 and 105: SUBJECTIVISM AND IDEAL TYPESto his
Page 108 and 109: SUBJECTIVISM AND IDEAL TYPESanswer
Page 110 and 111: SUBJECTIVISM AND IDEAL TYPES1 B wan
Page 112 and 113: SUBJECTIVISM AND IDEAL TYPESconclus
Page 114 and 115: SUBJECTIVISM AND IDEAL TYPESOn the
Page 116 and 117: SUBJECTIVISM AND IDEAL TYPES——(
Page 118 and 119: ENDOGENOUS CHANGEIntroductionAmong
Page 120 and 121: ENDOGENOUS CHANGEconsequences. If,
Page 122 and 123: ENDOGENOUS CHANGEHahn’s notion of
Page 124 and 125: ENDOGENOUS CHANGEentertain theories
Page 126 and 127: ENDOGENOUS CHANGEwords, is it possi
Page 128 and 129: ENDOGENOUS CHANGEX=X (L*,X*) [1]w=X
Page 130 and 131: ENDOGENOUS CHANGEP=Wa 0+rP(K/X)wher
Page 132 and 133: ENDOGENOUS CHANGEThere is no room i
Page 134 and 135: ENDOGENOUS CHANGEmodel that Dutt ha
Page 136 and 137: ENDOGENOUS CHANGE3 The difficulty i
Page 138 and 139: 7RADICAL SUBJECTIVISMAND AUSTRIANEC
Page 140 and 141: RADICAL SUBJECTIVISMdecisions under
Page 142 and 143: RADICAL SUBJECTIVISMconsidered as
Page 144 and 145: RADICAL SUBJECTIVISMnot simply enta
Page 146 and 147: RADICAL SUBJECTIVISMperformed by th
Page 148 and 149: RADICAL SUBJECTIVISMeconomic theory
Page 150 and 151: RADICAL SUBJECTIVISMAustrian resear
Page 152 and 153: RADICAL SUBJECTIVISMoutcomes of the
Page 154 and 155: 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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