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

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ENDOGENOUS CHANGEThere is no room in this world for independent investmentdecisions.In this model of a growing economy the agents who are usuallysupposed to make investment decisions are passively accepting theequilibrium rate of accumulation. Various reasons explain theirbehaviour. Here emphasis is placed on the possibility that investorshave not yet formed a theory of the growth of the economy, with theresult that they do not act on that. No theory implies no policy. Thefact that the rate of accumulation is determined as the rate thatclears the labour market shows that no theory is currentlyentertained by entrepreneurs on the variables relevant to theirpotential investment decisions, like, for example, the rate of profit.Otherwise investment decisions would be changed according tosome established behavioural function. Precisely because of theabsence of any such behavioural function, equilibrium cannot butbe provisional.If accumulation is supposed to be governed by decisions of firms,the equation linking the rate of accumulation with the rate ofgrowth of the labour force can be replaced by an equation linkingaccumulation with something more congenial to firms, such as theexpected rate of profit on invested capital. This replacement is thedistinguishing characteristic of another regime of growth, which hasa clear Keynesian flavour. The set of independent relations to beadded to the common analytical core to obtain this case is thefollowing:g s=srK/X=a 1g i=g(r)where g sand g irepresent desired saving and desired investment perunit of capital. Again we have a set of independent relations thatdetermine the usual set of five unknowns. Clearly, the addition of afurther relation requiring accumulation to be carried out at the naturalrate would overdetermine the system. Thus, this particular regimeof growth implies in the general case g¹n. It also implies thatdistribution can no longer be explained as the result of the marketclearinghypothesis. The rate of growth of employment and incomedistribution are turned into residual variables. Individual behaviourin the field of employment and income distribution is not modelledthen: the supply of labour is presented as perfectly elastic, the realwage rate is just a consequence of entrepreneurs’ investment decisions.119
MAURIZIO CASERTAWhat is left out in this regime, then, is the behaviour ofindividuals as labour suppliers. Such individuals are not supposed toreact to the endogenous rate of growth of employment or to theendogenous wage rate. No policy and hence no theory exist on thisaccount. A learning process can be assumed to be in place, however,to form such a theory. Only when the theory becomes available cana policy be developed. Again, this kind of equilibrium is necessarilyprovisional in nature.When, unlike the previous case, distribution is not allowed to beresidually determined, but is supposed to play a crucial role in thesystem, a different regime of growth is established. We then have asituation where the state of class conflict, reflected in a particularincome distribution, acts as a binding constraint on the capability ofthe system to grow over time. To see why this is the case supposethat the equation:W=W 0where W 0 represents the exogenously given real wage rate, is addedto the previous system. Since we already have five independentrelations that determine five unknowns, this additional relationwould clearly overdetermine the system. As a consequence, oneindependent relation has to be given up to make room for therelation reflecting the state of class conflict over the distribution ofincome. If the sacrificed relation is the investment function, wewould get what in the literature is known as the neo-Marxian case.Unlike the previous case, here distribution determinesaccumulation. Thus, accumulation is no longer determined by thedesire of firms to grow, but serves the interests of the class conflict.Again, as in the full-employment neoclassical case, animal spiritshave been suppressed; entrepreneurial investment propensities havenot been modelled. No policies are pursued, no theories are checkedin the light of the messages received from the economy and nature.In the cases considered so far the degree of capacity utilisationhas not figured among the variables that are determined residually.The assumption K/X=a 1has always ensured that the degree ofcapacity utilisation remains fixed at its normal level. A theory of thedegree of capacity utilisation is somehow included in the model.When that assumption is relaxed, a new regime of growth can beobtained where the degree of capacity utilisation turns into avariable to be determined endogenously. If this assumption isreplaced by another one fixing income distribution, we have a120
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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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MISES AND LACHMANN ON HUMAN ACTIONa
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MISES AND LACHMANN ON HUMAN ACTIONa
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MISES AND LACHMANN ON HUMAN ACTIONc
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MISES AND LACHMANN ON HUMAN ACTIONH
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MISES AND LACHMANN ON HUMAN ACTION2
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MISES AND LACHMANN ON HUMAN ACTIONW
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MISES AND LACHMANN ON HUMAN ACTIONT
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MISES AND LACHMANN ON HUMAN ACTIONA
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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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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
Page 102 and 103: SUBJECTIVISM AND IDEAL TYPESAccordi
Page 104 and 105: SUBJECTIVISM AND IDEAL TYPESto his
Page 106 and 107: SUBJECTIVISM AND IDEAL TYPESEconomi
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 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)
Page 156 and 157: 8HIERARCHICALMETAPHORS IN AUSTRIANI
Page 158 and 159: HIERARCHICAL METAPHORScoordination
Page 160 and 161: HIERARCHICAL METAPHORSpioneering ef
Page 162 and 163: HIERARCHICAL METAPHORSbe understood
Page 164 and 165: HIERARCHICAL METAPHORSlegal order.
Page 166 and 167: HIERARCHICAL METAPHORSMany of these
Page 168 and 169: HIERARCHICAL METAPHORSBanking and t
Page 170 and 171: HIERARCHICAL METAPHORSdemand’, th
Page 172 and 173: HIERARCHICAL METAPHORS(eds) (1993);
Page 174 and 175: HIERARCHICAL METAPHORS——(1988)
Page 176 and 177: 9LACHMANN’S POLICYACTIVISMAn Aust
Page 178 and 179: LACHMANN’S POLICY ACTIVISMLachman
Page 180 and 181: 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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