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

CARLO ZAPPIAVaughn, the major component of a satisfying notion of order is stillmissing. Economic institutions can be considered as ‘points oforientation’ for individual agents and thus favour pattern coordination—thatis co-ordination among the typical, recurrentfeatures of individual actions—even if specific aspects of individualactions ‘fail to mesh’, as O’Driscoll and Rizzo contend. On the otherhand, even those specific aspects of human action that do turn out tobe unco-ordinated are relevant for the endogenous change ofprevailing institutions. What the Austrian tradition has hinted at,but not dealt with as much as it should, is the fact that ‘errors thatconstitute part of the market process should be construed as bothintegral and beneficial’. Therefore, the proper approach to learningis ‘how can mistakes and error be channelled into productiveknowledge’ (173). At this point, Vaughn abruptly concludes that acogent explanation of the market process as a process of trial anderror thus requires an evolutionary theory of institutions, whereexperimentation and learning, which lead to ‘new modes of humaninteraction’, can explain ‘the origin, persistence or failure of humaninstitutions, those regular observable patterns of action that lendstability and predictability to human life’ (175).So Vaughn seems to be supporting a definitive withdrawal fromthe traditional ways of economic theorising, by arguing in favour ofa shift of focus from spontaneous to social order, and for almost thesame reasons that prompted Hayek’s withdrawal from equilibriumtowards spontaneous order. But Vaughn’s discussion of thoseinstitutions that ‘permit the use of new knowledge in human action’(174) is not very satisfying. She only refers to the tradition of thoseeconomists, notably Nelson and Winter, who have attempted to adaptevolutionary reasoning to economic processes, and to the similaritiesbetween certain features of evolutionary theory and the Austrianviewpoint, as represented by Witt (1992) and Horwitz (1992). Shealso concedes, ‘there is much work to be done’ (175). Indeed, theneed for the Austrian research programme to abandon the equilibriummetaphor and to elaborate an evolutionary notion of social order issupported only by a few suggestions for future research. Thisinevitably leaves the reader feeling discontented, for Vaughn doesnot even discuss the difficulties of reconciling methodologicalindividualism with group selection processes on which theevolutionary approach hinges. Moreover, it seems to imply that theanalytic content of the Austrian paradigm is yet to be developed.The future relevance of Austrian economics might probablydepend on the viability of Vaughn’s suggestions, although current136