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

RADICAL SUBJECTIVISMoutcomes of the market process, is not justified by the inability ofpure economic theory to deal with rational ignorance. In fact, mostAustrians seem to use this argument to avoid discussing theinevitable withdrawal from methodological individualism, which isimplicit in the endorsement of an evolutionary approach toeconomic theory.My aim here has not been to argue that future developments inAustrian economics should not follow this line of research, butrather to point out that a withdrawal from equilibrium theorising—which seems contradictory both to traditional Austrian thought ingeneral and to Hayek’s theory in particular—cannot be based on aninaccurate representation of recent developments in orthodoxmicroeconomics.Furthermore, a critical, but positive, attitude towards theattempts to formalise rational ignorance might suggest that theAustrian tradition may actually influence future research ratherthan merely constitute an optional supplement to it. As I haveargued, the kind of formal representation of decision making underuncertainty one finds in recent developments in microeconomictheory is not intended to describe agents ‘striving to formulate thecorrect vision of the future as if the future were something alreadyimplicit in the data and one’s only problem is to guess correctly whatthe future will be’ (147). On the contrary, it recognises as a startingpoint for research the view that ignorance is an inherent feature ofevery decision regarding future events. In this, it resembles theShackleian—and Lachmannian—assertion that the future is theunpredictable consequence of creative choices made by individualagents. And it seems to point towards a re-elaboration of the notionof equilibrium that is compatible at least with Hayek’s, if not withthe whole Austrian, tradition.AcknowledgementsI wish to thank J.Birner, L.Moss and the editors for their commentson a previous draft of this paper.Notes1 Throughout this chapter, unless otherwise noted, the page numbers inparentheses refer to this book. The passage quoted in this paragraph istaken from p. 108.2 The inverted commas are of course necessary because it is generally139