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

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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
CARLO ZAPPIAconsidered that one of the most influential ‘American Austrian’scholars is Lachmann.3 In their examination of the models provided by Hahn and Fisher,Currie and Steedman (1990:215) find it ‘striking that much recentwork has more in common…with Lachmann’s conception of marketprocesses than it does with the Arrow-Debreu economy’. Theiropinion is relevant with respect to my argument because their analysisof economists who have dealt with the behaviour of economies overtime highlights the importance of Shackle’s and Lachmann’scontributions.4 A previous attempt is Loomes and Sudgen 1986. It is worth noting,however, that the predictive power that is usually attributed to theBayesian process of updating beliefs seems bound to be lost in Kreps’srepresentation.5 A recent interpretation of the approach of non-additive utility theorypoints to the fact that while Bayesian decision theory is unable to dealwith the influence that choices can have on future states of nature, amain point in the agenda of the non-additive utility theory approach isto address the issue of the degree of irreversibility that characterises theconsequences of sequential actions (Vercelli 1995).6 Vaughn mentions, but does not discuss, Lachmann’s explicit retreat(1986) from the institutional issue.7 But see also the ‘Austrian rationale’ for the existence of organisationsprovided by Minkler 1993.ReferencesArrow, K.J. (1994) ‘Methodological individualism and social knowledge’,American Economic Review, 84 (2):1–11.Bianchi, M. (1994) ‘Hayek’s spontaneous order: the “correct” versus the“corregible” society’, in J.Birner and R.Van Zijp (eds) Hayek, Coordinationand Evolution, London: Routledge.Bowles, S. and Gintis, H. (1993) ‘The revenge of Homo Economicus:contested exchange and the revival of political economy’, Journal ofEconomic Perspectives, 7:83–102.Camerer, C. and Weber, M. (1992) ‘Recent developments in modelingpreferences: uncertainty and ambiguity’, Journal of Risk andUncertainty, 5:325–70.Currie, D. and Steedman, I. (1990) Wrestling with Time, Ann Arbor:Michigan University Press.Donzelli, F. (1993) ‘The influence of the socialist calculation debate onHayek’s view of general equilibrium theory’, Revue Européenne desSciences Sociales, 31:47–83.Fisher, F.M. (1983) Disequilibrium Foundations of EquilibriumEconomics, Cambridge: Cambridge University Press.Grossman, S. (1989) The Informational Role of Prices, Cambridge, MA:MIT Press.Hahn, F.H. (1973 [1984]) ‘On the notion of equilibrium in economies’, inEquilibrium and Macroeconomics, Oxford: Basil Blackwell.140
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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 MINDSour
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THE SUBJECTIVISM OF ACTIVE MINDSor
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THE SUBJECTIVISM OF ACTIVE MINDSa p
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THE SUBJECTIVISM OF ACTIVE MINDSact
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THE SUBJECTIVISM OF ACTIVE MINDSexp
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THE SUBJECTIVISM OF ACTIVE MINDSLan
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SUBJECTIVISM AND IDEAL TYPESthis or
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SUBJECTIVISM AND IDEAL TYPESof Gott
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SUBJECTIVISM AND IDEAL TYPESIn the
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SUBJECTIVISM AND IDEAL TYPESsuffici
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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
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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 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
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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);
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Page 176 and 177: 9LACHMANN’S POLICYACTIVISMAn Aust
Page 178 and 179: LACHMANN’S POLICY ACTIVISMLachman
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Page 192 and 193: LACHMANN’S POLICY ACTIVISMKnowled
Page 194 and 195: LACHMANN’S POLICY ACTIVISMinvestm
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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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