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

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LACHMANN’S POLICY ACTIVISM‘plan complementarity’ or ‘designed complementarity’, which referto the relationship between elements in the firm’s plan, versus‘structural complementarity’—which refers to the relationship ofelements across firms and indeed across industries, and thereforeacross planning consciousnesses. ‘Capital structure’ is given to bethe mode of complementarity expressed in the market as a whole, or‘a mode of the composition of the capital stock of society’ (Lachmann1986:63ff). In Capital and Its Structure, Lachmann distinguishesbetween plan and structural complementarity along these lines: ‘Thefirst type of complementarity is brought about directly byentrepreneurial action…. Our second type of complementarity is, ifat all, brought about indirectly by the market, viz. by the interplayof mostly inconsistent entrepreneurial plans’ (Lachmann 1956:54,italics in original). Again, in his last book The Market as an EconomicProcess, Lachmann draws the distinction:This second type of complementarity [here meaning structuralcomplementarity] is not the direct result of planned action, butthe indirect result of the interaction between the plans ofdifferent firms in the market. These latter plans need not havebeen consistent from the start, but were then made consistentby market forces.(Lachmann 1986:63)Structural complementarity is of the macro-level—on the order ofthe phenomena studied by policy makers; so is it valid to speak ofpolicies on the macro-level, such as increasing the ‘level ofinvestment’, without making reference to the coherence ofindividual plans? If we follow Lachmann’s line of argument, we seeclearly that structural complementarity is a surface relationship orby-product, merely a manifestation of the dovetailing (or failure todovetail) of individual plans, which are the more fundamental unitsof analysis. The morphology of capital at the structural level istherefore an order, which is to say that it is the result ‘of humanaction, but not of human design’—of individual and firm-levelinvestment planning, but not of macroeconomic investment policy.To recognise this argument in Lachmann’s work is to drive thestake of subjectivism into the heart of aggregate capital theory, andthus into the heart of most arguments for macroeconomicinterventionism as well. This is because standard investment theoryfails to perceive the differences between conscious or intended plancomplementarity at the firm level and manifested structural169
PETER J.BOETTKE AND STEVEN T.SULLIVANcomplementarity at the ‘macro’economic level. Blind to thephenomenology of the capital structure, the decentralised choicedrivenprocess of the coming-to-be of that capital structure, themacroeconomist speaks of the ‘level of investment’ without properreference to the causal agents of the capital structure, namely planningindividuals and firms. ‘National’ investment, good or bad, high orlow, appropriate or misdirected, only makes sense if we can speak ofa ‘national’ plan, a means-ends framework constructed by a directingand controlling mind. But such a plan is a fiction—at the level ofstructural complementarity, there is no one directing or controllingmind. Lachmann cites Hayek’s Pure Theory of Capital in thedevelopment of this point:Of consistent capital change, on the other hand, we may speakwhere ‘coincident expectations about the quantities andqualities of goods which will pass from one person’spossession into another’s will in effect co-ordinate all thesedifferent plans into one single plan, although this “plan” willnot exist in any one mind. It can only be constructed.’(Lachmann 1956:60)Yet the macroeconomist engages in the familiar conceit of extendingthe individual’s problem-solving acts of mind to the social level, withall the attendant hazards. In its restatement of the problem at theplanner’s level, it also departs from a fully subjectivist understandingof the problem world. Capital combinations are manifestations oflogical structures composed of relationships among subjectivelyperceived objects, and the knowledge they embody is not fullyavailable to anyone except their operators. The macroeconomist whoemploys an aggregate production technology with ‘known’ and stablecharacteristics of factor complementarity and substitutabilitypresumes a level of knowledge that no one mind or group of mindscan ever possess. 9 A Lachmannian capital theorist, then, mightreasonably view macroeconomic investment policy as an undertakingwith context-specific knowledge requirements that are simplyimpossible to satisfy. How, then, can Lachmann call for policyactivism in times of widespread plan discoordination?Lachmann on the price system and the trade cycleLachmann viewed the price system (including the interest rate) as acommunications network through which individual operators of170
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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 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 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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SUBJECTIVISM AND IDEAL TYPESAccordi
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SUBJECTIVISM AND IDEAL TYPESto his
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SUBJECTIVISM AND IDEAL TYPESEconomi
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SUBJECTIVISM AND IDEAL TYPESanswer
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SUBJECTIVISM AND IDEAL TYPES1 B wan
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SUBJECTIVISM AND IDEAL TYPESconclus
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SUBJECTIVISM AND IDEAL TYPESOn the
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SUBJECTIVISM AND IDEAL TYPES——(
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ENDOGENOUS CHANGEIntroductionAmong
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ENDOGENOUS CHANGEconsequences. If,
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ENDOGENOUS CHANGEHahn’s notion of
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ENDOGENOUS CHANGEentertain theories
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ENDOGENOUS CHANGEwords, is it possi
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ENDOGENOUS CHANGEX=X (L*,X*) [1]w=X
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ENDOGENOUS CHANGEP=Wa 0+rP(K/X)wher
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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
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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
Page 184 and 185: LACHMANN’S POLICY ACTIVISMcapital
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Page 194 and 195: LACHMANN’S POLICY ACTIVISMinvestm
Page 196 and 197: 10EXPECTATIONS ANDSTOCK MARKET PRIC
Page 198 and 199: EXPECTATIONS AND STOCK MARKET PRICE
Page 214 and 215: INDEXaction: individual 32-3, 38-9,
Page 216 and 217: INDEXefficient allocation/co-ordina
Page 218 and 219: INDEXmarket 119-20; theory of value
Page 220 and 221: INDEX19; stock market expectations1
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