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

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