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

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LACHMANN’S POLICY ACTIVISMwithdrawal of a factor, or its failure to turn up at theappointed time, will equally endanger the success of theproduction plans.(Lachmann 1956:107, italics in original)We can recognise here the added analytical value of heterogeneity—producers who had expected resources to be available which were tobe needed at later dates (now the present) have organised theirproduction processes and generated highly specific resources to beused in combination with the expected output of their suppliers.Many of these inventories of midstream products are uselesswithout the complementary resources, and those capitalcombinations which generated them are not costlessly orinstantaneously re-specified:Rates of interest which are too low, i.e. fail to establish ex anteequilibrium between savings and investment, are apt toconvey such a misleading picture and thus lead to wrongspecifying decisions….The essence of the matter is that investment decisions arenot merely irreversible in time, so that excessive investment inperiod 1 as a rule cannot be offset by disinvestment in period2, but that they are also irrevocable in kind. Even if, at a laterpoint during the boom, interest rates start to rise, the messagecomes too late for those who have made their irrevocabledecision before.(Lachmann 1956:118, italics added)This phenomenon, born out of heterogeneity and multiplespecificity, embeds plan failure in the system.Lachmannian stabilisation policyIf we found ourselves as Lachmannian capital theorists ‘on themorrow of the crisis’, asked to formulate a policy to shepherd theeconomy back to its more normal degree of plan co-ordination, whatwould we do? The post-boom economy, as Lachmann tells us, is incrisis because the interest rate or price system has sent the wrongsignals—projects have been undertaken and have drawn scarceresources away from other projects based upon false information onprofitability, factor availability and the buying public’s willingnessto delay consumption. The landscape is littered with failed and failing173
PETER J.BOETTKE AND STEVEN T.SULLIVANprojects, some of whose failure is based upon the lack ofcomplementary resources, others failing because of the normal courseof market activity. Bottlenecks have occurred and ceilings have beenhit in crucial sectors of industry—say, primary materials. The mainproblem is one of malinvestment or mistaken allocation, and theprima facie solution would seem to be to reallocate the misallocatedresources. This is what Lachmann suggests:The situation the economy faces on the morrow of the collapseof a strong boom clearly calls for capital regrouping on a largescale…. Plans have gone astray, hopes have been disappointed;capital combinations have to be dissolved and reshuffled…Some planned combinations cannot come into operationbecause of lack of complementary factors; these factors haveto be created now…. Something might be done by shiftingresources to where they are most needed. The critical sectorsare those sub-ceilings which lie in the path of expansion. Heremore investment is required in order to ‘lift the ceiling’. To thisend not merely must investment in other sectors be curtailed;additional factors able to help in lifting the ceiling must berecruited from wherever they happen to be, and this means asa rule that they must be withdrawn from those combinationsof which they form part. Mobile resources from everywhere,even from the consumption goods industries, will have to bedrawn to the critical sectors…. These mobile resources have tobe detached from the specific and non-mobile resources withwhich so far they have co-operated, and this will lead todissolution and reshuffling of existing combinations…In all probability mobile resources cannot be withdrawnand capital combinations will not be reshuffled withoutpressure being brought to bear on owners and managers ofspecific resources. In some cases it may not be possible at allwithout actual bankruptcy. To this end a ‘severe’ credit policyis required. But a credit policy sufficiently severe to ‘crackopen’ the tougher kind of unsuccessful capital combinationsmay discourage investment in the critical sectors of theeconomy.…In such a situation there is much to be said for a‘selective’ credit policy which need not be arbitrary if it merelyreflects the degree of imperfection of the capital market whichis the natural product of the past record of success and failureof individual firms.174
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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 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 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 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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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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ENDOGENOUS CHANGEThere is no room i
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ENDOGENOUS CHANGEmodel that Dutt ha
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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
Page 146 and 147: RADICAL SUBJECTIVISMperformed by th
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
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Page 192 and 193: LACHMANN’S POLICY ACTIVISMKnowled
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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