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

BRIAN J.LOASBYNeo-Ricardian valuation is an adequate alternative. Joan Robinsondid not accept it. As Lachmann agreed, in a letter of 17 August1989, she was never quite a Sraffian. If we do not know how tomeasure something that we would like to measure, then, as LordKelvin remarked, our knowledge may be of a meagre andunsatisfactory kind; but if we insist on fictitious measurement thenour knowledge, if apparently less meagre, will be much moreunsatisfactory—for it will be false.CatallacticsLachmann shared the common perception that in the last quarter ofthe nineteenth century the focus of economic analysis turned fromplutology—the science of wealth—to catallactics—the theory ofexchange. Yet catallactics proved to contain a deep internalcontradiction. For Lachmann, its essential feature is the explorationof purposeful action: that implies an orientation towards the future,which is unknown, but not unimaginable. Uncertainty—or, asLachmann’s kindred spirit, George Shackle, came to call it,unknowledge—does not imply chaos (Lachmann 1986:139); reasonand experience allow us to create intelligent, if fallible, expectations.But such expectations do have to be created; they cannot bemechanically formed. We may, if we choose, rely on some formalprocedure to convert data into forecasts, but the choice is ourchoice, and any procedure that we choose must itself be a humancreation. Even if it were to be, in some sense, a ‘correct model’, itwould nevertheless be a human invention, as is every scientifictheory, and its correctness would remain forever open to doubt.Lachmann understood Popper’s arguments. But, like many naturalscientists, he also understood their liberating potential: predictivefailure is an opportunity to improve our knowledge, for we learn asa consequence of our mistakes, and the improvement of ourknowledge depends on our ability to make conjectures which gowell beyond the evidence (ibid.: 152). That the key to humanprogress is imagination, and that imagination is inconceivablewithout ‘unknowledge’, is a theme that belongs uniquely to GeorgeShackle; but no one was more aware of its significance than LudwigLachmann.Yet such modes of thought are incompatible with modernformalism. Lachmann (1986:25) endorsed Joan Robinson’scomplaint that:18