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

BRIAN J.LOASBYvery well without any particular item of consumption or anyparticular job, because a slight adjustment of aspirations wouldimmediately produce an acceptable alternative. But that is not ourworld and the dangers of complementarity are the obverse of theopportunities that it brings.‘Every market of course tends to eliminate excess demand orsupply, but may do so by quantity, not price adjustment, and thusengender multiplier effects’ Lachmann wrote on 17 September1989. However, these effects are not adequately represented by amechanical sequence. Lachmann echoed Ohlin’s (1937:239)criticism of Keynes’s formulation, which was based on the Swedishconception of subjective expectations: consumption decisions, likeproduction and investment decisions, depend on assessments offuture prospects, and though these assessments are influenced by thepast they are not determined by it. Consumption, like investment,can change without any change in the data; and it does. In this, as inother respects, Lachmann was a constructive as well as asympathetic critic of Keynes, and believed that the quarrel betweenKeynes and the Austrians was quite unnecessary: This is a view Ihave held for a long time’ wrote Lachmann on 13 August 1989. Herecognised Keynes as a major, if not always consistent, proponent ofsubjectivist ideas, and the Austrians had no explanation of generalunemployment.ConclusionLachmann was a thoroughgoing subjectivist. Subjectivism is anepistemological stance that does not imply the rejection of asubstantive reality; it certainly does not imply that ‘thinking makesit so’. But it does imply that thinking depends on interpretativeframeworks, that no framework can be comprehensive and thatlogical argument, though necessary for consistency, is insufficientfor truth. The future is unknowable. But though mistakes aretherefore inevitable, creativity is thereby made possible.Lachmann was consistent in the application of his scheme ofthought to the economy and to the practice of economists. Therewere no determinate equilibria, and no proofs of any persistentlydominant tendencies to co-ordination—not by the exercise ofrational choice, nor by reason of gravitational principles, nor byevolutionary selection, nor even by unimpeded market processes;nor was there any uniquely correct way of doing economics. Thediscipline of economics, the economy and the polity were therefore28