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

ROGER KOPPLAnimal spirits are neither subjective expectations nor the sourceof them. They are the springs of action in a world where reason mustdefault for lack of data (Koppl 1991). It is the default of reason thatmakes long-term expectations necessarily ‘subjective’ for Keynes inthe extreme sense of disconnection from underlying scarcities. InKeynes’s scheme of thought, the actions to which animal spiritsimpel us cannot be grounded in a rational calculation of futureconsequences. The extreme unknowability of the future ensures asmuch. The expectations behind such actions are psychologicalbeliefs and more or less independent of market data. Subjectiveexpectations are determined by an autonomous process of masspsychology. They are therefore fundamentally exogenous to themarket process.The exogeneity of subjective expectations in Keynes contrastswith the criterion stated above, namely, that a Lachmannian theoryof expectations must represent expectations as endogenous to themarket process. Lachmann was right to see Keynes as a pioneer inthe theory of subjective expectations. But Keynes’s pioneering workis not one on which we might build a theory of expectations thatmeets the challenge Lachmann put to the science of economics.Alfred Schutz and the Lachmann problemSchutz on anonymityThe works of F.A.Hayek and Alfred Schutz give us a way to solvethe Lachmann problem. The work of Schutz teaches us that radicalsubjectivism can sometimes make use of a less psychologicallydetailed picture of action than Lachmann seems to have thoughtpossible. The work of F.A.Hayek may be used to infer somethingabout when it is appropriate to use those less detailed pictures.Putting together the insights of these two great subjectivists allowsus to construct a theory of expectations that builds from thesubjectivism of active minds to a picture of orderly andendogenously determined economic expectations.A subjectivism of active minds must start with a picture ofthought. Schutz gives us such a picture. The key notion in Schutz’sphenomenological description of thought and action is‘typification’. A typification is just a stereotype. 2 All thinking,Schutz taught, is stereotypical. When we form an idea, we form atypification. Typifications of people are ‘personal types’;typifications of actions are ‘course-of-action types’. The structure of68