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

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THE SUBJECTIVISM OF ACTIVE MINDSexpectations fit together. This complementarity is a strength ofthe theory. Keynes’s treatment of long-run expectations runsmostly in terms of psychological expectations. It is not clear, inhis analysis, what institutional properties of asset marketsencourage the perversities he identifies and what propertiesdiscourage them. (Keynes refers only to liquidity.) Rationalexpectations models refer, presumably, to dispositionalexpectations. They seem to imply that psychologicalexpectations are perfectly plastic, taking on whatever form isneeded to generate the predicted behaviour. As Thomas Sargenthas noted, this may imply that economic agents know withcertainty the very structural parameters of the economy thateconometricians can only estimate with uncertainty (Sargent1993:21). The examples of Keynes and rational expectationshelp to show that we should prefer economic arguments thatcombine and correlate plausible treatments of both psychologicaland dispositional expectations.Distinguishing dispositional and psychological expectationshelps us to see how we might fit Schutz and Hayek into a consistenttheory of expectations. The Big Players theory suggests the utility ofdoing so. The proposed integration seems to yield testablehypotheses. It may be true, then, that integrating Schutz and Hayekwill help to solve the Lachmann problem.ConclusionThe Lachmann problem was stated at least as early as 1943. For themost part it has remained unsolved. Some progress has been madeby Lachmann and others through the recognition of theco-ordinative function of institutions, ‘nodal points’ ofco-ordination as Lachmann called them. But much remains to bedone. I conjecture that this intractability has been due in part to atendency by researchers following Lachmann to look for eitherKeynesian or Misesian solutions. If instead we try to placeconsiderations of anonymity raised by Schutz in a Hayekian contextof social evolution, we may make more progress.AcknowledgementsI thank William Butos for useful comments. Any deficiencies of thetext are my fault.77
ROGER KOPPLNotes1 For an interesting discussion of ‘Vision’ and analysis in economics seeBoettke 1992.2 Today the term ideal type is commonly used only for the typification ofscience, especially social science. In his Phenomenology of the SocialWorld (1932) Schutz used the term ‘ideal type’ to refer to both thetypifkations of common sense and those of science.3 I have been ignoring the difference between the thoughts of agents andour representations of those thoughts. This difference can matter. Asfar as I can tell, however, it doesn’t matter for the points being made inthis paper.ReferencesBoettke, P.J. (1992) ‘Analysis and vision in economic discourse’, Journal ofthe History of Economic Thought, 14 (1):84–95.Butos, W.N. (1997) ‘Toward an Austrian theory of expectations’, Advancesin Austrian Economics’, 4:75–94.Butos, W.N. and Koppl, R.G. (1993) ‘Hayekian expectations: theory andempirical applications’, Constitutional Political Economy, 4 (3):303–29.——(1997) ‘The varieties of subjectivism: Keynes and Hayek onexpectations’, History of Political Economy, 29 (2):327–59.Keynes, J.M. ([1921] 1972) Collected Writings of John Maynard Keynes,vol. VIII, A Treatise on Probability, London: Macmillan.——([1936] 1972) Collected Writings of John Maynard Keynes, vol. VII,The General Theory of Money, Employment, and Interest, London:Macmillan.Knight, F.H. ([1921] 1971) Risk, Uncertainty and Profit, Chicago: TheUniversity of Chicago Press.Koppl, R.G. (1991) ‘Animal spirits’, Journal of Economic Perspectives, 5(3): 203–10.——(1997) ‘Mises and Schutz on ideal types’, Cultural Dynamics, 9 (1):63–76.Koppl, R. and Yeager, L. (1996) ‘Big players and herding in asset markets: acase of the Russian ruble’, Explorations in Economic History, 33: 367–83.Lachmann, L. ([1943] 1977) ‘The role of expectations in economics as asocial science’, in Lachmann, L., Capital, Expectations, and the MarketProcess, ed. by Grinder, W.E., Kansas City, Missouri: Sheed Andrewsand McMeel, pp. 65–80.——([1969] 1977) ‘Methodological individualism and the marketeconomy’, in Lachmann, L., Capital, Expectations, and the MarketProcess ed. by Grinder, W.E., Kansas City, Missouri: Sheed Andrews andMcMeel, pp. 149–65.——(1976) ‘From Mises to Shackle: an essay on Austrian economics andthe Kaleidic Society’, Journal of Economic Literature, 14 (1): 54–62.Lakatos, I. (1976) Proofs and Refutations: The Logic of MathematicalDiscovery, Cambridge: Cambridge University Press.78
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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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Page 44 and 45: 3MISES AND LACHMANNON HUMAN ACTIONS
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Page 74 and 75: 4LACHMANN ON THESUBJECTIVISM OF ACT
Page 76 and 77: THE SUBJECTIVISM OF ACTIVE MINDSThe
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Page 124 and 125: ENDOGENOUS CHANGEentertain theories
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RADICAL SUBJECTIVISMdecisions under
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RADICAL SUBJECTIVISMconsidered as
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RADICAL SUBJECTIVISMnot simply enta
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RADICAL SUBJECTIVISMperformed by th
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RADICAL SUBJECTIVISMeconomic theory
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RADICAL SUBJECTIVISMAustrian resear
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RADICAL SUBJECTIVISMoutcomes of the
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RADICAL SUBJECTIVISM——(1990)
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8HIERARCHICALMETAPHORS IN AUSTRIANI
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HIERARCHICAL METAPHORScoordination
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HIERARCHICAL METAPHORSpioneering ef
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HIERARCHICAL METAPHORSbe understood
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HIERARCHICAL METAPHORSlegal order.
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HIERARCHICAL METAPHORSMany of these
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HIERARCHICAL METAPHORSBanking and t
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HIERARCHICAL METAPHORSdemand’, th
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HIERARCHICAL METAPHORS(eds) (1993);
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HIERARCHICAL METAPHORS——(1988)
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9LACHMANN’S POLICYACTIVISMAn Aust
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LACHMANN’S POLICY ACTIVISMLachman
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LACHMANN’S POLICY ACTIVISMcapital
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LACHMANN’S POLICY ACTIVISM‘plan
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LACHMANN’S POLICY ACTIVISMcapital
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LACHMANN’S POLICY ACTIVISMwithdra
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LACHMANN’S POLICY ACTIVISM…Supp
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LACHMANN’S POLICY ACTIVISMchain o
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LACHMANN’S POLICY ACTIVISMKnowled
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LACHMANN’S POLICY ACTIVISMinvestm
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10EXPECTATIONS ANDSTOCK MARKET PRIC
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EXPECTATIONS AND STOCK MARKET PRICE
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INDEXaction: individual 32-3, 38-9,
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INDEXefficient allocation/co-ordina
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INDEXmarket 119-20; theory of value
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INDEX19; stock market expectations1
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