A look at Subjectivism, Intelligibility and Economic Understanding: Essays in honor of Ludwig M. Lachmann on his Eightieth Birthday

Abstract

Due to my focusing the detailed analysis on by far the best chapters in this Festschrift, the reader may be left with a better impression of the book than it deserves. In point of fact, this volume is replete with errors and is most disappointing for a book touted as the most modern, up-to-date version of Austrianism and as a challenge to the economics of Mises. Indeed, the majority of its chapters simply ignore the basic tenets of this school of thought, and several of those that do not ignore praxeology misconstrue it. But it is important that an overall assessment of the work of the followers of Professor Lachmann not be lost sight of amid the welter of minutiae about their specific errors. And, unfortunately it is not just that they are wrong about equilibrium, methodology, hermeneutics, time preference, and so on; even worse, if possible, is the fact that there has been a virtual cessation of focus on real economic problems such as money and banking, business cycles, utility and welfare economics, and monopoly theory. Virtually all that is heard from this quarter is an endless repetition that the market is a process, that equilibrium is a red herring or worse, that no one can ever know anything, and that all is subject to interpretation. It is possible to construct a continuum in this regard. On the one extreme would be the mainstream empiricists, who believe that their regression equations can test economic axioms. This might well be called an overreliance on economic research. On the other extreme would be the followers of Lachmann, who have all but eschewed economic research; the impossibility of knowing the future, the divergence of expectations, radical subjectivism, it would appear, make this an extremely dubious path for them to follow. And as moderates on the continuum are the Misesians, who maintain that history can illustrate but not test theory, and who are nevertheless vitally interested in doing just this type of work.