Abstract
Generally speaking, historians are loath to report on current or very recent movements, and the very sound reasons for this disinclination will soon become clear to readers of this chapter. In examining the nature of and reasons for the revival of subjectivism in economics the obvious strategy is to begin by defining the subject and then proceed to trace its origins, development and pre-revival decline; but unfortunately this is much easier said than done. Quite apart from the problem of definition, which will be considered later, the origins of subjectivism in economics go back at least as far as the medieval Scholastics, perhaps even to the Greeks, and its subsequent history has been complex as well as protracted. As it is obviously impossible to cover all this ground in the time allotted, an arbitrary choice of starting-point is unavoidable.
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Notes And References
For a comprehensive survey of the subject see R. D. Collison Black, A. W. Coats, Crauford D. W. Goodwin, The Marginal Revolution in Economics. Interpretation and Evaluation (Durham, N.C.: Duke University Press, 1973) especially the essay ‘To What Extent was the Austrian School Marginalist?’ by Erich Streissler.
Alex Shand, Subjectivist Economics. The New Austrian School (Exeter, Devon: Pica Press, 1980) with a comment by G. L. S. Shackle. For other useful surveys see Edwin G. Dolan (ed.), The Foundations of Modern Austrian Economics (Kansas City: Sheed and Ward, 1976); Louis M. Spadaro (ed.), New Directions in Austrian Economics (Kansas City: Sheed, Andrews and McMeel, 1978).
‘Austrians on The Philosophy and Method of Economics — (since Menger)’ in his The Politics and Philosophy of Economics. Marxists, Keynesians and Austrians (Oxford: Basil Blackwell, 1981). For a different, less penetrating account of Hayek’s shifts of position see Norman P. Barry’s Hayek’s Social and Economic Philosophy (London: Macmillan, 1979) chap. 2.
The quotations are from Hayek’s Studies in Philosophy, Politics and Economics (London: Routledge & Kegan Paul, 1967) p. viii (this volume is dedicated to Karl R. Popper): also his Nobel Lecture, ‘The Pretence of Knowledge’, in his New Studies in Philosophy, Politics, Economics and the History of Ideas (London: Routledge & Kegan Paul, 1978) pp. 33, 31.
The neo-Austrian revival has been led from New York University, where Mises conducted an influential seminar until 1969. Two of his students, Israel Kirzner and Murray Rothbard, have been prominent, together with a member of the older generation, Ludwig Lachmann. The resumption of the seminar, in 1975, followed the ‘crisis’ in orthodox economics and may have been influenced by the centenary of the marginal revolution and renewed interest in Menger’s works. See, for example, J. R. Hicks and W. Weber (eds), Carl Menger and the Austrian School of Economics (Oxford University Press, 1973). In addition to the Austrian Economics Newsletter, from 1977, a new periodical The Journal of Libertarian Studies has also appeared. These activities have been supported by the Center for Libertarian Studies, the Liberty Fund, the Institute for Humane Studies, the Cato Institute, the Economic Institute for Research and Education, the Schultz and Koch Foundations.
Cf. Rothbard, in Dolan, Foundations of Modern Austrian Economics, pp. 30–2; Lachmann, Capital, Expectations, pp. 52, 53; Mises, Human Action, pp. 12, 125, 483–5. The term ‘psychological school’ has been applied both to the late nineteenth-century Austrians and to a group of early twentieth-century American economists. For an account of this phase of the debate see A. W. Coats, ‘Economics and Psychology: the Death and Resurrection of a Research Programme’, in S. J. Latsis (ed.), Method and Appraisal in Economics (Cambridge University Press, 1976) pp. 43–64.
Lachmann, Capital, Expectations, p. 170 (italics in original). This is an explicit statement of a view that is implicit in many subjectivist writings. It poses obvious problems for the methodology of science. For example, Lachmann (ibid., pp. 57–8) virtually excludes the possibility of verification.
Lachmann, ibid., p. 173 (italics in original). However, according to Kirzner, ‘Economics has to make the world intelligible in terms of human motives’. Cf. Dolan, Foundations of Modern Austrian Economics, p. 45 (italics added).
See J. M. Buchanan and G. F. Thirlby, LSE Essay on Cost (London: Weidenfeld and Nicolson, 1973); also
J. M. Buchanan, Cost and Choice (Chicago: Markham Publishing Co., 1969); and
Jack Wiseman, ‘Costs and Decisions’, in Contemporary Economic Analysis, vol. 2, David Currie and Will Peters, eds (London: Croom Helm, 1980).
See, for example, the Presidential Addresses by F. H. Hahn, ‘Some Adjustment Problems’, Econometrica 38 (January 1970) 1–17; and
W. Leontief, ‘Theoretical Assumptions and Nonobserved Facts’, American Economic Review 61 (March 1971) pp. 1–7.
Benjamin Ward, What’s Wrong with Economics? (London: Macmillan, 1972).
To list all the relevant works of these well-known authors would take up too much space. Moreover, it might obscure the parallels between technical works in the history and philosophy of science and the broader, more radical contemporary reaction against objectivist approaches to science and society. For penetrating insights into this wider phenomenological movement see Roger Pool, Towards Deep Subjectivity (London: Allen Lane, 1972). ‘Without taking the fact of subjectivity into account … without integrating the ideological factors of the subjective revolt into its analysis, objectivity’s considerations are less than objective and its conclusions are no conclusions at all’, p. 43.
See Popper’s essay in Philosophy Today, ed. Jerry H. Gill (New York: Macmillan, 1968) p. 228; also his Objective Knowledge (Oxford University Press, 1972).
On the sociology of science, for example, Joseph Ben-David, The Scientist’s role in Society: A Comparative Study (Englewood Cliffs: Prentice Hall, 1971); and
Warren O. Hagstrom, The Scientific Community (New York: Basic Books, 1965). For a brilliant study of the inter-relationships between subjectivity and the organisation of science see Michael Polanyi, Personal Knowledge. Towards a Post-Critical Philosophy (University of Chicago Press, 1958).
Thomas S. Kuhn, The Structure of Scientific Revolutions, 2nd edn (University of Chicago Press, 1970); also The Essential Tension. Selected Studies in Scientific Tradition and Change (University of Chicago Press, 1977) especially chaps 7, 9, 11, 13.
The concepts of ‘naive’ versus ‘sophisticated’ falsificationism are especially associated with Imre Lakatos’s ‘Falsification and the Methodology of Scientific Research Programmes’ in Criticism and the Growth of Knowledge, ed. I. Lakatos and A. Musgrave (Cambridge University Press, 1974) pp. 91–196. For a valuable brief introduction to the issues see A. F. Chalmers, What is This Thing Called Science? An Assessment of the Nature and Status of Science and its Methods (Milton Keynes: Open University Press, 1978) especially chaps 4–6; and, with special reference to economics, Mark Blaug, The Methodology of Economics or How Economists Explain (Cambridge University Press, 1980) chap. 4.
See, for example, the severely criticial analysis by T. W. Hutchison, in his Economics and Economic Policy in Britain1946–66 (London: Allen and Unwin, 1968) and
Knowledge and Ignorance in Economics (Oxford: Basil Blackwell, 1977) Appendix.
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Coats, A.W. (1983). The Revival of Subjectivism in Economics. In: Wiseman, J. (eds) Beyond Positive Economics?. British Association for the Advancement of Science. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-16992-4_7
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