Ludwig Lachmann and the Centrality of Radical Subjectivism

Few will dispute the observation that the unifying thread running through Lachmann’s social science was his radical subjectivism. It was radical subjectivism that Ludwig Lachmann deployed in order to deepen our understanding of economic processes. And if one seeks to characterize the intellectual odyssey which made up Lachmann’s scholarly career, it seems fair to portray it as a consistent series of deepened, pioneering extensions—the radicalization, if you will—of his own subjectivism. And, we shall see, it is certain characteristic features of Lachmann’s subjectivism which raise the problems with which we wish to grapple in this lecture.

Lachmann was entirely unsatisfied by what he called “subjectivism as the expression of human ‘disposition.’”  It is simply not enough to recognize that decisions made by consumers express the structures of their preferences. Such recognition for the role of subjective tastes would be entirely compatible with the statement of Pareto—a statement cited by Lachmann with disagreement so obviously profound as to border on disbelief—to the effect that once the consumer has left us a picture of his indifference map, we no longer need him at all, since, we then already know exactly what he will decide to do. For Lachmann subjectivism represents, most importantly, “a manifestation of spontaneous action.” By this way of putting it, Lachmann meant to draw attention to the power of the active human mind to frustrate any pretensions by Paretian—or other—economists to predict, simply on the basis of given scarcity constraints impinging on given preferences, what action will in fact be taken.

--Israel M. Kirzner, The Driving Force of the Market: Essays in Austrian Economics, Foundations of the Market Economy (London: Routledge, 2003), 55.