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Lachmann on Keynes and Methodology

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William posted on Sat, May 7 2011 12:07 PM

Interesting interview from here: 


AEN: How do you see the relationship of the Keynesians to the Austrians?

Lachmann: Now, this is a bit more difficult because the question arises, "Who now are the Keynesians?" I did notice that a certain economist whom I always thought was a Keynesian has described himself as a nonmonetarist. So, it seems to me, that Austrians and Keynesians have certain things in common. They have a common methodology, which in the case of the Austrians is laid down of course in Mises Human Action. And which I would say so far as Keynes was concerned is expressed as you know succinctly in the famous letter to Roy Harrod of July 16, 1938, that I have quoted several times: "Economics is not a natural science. It has to deal with human purposes." That as it were unites us with the Keynesians as against certain other economists, this kind of subjectivism. What also I take it we have in common is a general interest in the facts. After all, we are living in the same world, and it is assumed we accept that facts matter, a proposition which in Chicago doesn't seem to be so readily accepted. But if we admit that facts matter, then we should be able to establish those facts.

AEN: You mentioned the comment by Keynes in which he made a methodological statement. In fact most Keynesians, at least in the United States, follow a methodology that limits itself to a study of averages and aggregates. Is it possible to see this relationship when, in fact, they for the most part operate with a methodological holism?

Lachmann: I don't know what you have in mind, and then of course the question again arises who is a Keynesian? I would point out, for instance, that in a book like Paul Davidson's Money and the Real World, subjectivism is after all present. I wouldn't know any good examples of what you call methodological holism. The mere fact that someone deals with macroaggregates does not necessarily mean that he is not methodologically an individualist. This was, I think, brought out quite well by Frank Hahn, in his famous critique of Friedman. I would say the mere fact that some economists are interested in macroaggregates does not necessarily impair their methodological subjectivism. It still leaves the avenue open for explaining the phenomena pertaining to macroaggregates ultimately in terms of human motives, as, for instance, Keynes did himself when he tried to split up the demand for money (money as a macroaggregate) into the famous motives. That was an attempt at subjectivism, at least.

AEN: One theorist who has said that he comes out of a Keynesian tradition is Shackle, and he says that he is trying to develop the subjectivism that he sees in Keynes, in particular Keynes's thoughts on expectations. What relationship do you see between Shackle's work and that of the Austrians?

Lachmann: I can think of no one more distinguished or important to the fundamental Austrian ideas than Shackle. Whether he wishes to identify himself with Austrian economics or not, or whether he prefers to rather not be associated with any particular kind of school, is an attitude one certainly can appreciate. I regard Shackle as, in fact, an Austrian, 

"I am not an ego along with other egos, but the sole ego: I am unique. Hence my wants too are unique, and my deeds; in short, everything about me is unique" Max Stirner
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