Take a look at this said by Lachmann in "Capital and Its Structure"
Inevitably unexpected change entails some capital gains and losses. Hence we cannot say that progress is either accompanied or caused by the accumulation of capital. But the malinvestment of capital may, in some cases, by providing external economies, become the starting-point of a process of development. A railway line built for the exploitation of some mineral resource may be a failure, but may nevertheless give rise to more intensive forms of agriculture on land adjacent to it by providing dairy farmers with transport for their produce. Such instances play a more important part in economic progress than is commonly realized.
it by providing dairy farmers with transport for their produce. Such instances play a more important part in economic progress than is commonly realized.
So if I understand correctly, Lachmann is saying that malinvestments may be good for progress since entrepreneurs may benefit from this. Wouldn't this go against what most Austrians say about Capital, that is, wouldn't most Austrians today claim that malinvestments destroy the economy, therefore, we shouldn't even think about using malinvestments as a starting point to progress that may be attained in the future?
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All he is saying is that mistakes are often partially salvageable and may lead to unexpected developments. This does not necessrily mean that entrepreneurial mistakes lead to more optimal outcomes than entrepreneurial successes. Of course, it may be possible that a malinvestment turns out to have been a good idea, purely as a result of luck.
So in his railroad example, he isnt advocating building the railroad, even if economists use externalities to show how the railroad may be able to benefit? If so, then this would go against what Hazlitt points out in his 'Econ in one lesson' in his bridge example, since, yes, after the bridge is built we can see the benefit from it, but what we do not see is the opportunity cost of it, that is, what we could have done with the resources if the bridge wasnt built.
The World that Trade Created shows how interconnected the world was due to trade and how many unintended (positive and negative) consequences came out of many projects which failed their original purpose. I cannot quote specifics, as the book is dense and I don't remember specifics, but I can find some for you.
Capital and Its Structure seems dedicated to dealing with capital in reference to expectations, plans and knowledge in disequilibrium. Lachmann was saying not that it's an optimum use of resources when entrepreneurs malinvest, but instead that capital goods in and of themselve neither imply progress nor regress. The fact that goods have been malinvested (due to incorrect expectations which lead to bad plans), doesn't mean that it cannot allow for progress, as long as it can be used in some other line of production.
There are unseen consequences as Hazlitt describes in Economics in One Lesson, but this isthe fault of imperfect knowledge due to ever changing circumstances, which is just a part of reality. An entrepreneur takes his own resources then tries to adjust his use of capital goods so that he remains profitable (going from passenger rail line to agricultural rail line), and this also send signals to other entrpreneurs about what is and is not profitable; while the state has no need to try and restructure the capital to market conditions because they don't need profit, and also their transactions do not transmit knowledge to market players about actual conditions.