A Bad Term for an Important Concept

"expectations, a manifestation of subjectivism" -- Ludwig Lachmann, Expectations and the Meaning of Institutions

Most economists today are "subjectivists": that is, they believe that, say, value, or expectations (as above) are "subjective" phenomena. This idea is often associated the Austrian School, but it is held widely outside that school.

The term "subjective" is an unfortunate choice for what is being talked about here. For instance, my expectations have a subjective aspect, in that they are my expectations and not yours, and in that they are expectations about an uncertain future, rather than matters of "mere" fact. But they have an objective aspect as well, in that, so far as they are articulable at all, I can state them in our common language and share them with you (so they are not merely mine), and that, in so far as they are expectations and not mere fantasies, I mean them to be my best guess as to a future, objective state of the world.

Michael Polanyi did a pretty good job of getting at this dual aspect of what economics is prone to call "subjective" phenomena with his concept of "personal knowledge": our knowledge is ours (and hence its subjective aspect) but it is an attempt to assert a truth valid for everyone (hence its objective aspect).

By the way, if you wonder why I worry about this term, consider the ease with which some of the less astute readers of Mises and Rothbard have slid from regarding value as subjective from the economist's point of view to regarding all moral principles as purely personal preferences with no basis in fact.

12 comments:

  1. Subjective knowledge also has the important quality that two people can have two subjective beliefs that are mutually exclusive, but neither of them are necessarily wrong. (e.g. "Cake is awesome" v. "cake sucks.")

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    1. Well, no: If these people talk more clearly, what the first one means is "I really love cake," and the second, "I really hate cake."

      Those are objectively true statements, and we can also make objectively false ones in this regard, e.g., "Everyone really loves cake," etc.

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    2. In a recent comment thread you told me that you think beauty is objective. Does "cake is awesome" not count as an aesthetic judgment?

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    3. "In a recent comment thread you told me that you think beauty is objective."

      Not quite. The real truth is beyond the subject / object dichotomy. Beauty has an objective aspect, as well as a subjective one.

      'Does "cake is awesome" not count as an aesthetic judgment?'

      IF that's what the person meant (I think usually the person means "I really like cake") so what? How would that bear on this topic.

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    4. I suspect you have your causality backwards for those Rothbard readers. They latch onto to Rothbard because he justifies their preconceived ideas.

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  2. I think people aren't grasping what Gene is saying here. I can have subjective preferences about objective things. My opinion on the taste of cake doesn't affect it's existence. I can have opinions about objective facts about the future (that is I can predict things like the value of the S&P 500 next year). My opinions are subjective, the future is objective when it occurs.

    When Gene says beauty has objective and subjective aspects he isn't being mysterious. He's saying that there are things I consider to be beautiful, those are subjective. There's also a concept of beauty, that's related to a thing that another person considers beautiful. We each recognize that the concept occurs to others too. We have a feeling of beauty that we experience alone and an idea of it that we share with others.

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  3. I expect my new recording to arrive in the mail tomorrow. I excpect it to be beautiful.

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    1. Well, then they are making a mistake: Rothbard is not a moral subjectivist!

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  4. Aren't many economic models based on the assumption of "rational expectations"? Rational expectations cannot be subjective, so the economists who use these models can't believe that expectations are subjective.

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    1. Good question Gorilla. They are most likely subjectivists about values still.

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  5. It is a bad term. Unfortunately, I have seen what you're talking about happen. In a thread about public funding of the arts over on the political forum I frequent, for example, this one member who is into Austrian economics basically said that one work of art can't be said to be any better than another. He also tried to use the fact that people have preferences as an explanation for why particular works get so much attention. Another member, one who has a passion for literature, compared his view to those of the postmodernists, which is funny because I would expect postmodernist philosophers (or "philodoxers", as you would put it) to situate themselves against Austrian economics.

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    1. Austrians and post modernists have much in common. They prevaricate systematically, they use jargon dishonestly, they hide behind "what is truth", they have a broad streak of nihilism, and they are full of shit. So your guy has a point.

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