Maybe "Subjective" Was Not the Best Choice of Words

Here is Lachmann:

"We have said that the formation of expectations is incidental to the diagnosis of the situation as a whole in which one has to act. How is this done? We analyse the situation, as we see it, in terms of forces to which we attribute various degrees of strength. We disregard what we believe to be minor forces and state our expectations in terms of the results we expect the operation of the major forces to have. Which forces we regard as major and minor is of course a matter of judgment. Here the subjective element of interpretation is seen at work." -- Capital and Its Structure, p. 24, emphasis mine

But what is really meant here is not subjective, but personal. (We follow M. Polanyi here in adopting this term.) The entrepreneur is not saying to herself, "Gee, just any old expectations I form will be as good as any others, because it is all just subjective." No, she is striving to make her judgment of what are minor and what are major forces as objective as possible. To the extent they turn out to be "merely subjective," she will suffer losses. Certainly, they are her own judgments. But they are not merely her own: they are her own judgments about all of the objective factors she is able to perceive in the situation in which she must allocate her capital.

The truth at the core of "methodological subjectivism" is that any evaluation of a situation is some particular person's evaluation. But in so far as that person wants their evaluation to yield good results, they must always strive to render it as objectively accurate as possible.


  1. And rendering them as "objectively accurate as possible" largely requires making sure they are aligned with other people's subjective judgments.

    1. Well, with other people's *judgments*, yes, but those judgments are also not "merely subjective," are they? No judgment could ever possibly be that: to make a judgment is an assertion of reality, as Polanyi informed us.

    2. I suppose that people's subjective views would have to be aligned both in regards to objective reality (what physical object are out there) and what other peoples subjective views about that objective reality is (how they subjectively value those physical goods both now and in the future).

    3. But, even further, rob, even my evaluations of actions are not "purely" subjective: I want the actions I undertake to really, objectively make me happier, more fulfilled, etc. The fact that we are sometimes mistaken demonstrates this very clearly: "I thought marrying Jane would be good, but boy was I wrong!" "Whoa, it turns out that fifth shot was a really bad idea."

      There is a matter of fact about what makes us happy and what doesn't, and we are not able to simply wish that objective reality away!

  2. This seems right. Personal, as in idiosyncratic. To be fair, though, I always found Lachmann really frustrating. He does that thing where he claims no one knows anything, ever. Except that he, Dr. Lachmann, seems to know quite a bit.

    1. "Personal, as in idiosyncratic."

      Because something is my own view does not mean it is an idiosyncratic view. (It may be so, of course.)

  3. But those are example of poor expectations about how you will feel in the future (or perhaps just disregard for that future state in the case of the extra shot).

    Knowledge that smoking causes cancer is likely to deter you from smoking but even then only after weighing up the pros and cons. A piece of knowledge that you think is true ("smoking causes cancer" will be weighed up against the pleasure you get from smoking, the perceived risks (you may never get cancer) and the time discount you attach to future states over present states (they may have found a cure by the time you get cancer}.

    cancer is an objective thing - but the things that drive your actions in regard to it are subjective.

    1. "But those are example of poor expectations about how you will feel in the future..."

      What is this "but"?! I thought marrying Jane would make me happy, but the fact of the matter is it did not do so. I was objectively wrong. The same with the shot.

      "cancer is an objective thing - but the things that drive your actions in regard to it are subjective."

      Nonsense: this distinction is unsustainable.

      How do you know about this so-called "cancer," rob? Through your senses and your thoughts. But those are the things you are trying to convince me are "just subjective": if that is so, you've totally undermined any basis for declaring cancer "objective."

      (I think cancer is real, by the way, but that's because I know my own thoughts and sensations are NOT "just subjective.")

    2. Kant got this right, rob: Once you accept the Cartesian duality of subjective and objective as ultimate, you will in the end discover that all you know is your own mental states, and this "objective" world is completely beyond your reach.

    3. All I ever know is my own experiences.

      A dualist model would distinguish between two type of experience.

      1. Ones correlated with things outside of my experience (such as the building where I got married). Call these objective

      2. Ones that have no correlation outside of my experience (such as my hopes on my wedding day that I will be happy). Call these subjective.

      I decide to go through the (objective) wedding ceremony for subjective reasons (hope of happiness).

      My marriage may fail because my wife sings opera all day (objective) and I hate opera (subjective) and this makes me unhappy (subjective) and we end up in a (objective) divorce hearing.

      The objective world may never be knowable to us - but a model that distinguishes between these 2 states seems incredible useful to me - especially in economics.

    4. rob, if the "objective world may never be knowable to us," how in the world can you isolate which parts "correlate" with your subjective experience?

      "but a model that distinguishes between these 2 states seems incredible useful to me"

      I've never said the distinction is useless, just that it is merely an abstraction.

  4. I think that in a dualist model objective experiences have different attributes to subjective ones (they just feel different). That's how you would tell the difference - and as the distinction helps you achieve your (subjective) goals it seems to work in a practical way too.


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