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The Varieties of Subjectivism: Keynes and Hayek on Expectations


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  • William N. Butos

    (Trinity College)

  • Roger G. Koppl

    (Fairleigh Dickinson University)


J.M. Keynes and F.A. Hayek had different economic ideas even though both were subjectivists seriously engaged with issues of time and uncertainty in economics. The source of the difference between their economic ideas was the difference between their philosophical ideas. Keynes was a Cartesian rationalist and justificationist; Hayek a critical rationalist and non-justificationist. We draw on Keynes's "A Treatise on Probability," Hayek's "The Sensory Order," and other works to defend our argument. Although Keynes and Hayek might both be called "subjectivists," there are varieties of subjectivism. Their subjectivist ideas are not fully compatible with one another and conduce to different theories of the market process. Hayek's theory, not Keynes's, allows us to say when markets will behave in the way Keynes described and when they will instead behave in more coordinated ways. In this sense, a Hayekian theory is needed to understand a Keynesian world.

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Bibliographic Info

Paper provided by EconWPA in its series Method and Hist of Econ Thought with number 9505001.

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Date of creation: 16 May 1995
Date of revision: 17 May 1995
Handle: RePEc:wpa:wuwpmh:9505001

Note: wp5.1 file, forthcoming, Summer 1997, History of Political Economy
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Related research

Keywords: Subjectivism; uncertainty; expectations; Keynes; Hayek; philosophy; epistemology; probability;

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  1. Runde, Jochen, 1990. "Keynesian Uncertainty and the Weight of Arguments," Economics and Philosophy, Cambridge University Press, vol. 6(02), pages 275-292, October.
  2. Coddington, Alan, 1982. "Deficient Foresight: A Troublesome Theme in Keynesian Economics," American Economic Review, American Economic Association, vol. 72(3), pages 480-87, June.
  3. Caldwell, Bruce, 1994. "Hayek's Scientific Subjectivism," Economics and Philosophy, Cambridge University Press, vol. 10(02), pages 305-313, October.
  4. Hicks, J. R., 1979. "Critical Essays in Monetary Theory," OUP Catalogue, Oxford University Press, number 9780198284239, September.
  5. Heiner, Ronald A, 1983. "The Origin of Predictable Behavior," American Economic Review, American Economic Association, vol. 73(4), pages 560-95, September.
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Cited by:
  1. Roger Koppl & William Butos, 2001. "Confidence in Keynes and Hayek: Reply to Burczak," Review of Political Economy, Taylor & Francis Journals, vol. 13(1), pages 81-86.
  2. Anna Carabelli & Nicolo De vecchi, 2004. "On Hayek and Keynes once again: a reply to Butos & Koppl," Review of Political Economy, Taylor & Francis Journals, vol. 16(2), pages 249-256.
  3. Pierre Garrouste, 2008. "The Austrian roots of the economics of institutions," The Review of Austrian Economics, Springer, vol. 21(4), pages 251-269, December.
  4. William Butos & Roger Koppl, 1993. "Hayekian expectations: Theory and empirical applications," Constitutional Political Economy, Springer, vol. 4(3), pages 303-329, September.
  5. Roger Koppl & William Luther, 2012. "Hayek, Keynes, and modern macroeconomics," The Review of Austrian Economics, Springer, vol. 25(3), pages 223-241, September.
  6. Cornelia Woll, 2010. "Firm Interests in Uncertain Times: Business Lobbying in Multilateral Service Liberalization," Sciences Po publications info:hdl:2441/f5vtl5h9a73, Sciences Po.
  7. Robert P. Murphy & William Barnett II & Walter E. Block, 2012. "Testing Austrian Business Cycle Theory? A Second Rejoinder To Andrew Young," Romanian Economic Business Review, Romanian-American University, vol. 7(3), pages 7-20, September.
  8. Theodore Burczak, 2001. "Profit Expectations and Confidence: Some unresolved issues in the Austrian/Post-Keynesian debate," Review of Political Economy, Taylor & Francis Journals, vol. 13(1), pages 59-80.
  9. William Butos & Roger Koppl, 2004. "Carabelli & de Vecchi on Keynes and Hayek," Review of Political Economy, Taylor & Francis Journals, vol. 16(2), pages 239-247.
  10. Miguel A. DurĂ¡n, 2005. "The problems of the the Co-Ordination problem," ThE Papers 05/09, Department of Economic Theory and Economic History of the University of Granada..
  11. William Butos, 2003. "Knowledge Questions: Hayek, Keynes and Beyond," The Review of Austrian Economics, Springer, vol. 16(4), pages 291-307, December.
  12. Salvatore Rizzello & Margherita Turvani, 2000. "Institutions Meet Mind: The Way out of a Deadlock," Constitutional Political Economy, Springer, vol. 11(2), pages 165-180, June.
  13. Anna Carabelli & Nicolo De Vecchi, 2001. "Hayek and Keynes: From a common critique of economic method to different theories of expectations," Review of Political Economy, Taylor & Francis Journals, vol. 13(3), pages 269-285.


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