Solving the “Lachmann Problem”: Orientation, Individualism, and the Causal Explanation of Socioeconomic Order

This article examines the question of whether social institutions should be treated as possessing the sui generis causal power to influence people's actions. It does so by means of a case study of the work of the Austrian economist Ludwig Lachmann. Lachmann's account of how social institutions facilitate intentional human agency in the face of uncertainty contains significant ambiguities and tensions, stemming from his reluctance to acknowledge the causal efficacy of social institutions. The conceptual resources required to overcome these problems are to be found in realist social philosophy and social theory. The proposed resolution comes at a price, however, for it calls into question Lachmann's self‐avowed commitment to methodological individualism.