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The Varieties of Subjectivism: Keynes and Hayek on Expectations

Author

Listed:
  • William N. Butos

    (Trinity College)

  • Roger G. Koppl

    (Fairleigh Dickinson University)

Abstract

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.

Suggested Citation

  • William N. Butos & Roger G. Koppl, 1995. "The Varieties of Subjectivism: Keynes and Hayek on Expectations," Method and Hist of Econ Thought 9505001, University Library of Munich, Germany, revised 17 May 1995.
    • Handle: RePEc:wpa:wuwpmh:9505001
    Note: wp5.1 file, forthcoming, Summer 1997, History of Political Economy
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    References listed on IDEAS

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    1. Caldwell, Bruce, 1994. "Hayek's Scientific Subjectivism," Economics and Philosophy, Cambridge University Press, vol. 10(2), pages 305-313, October.
    2. Vaughn,Karen I., 1994. "Austrian Economics in America," Cambridge Books, Cambridge University Press, number 9780521445528, April.
    3. Hicks, J. R., 1979. "Critical Essays in Monetary Theory," OUP Catalogue, Oxford University Press, number 9780198284239.
    4. Runde, Jochen, 1990. "Keynesian Uncertainty and the Weight of Arguments," Economics and Philosophy, Cambridge University Press, vol. 6(2), pages 275-292, October.
    5. Heiner, Ronald A, 1983. "The Origin of Predictable Behavior," American Economic Review, American Economic Association, vol. 73(4), pages 560-595, September.
    6. Coddington, Alan, 1982. "Deficient Foresight: A Troublesome Theme in Keynesian Economics," American Economic Review, American Economic Association, vol. 72(3), pages 480-487, June.
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    Citations

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    Cited by:

    1. 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.
    2. Pierre Garrouste, 2008. "The Austrian roots of the economics of institutions," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 21(4), pages 251-269, December.
    3. Roger Koppl & William Luther, 2012. "Hayek, Keynes, and modern macroeconomics," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 25(3), pages 223-241, September.
    4. Cornelia Woll, 2010. "Firm Interests in Uncertain Times: Business Lobbying in Multilateral Service Liberalization," Post-Print hal-00972803, HAL.
    5. Miguel A. Durán, 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..
    6. 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.
    7. Pies, Ingo, 2013. "Theoretische Grundlagen demokratischer Wirtschafts- und Gesellschaftspolitik: Der Beitrag von John Maynard Keynes," Discussion Papers 2013-16, Martin Luther University of Halle-Wittenberg, Chair of Economic Ethics.
    8. William Butos & Roger Koppl, 1993. "Hayekian expectations: Theory and empirical applications," Constitutional Political Economy, Springer, vol. 4(3), pages 303-329, September.
    9. William Butos, 2003. "Knowledge Questions: Hayek, Keynes and Beyond," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 16(4), pages 291-307, December.
    10. Daniel Y. ROTHSCHILD & Walter BLOCK, 2016. "It Is Not Armed Robbery When Government Takes People's Stuff, It Is Civil Asset Forfeiture," Journal of Social and Administrative Sciences, KSP Journals, vol. 3(3), pages 219-230, September.
    11. 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.
    12. 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.
    13. Stephen Montgomery & Walter E. Block, 2016. "Animal Torture: A Critique Of Thick Libertarianism," Review of Social and Economic Issues, Romanian-American University, vol. 1(3), pages 105-116, march.
    14. 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.
    15. Cornelia Woll, 2010. "Firm Interests in Uncertain Times: Business Lobbying in Multilateral Service Liberalization," Sciences Po publications info:hdl:2441/f5vtl5h9a73, Sciences Po.
    16. 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.
    17. Walter E. Block & William Barnett, 2017. "Maturity Mismatching and “Market Failure”," Journal of Business Ethics, Springer, vol. 142(2), pages 313-323, May.
    18. 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.

    More about this item

    Keywords

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

    JEL classification:

    • B - Schools of Economic Thought and Methodology

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