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The Varieties of Subjectivism: Keynes and Hayek on Expectations

Author Info

Listed author(s):
  • 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.

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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
Contact details of provider: Web page: http://econwpa.repec.org

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

Find related papers by JEL classification:

  • B - Schools of Economic Thought and Methodology

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  1. Hicks, J. R., 1979. "Critical Essays in Monetary Theory," OUP Catalogue, Oxford University Press, number 9780198284239, April.
  2. Heiner, Ronald A, 1983. "The Origin of Predictable Behavior," American Economic Review, American Economic Association, vol. 73(4), pages 560-595, September.
  3. Coddington, Alan, 1982. "Deficient Foresight: A Troublesome Theme in Keynesian Economics," American Economic Review, American Economic Association, vol. 72(3), pages 480-487, June.
  4. Caldwell, Bruce, 1994. "Hayek's Scientific Subjectivism," Economics and Philosophy, Cambridge University Press, vol. 10(02), pages 305-313, October.
  5. Vaughn,Karen I., 1994. "Austrian Economics in America," Cambridge Books, Cambridge University Press, number 9780521445528, Diciembre.
  6. Runde, Jochen, 1990. "Keynesian Uncertainty and the Weight of Arguments," Economics and Philosophy, Cambridge University Press, vol. 6(02), pages 275-292, October.
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Cited by:

  1. 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.
  2. Cornelia Woll, 2010. "Firm Interests in Uncertain Times: Business Lobbying in Multilateral Service Liberalization," Post-Print hal-00972803, HAL.
  3. 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.
  4. 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.
  5. 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.
  6. 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.
  7. 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.
  8. 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.
  9. 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.
  10. 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.
  11. 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.
  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. 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..
  14. William Butos & Roger Koppl, 1993. "Hayekian expectations: Theory and empirical applications," Constitutional Political Economy, Springer, vol. 4(3), pages 303-329, 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.

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