IDEAS home Printed from https://ideas.repec.org/p/wpa/wuwpmh/9505001.html
   My bibliography  Save this paper

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
    as

    Download full text from publisher

    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/mhet/papers/9505/9505001.pdf
    Download Restriction: no
    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/mhet/papers/9505/9505001.ps.gz
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. R. M. O’Donnell, 1989. "Keynes: Philosophy, Economics and Politics," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-07027-5.
    2. Rudy Van Zijp, 1993. "Austrian And New Classical Business Cycle Theories," Books, Edward Elgar Publishing, number 449.
    3. Hicks, J. R., 1979. "Critical Essays in Monetary Theory," OUP Catalogue, Oxford University Press, number 9780198284239.
    4. Burczak, Theodore A., 1994. "The Postmodern Moments of F. A. Hayek'S Economics," Economics and Philosophy, Cambridge University Press, vol. 10(1), pages 31-58, April.
    5. Vanberg, Viktor, 1986. "Spontaneous Market Order and Social Rules," Economics and Philosophy, Cambridge University Press, vol. 2(1), pages 75-100, April.
    6. Heiner, Ronald A, 1983. "The Origin of Predictable Behavior," American Economic Review, American Economic Association, vol. 73(4), pages 560-595, September.
    7. Coddington, Alan, 1982. "Deficient Foresight: A Troublesome Theme in Keynesian Economics," American Economic Review, American Economic Association, vol. 72(3), pages 480-487, June.
    8. Caldwell, Bruce, 1994. "Hayek's Scientific Subjectivism," Economics and Philosophy, Cambridge University Press, vol. 10(2), pages 305-313, October.
    9. Vaughn,Karen I., 1994. "Austrian Economics in America," Cambridge Books, Cambridge University Press, number 9780521445528.
    10. repec:ucp:bkecon:9780226320625 is not listed on IDEAS
    11. Runde, Jochen, 1990. "Keynesian Uncertainty and the Weight of Arguments," Economics and Philosophy, Cambridge University Press, vol. 6(2), pages 275-292, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    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. Walter E. BLOCK & Michael R. EDELSTEIN, 2020. "Rejoinder To Nelson On Nature Preserves," Romanian Economic Business Review, Romanian-American University, vol. 15(1), pages 46-56, March.
    3. 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.
    4. John Davis & Theodore Koutsobinas, 2021. "Attribute substitution, counterfactual thinking, and heterodox economics," Journal of Behavioral Economics for Policy, Society for the Advancement of Behavioral Economics (SABE), vol. 5(S3), pages 45-54, October.
    5. 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.
    6. 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.
    7. 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.
    8. 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.
    9. 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.
    10. 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..
    11. 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.
    12. William Butos & Roger Koppl, 1993. "Hayekian expectations: Theory and empirical applications," Constitutional Political Economy, Springer, vol. 4(3), pages 303-329, September.
    13. Cornelia Woll, 2010. "Firm Interests in Uncertain Times: Business Lobbying in Multilateral Service Liberalization," Post-Print hal-00972803, HAL.
    14. 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.
    15. 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.
    16. 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.
    17. 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.
    18. repec:hal:spmain:info:hdl:2441/f5vtl5h9a73d5ls976m3igpqi is not listed on IDEAS
    19. Cornelia Woll, 2010. "Firm Interests in Uncertain Times: Business Lobbying in Multilateral Service Liberalization," Sciences Po publications info:hdl:2441/f5vtl5h9a73, Sciences Po.
    20. 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.
    21. Walter E. Block & William Barnett, 2017. "Maturity Mismatching and “Market Failure”," Journal of Business Ethics, Springer, vol. 142(2), pages 313-323, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. J. Barkley Rosser, 2001. "Alternative Keynesian and Post Keynesian Perspective on Uncertainty and Expectations," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 23(4), pages 545-566, July.
    2. Feduzi, Alberto, 2007. "On the relationship between Keynes's conception of evidential weight and the Ellsberg paradox," Journal of Economic Psychology, Elsevier, vol. 28(5), pages 545-565, October.
    3. Marcello Basili & Carlo Zappia, 2010. "Ambiguity and uncertainty in Ellsberg and Shackle," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 34(3), pages 449-474.
    4. Fontana, Giuseppe & Gerrard, Bill, 2004. "A Post Keynesian theory of decision making under uncertainty," Journal of Economic Psychology, Elsevier, vol. 25(5), pages 619-637, October.
    5. Marco A. Crocco, 2008. "Technical Change And Formation Of Expectations," Metroeconomica, Wiley Blackwell, vol. 59(2), pages 276-304, May.
    6. Marco Crocco, 2002. "The concept of degrees of uncertainty in Keynes, Shackle, and Davidson," Nova Economia, Economics Department, Universidade Federal de Minas Gerais (Brazil), vol. 12(2), pages 11-28, July-Dece.
    7. Sandye Gloria-Palermo, 2002. "Continuité dans la pensée hayekienne. Une résistance planifiée contre l'interventionnisme," Recherches économiques de Louvain, De Boeck Université, vol. 68(3), pages 313-333.
    8. Marco Crocco, 2003. "Innovation and social probable knowledge," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 27(2), pages 177-190, March.
    9. 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.
    10. Marcello Basili & Carlo Zappia, 2007. "The weight of argument and non-additive measures: a note," Department of Economic Policy, Finance and Development (DEPFID) University of Siena 003, Department of Economic Policy, Finance and Development (DEPFID), University of Siena.
    11. Carlo Zappia, 2008. "Non-Bayesian decision theory ante-litteram: the case of G. L. S. Shackle," Department of Economic Policy, Finance and Development (DEPFID) University of Siena 0408, Department of Economic Policy, Finance and Development (DEPFID), University of Siena.
    12. Andrea Migone, 2011. "Embedded markets: A dialogue between F.A. Hayek and Karl Polanyi," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 24(4), pages 355-381, December.
    13. Loïc Sauce, 2017. "Market process(es) and (un)knowledge," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 30(3), pages 305-321, September.
    14. Mauro Boianovsky, 2004. "The IS-LM Model and the Liquidity Trap Concept: From Hicks to Krugman," History of Political Economy, Duke University Press, vol. 36(5), pages 92-126, Supplemen.
    15. Theodore Burczak, 2014. "Dictating Liberty," Review of Political Economy, Taylor & Francis Journals, vol. 26(3), pages 368-371, July.
    16. Jieming Zhu, 2005. "A Transitional Institution for the Emerging Land Market in Urban China," Urban Studies, Urban Studies Journal Limited, vol. 42(8), pages 1369-1390, July.
    17. Peter Wheale & David Hinton, 2007. "Ethical consumers in search of markets," Business Strategy and the Environment, Wiley Blackwell, vol. 16(4), pages 302-315, May.
    18. Dow Alexander & Dow Sheila C., 2011. "Animal Spirits Revisited," Capitalism and Society, De Gruyter, vol. 6(2), pages 1-25, December.
    19. Lars Jonung, 2002. "EMU and the Euro - The First Ten Years. Challenges to the sustainability and price stability of the euro area - what does history tell us?," EUI-RSCAS Working Papers 46, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).
    20. Dequech, David, 2000. "Confidence and action: a comment on Barbalet," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 29(6), pages 503-515, November.

    More about this item

    Keywords

    Subjectivism; uncertainty; expectations; Keynes; Hayek; philosophy; epistemology; probability;
    All these keywords.

    JEL classification:

    • B - Schools of Economic Thought and Methodology

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpmh:9505001. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: EconWPA (email available below). General contact details of provider: https://econwpa.ub.uni-muenchen.de .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.