Ludwig Lachmann > Quotes

“The generic concept of capital without which economists cannot do their work has no measurable counterpart among material objects; it reflects the entrepreneurial appraisal of such objects. Beer barrels and blast furnaces, harbour installations and hotel-room furniture are capital not by virtue of their physical properties but by virtue of their economic functions. Something is capital because the market, the consensus of entrepreneurial minds, regards it as capable of yielding an income. This does not mean that the phenomena of capital cannot be comprehended by clear and unambiguous concepts. The stock of capital used by society does not present a picture of chaos. Its arrangement is not arbitrary. There is some order in it.”
― Ludwig Lachmann, Capital and Its Structure

“A progressive economy is not an economy in which no capital is ever lost, but an economy which can afford to lose capital because the productive opportunities revealed by the loss are vigorously exploited.”
― Ludwig Lachmann, Capital and Its Structure

“Formalism, in opting for the functional mode making possible precise quantitative determinations within a closed system of variables, forgoes the possibility of making meaningful statements about human action.”
― Ludwig Lachmann, Capital, Expectations, and the Market Process: Essays on the Theory of the Market Econony

“Both, business expectation and scientific hypothesis serve the same purpose; both reflect an attempt at cognition and orientation in an imperfectly known world, both embody imperfect knowledge to be tested and improved by later experience. Each expectation does not stand by itself but is the cumulative result of a series of former expectations which have been revised in the light of later experience, and these past revisions are the source of whatever present knowledge we have”
― Ludwig Lachmann

“The Keynesian world is a world in which there are two distinct classes of actors: the skilled investor, ‘who, unperturbed by the prevailing pastime, continues to purchase investments on the best genuine long-term expectations he can frame’, and, on the other hand, the ignorant ‘game-player’. It does not seem to have occurred to Keynes that either of these two may learn from the other, and that, in particular, company directors and even the managers of investment trusts may be the wiser for learning from the market what it thinks about their actions. In this Keynesian world the managers and directors already know all about the future and have little to gain by devoting their attention to the misera plebs of the market. In fact, Keynes strongly feels that they should not! This pseudo-Platonic view of the world of high finance forms, we feel, an essential part of what Schumpeter called the ‘Keynesian vision’. This view ignores progress through exchange of knowledge because the ones know all there is to be known whilst the others never learn anything.”
― Ludwig Lachmann, Capital and Its Structure

“The Austrian theory rests fundamentally upon the non-reversibility of the investment operation. Once "free capital" has been converted into buildings and machinery, any failure of events to conform to expectations will upset everything.”
― Ludwig Lachmann, Capital, Expectations, and the Market Process: Essays on the Theory of the Market Econony

“...industrial growth is the outcome of conscious and sustained human effort about which "dynamic equations" tell us less than nothing. Growth then is the cumulative effect of individual efforts directed towards the improvement of the productive apparatus of society.”
― Ludwig Lachmann, Capital, Expectations, and the Market Process: Essays on the Theory of the Market Econony

“The task of the economist is not merely, as in equilibrium theory, to examine the logical consistency of various modes of action, but to make human action intelligible, to let us understand the nature of the logical structure called "plans," to exhibit the successive modes of thought which give rise to successive modes of action. In other words, all true economics is not "functional" but "causal-genetic.”
― Ludwig Lachmann, Capital, Expectations, and the Market Process: Essays on the Theory of the Market Econony