Equilibrium versus Understanding: Towards the Restoration of Economics as Social Theory

By Mark Addleson | Go to book overview

7

IMPLICATIONS OF INTERPRETATIVE UNDERSTANDING

TOWARDS A FIRST-PERSON PERSPECTIVE

Austrian subjectivism, reviewed in the previous chapter, is prefaced upon a Cartesian desire to show what the world is really like. It is characterised by an ‘external world’ that is independent of individuals and their experiences. There is one real world, though individuals’ experiences of it may differ. Determinism, if not central, is at least an important motif in Austrian contributions which emphasise the significance of equilibrium in one way or another. Determinism means that the world out there can be grasped and represented in its entirety. Whether it is Hayek’s (1948f) interest in the unintended consequences of conduct, or Mises (1949) referring to the need to explicate the conditions of an ‘evenly rotating economy’, or Kirzner (1973, 1985), analysing the implications of entrepreneurial activity or Lachmann reflecting upon the character of the market system (1986: see ‘Appendix’), in each case, as with neoclassical equilibrium theory, the object of the enquiry is an entire scheme of things. Objective-subjectivism combined with determinism ensures that the theory cannot accommodate interpretation or understanding.

The first-person perspective, which engages understanding at both levels of the double hermeneutic, eschews an ontology of things that exist in the world. The individual is not something oriented towards a given world out there. Understanding something means making it part of one’s being or of one’s awareness. Understanding is personal, reflecting the understander’s interests of the moment, and prejudiced, coloured by her interests and beliefs. The focus is thus the individual’s world, which she constitutes through being conscious of things and doing things. The individual breathes meaning into her world which is co-extensive with her thoughts, changing as her interest, or perspective, changes. The first-person perspective also eschews an epistemology of ‘completeness’. Meaning is temporal, tied to experience in the durée. From moment to moment the individual constitutes her understanding in terms of her interests and purposes and continually reconstitutes her understanding with her experience of, for example, people and their attitudes.

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Equilibrium versus Understanding: Towards the Restoration of Economics as Social Theory
Table of contents

Table of contents

  • Title Page iii
  • Contents vii
  • List of Figures ix
  • Acknowledgements x
  • Part 1 1
  • Introduction 3
  • 1 - Two Languages of Economic Theory 13
  • 2 - Neoclassical Methodology 34
  • 3 - The Practices of Neoclassicists 52
  • 4 - On Subjectivism 68
  • 5 - Interpretative Understanding 79
  • 6 - Austrian Economics and Subjectivism 97
  • 7 - Implications of Interpretative Understanding 116
  • Part 2 133
  • 8 - Models of Industrial Location 135
  • 9 - Location Theory as a Narrative 155
  • 10 - Decisions About Things in the World 170
  • 11 - Plans and Decisions as Understanding 182
  • 12 - Investment Decisions 195
  • 13 - Understanding and Locations 213
  • 14 - Retrospect and Prospect 231
  • Notes 241
  • References 266
  • Index 288
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