Ludwig M. Lachmann · 1966
Lachmann’s 1966 essay redefines the Austrian school’s place in the history of economic thought. Against Schumpeter and Sombart, who treated Vienna as an incomplete or less technical anticipation of Walrasian equilibrium theory, Lachmann argues that its importance lies in a different intellectual aim: not merely ordering quantitative relations, but interpreting the meaning of economic action. Its distinctive “Denkstil” is geisteswissenschaftlich because it introduces
Verstehen als Methode in die theoretischen Sozialwissenschaften eingeführt wurde.
English translation: Verstehen [interpretive understanding] was introduced as a method into the theoretical social sciences.
The essay first clears away methodological objections. Menger’s Untersuchungen still speaks of “exakte Gesetze,” but Lachmann treats that work as transitional: written before the Austrian theoretical project had matured and in dispute with Schmoller’s historicism. Mises’s distinction between Begreifen and Verstehen is likewise not fatal, since Lachmann’s concern is the sense-oriented theoretical interpretation of action, not historical empathy.
Lachmann then develops his thesis by contrast. Classical economics, especially Ricardo, appears as a natural-scientific system: it seeks laws of distribution, treats value as a substance-like measure, and reduces man to a homogeneous production factor. Austrian economics reverses this by turning marginal utility into a theory of calculation, choice, and plans.
Aus dem Grenznutzengesetz entwickelt sich allmählich eine Theorie der Wirtschaftsrechnung und damit eine Logik der Wahlakte.
English translation: Out of the law of marginal utility there gradually develops a theory of economic calculation, and with it a logic of acts of choice.
Thus subjective value theory is not merely a new price doctrine. It relocates economic explanation in heterogeneous actors who value, choose, and plan. The school’s historical significance is condensed in the claim
daß hier der handelnde Mensch im Mittelpunkt des wirtschaftlichen Geschehens steht.
English translation: that here acting man stands at the center of economic events.
The deepest contrast is with Lausanne. Walrasian-Paretian theory requires timeless statics, in which all relevant alternatives are already given so that equilibrium can be determinate. Austrian theory requires real time, because action is mental, plan-guided, and exposed to revision under changing knowledge and expectations.
Die österreichische Theorie bedarf der Zeitdimension, da geistige Akte nur in der Zeit möglich sind.
English translation: Austrian theory requires the dimension of time, since mental acts are possible only in time.
Pareto’s reduction of the person to a fixed map of tastes therefore marks the opposite pole:
„L'individu peut disparaître, pourvu qu'il nous laisse cette photographie de ses goûts.“
English translation: “The individual may disappear, provided that he leaves us this photograph of his tastes.”
For Lachmann, such a “photograph” may serve equilibrium logic, but it cannot explain the formation, failure, or revision of actual plans. It also misses the difference between expected and realized prices, on which Austrian value theory depends.
The epistemological core of the essay is Lachmann’s answer to how a logic of choice can yield knowledge of reality. In social science, unlike natural science, action is internally structured by meaning. Prediction is limited because outcomes depend on actors’ future knowledge and expectations; interpretation remains possible because plans are immanent in conduct.
Pläne sind logische Schemen, die also der Handlung immanent sind.
English translation: Plans are logical schemes and are therefore immanent in action.
The final section turns this reconstruction into a program: defend the methodological independence of the social sciences, criticize models that replace action with sense-free functions, and study disequilibrium as the field of profit-seeking plan revision. Lachmann closes by extending praxeology toward institutions, which coordinate plans as
„zwischenmenschliche Orientierungstafeln“
English translation: “interpersonal tables of orientation”
The essay’s relevance lies in this repositioning of Austrian economics: not embryonic Walrasianism, but an interpretive theory of action, time, knowledge, expectations, plans, and institutions.
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