Ludwig M. Lachmann: Review of Freedom and Reform (1947)

Ludwig M. Lachmann’s journal review examines Frank H. Knight’s Freedom and Reform: Essays in Economics and Social Philosophy as an inquiry into the moral foundations of a free society. Assembled by Knight’s pupils, the book continues the concerns of The Ethics of Competition and develops the argument of “Ethics and Economic Reform.” Lachmann finds its subtitle misleading: its substantive subjects are social philosophy and methodology, rather than economics narrowly understood. His review follows Knight’s search for a rational criterion of social action, examines the role of discussion in establishing consent, and then challenges Knight’s criticism of methodological individualism. Throughout, admiration for Knight’s intellectual independence coexists with objections to his conceptual ambiguities.

The organizing problem is the compatibility of individual purposes. Human action is intelligible insofar as it is purposive, but a society cannot remain stable merely because its members’ plans are formally consistent. Individuals must also believe that its institutions leave room for the fulfilment of their aspirations.

No stable society can be based on mass frustration.

This sentence connects the analysis of purposeful action to the moral conditions of social stability. The question is not simply whether plans fit together, but whether people can accept the framework within which they pursue them. Lachmann presents Knight’s criticism of traditional liberalism as a rejection of two ways of assuming away this difficulty. Positivist liberalism treats the choice of ends as determined by natural forces, thereby obscuring initiative and self-determination. Utilitarian liberalism assumes that the pursuit of happiness makes individual ends compatible, while attributing excessive knowledge and foresight to individuals. Neither establishes how millions of purposes can coexist.

Democratic consent consequently becomes a continuing achievement rather than a premise from which political theory may safely begin.

It is not an axiom of political theory, but a perennial problem, to be solved year after year, generation after generation.

Lachmann emphasizes the moral character of this problem. Majority rule cannot by itself supply the consent that legitimates collective action; detached from that ideal, it may amount to another form of tyranny. Knight’s proposed alternative is discussion understood as a cooperative search for truth about facts and values. Yet the review identifies an unresolved tension between that demanding ideal and ordinary political practice. Knight sometimes associates discussion with deliberative bodies, while elsewhere stressing both the rarity of genuine discussion and the secondary importance of formal political procedures. Parliamentary debate and the informal formation of public opinion cannot simply be assumed to embody the same truth-seeking process.

A passage Lachmann quotes from Knight makes the difficulty especially clear:

The inveterate human tendency is to turn serious intercourse into a contest, a debate, or mere verbal clamor and combat instead of a co-operative quest for solutions.

Discussion must overcome dispositions that routinely transform inquiry into competition. Lachmann’s further objection concerns what discussion can establish. Knight describes values as validated through discussion, a claim that puzzles the reader who regards values as a transcendental category. Lachmann finds its explanation in Knight’s treatment of Maritain: beneath the apparent avoidance of metaphysics lies a radical empiricism and a sociological conception of value resembling Durkheim’s. Truth itself becomes a social category. The review thus distinguishes the practical problem of securing agreement from the philosophical problem of whether agreement can validate what is right.

The uncertainty of consent also helps explain Knight’s “philosophical conservatism.” Important decisions fall in practice to officials and professional politicians, while departures from established arrangements require strong justification. Existing institutions have at least sustained collective life; novelty offers no equivalent assurance. Lachmann compares this presumption in favour of continuity with Hayek’s “true individualism.” Its significance is not an unconditional rejection of reform, but resistance to the assumption that change, or individual freedom to introduce change, is inherently beneficial.

The review’s sharpest disagreement concerns methodology. Knight objects that methodological individualism neglects the reciprocal formation of society and individuals. Lachmann considers this objection mistaken because it demands a comprehensive explanation from a method designed for analytical discrimination.

Science, as Max Weber pointed out, does not deal with concrete phenomena and their relationships, but with those conceptual elements of them which are analytically separable from other elements.

For Lachmann, failure to explain a concrete social phenomenon in its entirety does not discredit a scientific method. The relevant question is whether an alternative can explain the social conditioning of action with precision comparable to economic analysis. Knight invokes linguistics, where purposeful use of language does not imply that conscious efforts at improvement explain linguistic change. Lachmann responds that making the social element an independent explanatory foundation risks either postulating a collective mind or importing natural-scientific methods unsuited to human action. Knight’s criticism of individualism therefore sits uneasily with his own opposition to Hegelianism and scientism.

Lachmann ends by balancing criticism with a strong endorsement. Knight’s rapid transitions, contradictory formulations, and brilliant aphorisms make the essays difficult to follow; their successive treatments of related problems are necessary aids to understanding. Nevertheless, the book remains a resource for confronting the difficulties of Western civilization. Its lasting conclusion is that a society committed to problem-solving freedom can neither recover a static morality nor surrender its problems to purported experts in social engineering. The review’s relevance lies in this double insistence: freedom requires continuing moral inquiry, but neither collective agreement nor scientific expertise provides an automatic substitute for understanding purposeful individual action.