Roger W. Garrison · 2000
Roger W. Garrison’s review examines the 1999 book by Malte Faber, John Proops, and Stefan Speck with Frank Jöst. Its central concern is the methodological distance between Austrian subjectivism and neo-Austrian mathematical capital theory, and the consequences of that distance for environmental policy. Garrison proceeds from a distinction between intellectual traditions, through an account of the book’s models, to a critique of its claims about entrepreneurial foresight and environmental accounting.
Drawing on Israel Kirzner’s explanation of Austrian economics, Garrison identifies subjective evaluation—not simply attention to production through time—as the tradition’s defining commitment:
Economic theorizing must be rooted in the subjective evaluations of market participants, each employing means in pursuit of his or her own separate ends.
The reviewed book instead follows John Hicks’s neo-Austrian approach, retaining the temporal structure of production while adopting mathematical formalism. Garrison acknowledges that its authors explicitly distinguish Austrian subjectivists from neo-Austrian capital theorists. His objection is therefore less that they misunderstand their affiliation than that their analytical framework displaces the explanatory role of purposeful agents:
The Austrians’ means–end framework is overshadowed by the neo-Austrians’ mathematical structure.
Garrison describes a demanding technical work organized into five parts. An introduction and historical discussion precede a three-sector, two-period capital model, subsequently extended to multiple periods. Further sections incorporate technical innovation and environmental considerations; the final part addresses pollution and recycling, culminating in an application to iron and steel production. He credits the introductory discussion with unusual methodological awareness, while emphasizing that most of the book requires working through models rather than simply reading an exposition.
The review’s substantive pivot is the authors’ treatment of entrepreneurial planning. Their “rolling myopic plans” allow entrepreneurs to revise multiperiod decisions over time, suggesting a market process more adaptive than static or rational-expectations assumptions permit. Garrison nevertheless challenges the characterization of this process as myopic:
Relative to what other decisionmakers are the entrepreneurs supposedly myopic?
This question introduces his comparative-institutional criticism. Entrepreneurial foresight must be assessed against the actual capacities and incentives of political decisionmakers, not an assumed long-sighted state. Continually revised market plans may compare favorably with decisions constrained by electoral cycles. For Garrison, describing entrepreneurs as short-sighted prejudges precisely the institutional comparison that the analysis should undertake.
The environmental-accounting chapter gives this methodological objection its policy significance. The authors propose valuing nature’s capacity to absorb pollutants by reference to the marginal value of public pollution-abatement programs, despite acknowledging that those programs cannot themselves be designed to satisfy optimality criteria. They also favor assigning present use of nonrenewable resources a higher price than the market would generate. These accounting adjustments are meant to correct investment timing and prevent resource depletion and ecological overload.
Garrison reads the proposed institutional remedies as relying on an unestablished governmental superiority in foresight:
Far-sighted governmental interventions are needed to override the short-sighted market process.
This is his critical reconstruction of the book’s conclusion, not his own policy recommendation. The review’s relevance lies in connecting formal assumptions about planning horizons to the institutional authority claimed for environmental intervention. Garrison closes by locating the book within Faber’s continuing research on capital, investment, time, and ecology. His assessment recognizes the coherence and methodological self-awareness of that program while insisting that modelling production through time does not, by itself, preserve Austrian subjectivism or justify corrective state action.
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