The archive.

Prosperity can undermine the investment that set it in motion. In “Investment and Costs of Production,” Ludwig Lachmann explains how rising consumption can increase construction costs without improving the expected long-term returns on durable assets. His distinctive move is to examine relative profitability rather than aggregate income: unemployed workers and idle machinery do not eliminate shortages of the particular skills and equipment a project requires. Readers can discover why cheap credit may fail to overcome these bottlenecks—and why commodity speculation may accelerate the cost increases that discourage investment. The article develops a qualified defence of Austrian cycle theory, while refusing to infer that falling costs will necessarily restart interrupted production. Its central tension is between an expansion’s apparent resources and the specific combinations needed to sustain it.

A convincing account of a crisis need not rest on a convincing theory of economic change. In this review of Thomas Wilson’s Fluctuations in Income and Employment, Ludwig Lachmann praises much of the analysis of American fluctuations while challenging the theoretical synthesis behind it. His objections are concrete: raw-material shortages can interrupt expansion, industrial equipment differs in age and productivity, and expectations cannot simply be treated as given. These concerns sharpen his defence of Austrian cycle theory against what he regards as Wilson’s static assumptions. The review culminates in a question that reaches beyond their disagreement: if investment opportunities are exhausted, what explains the human effort through which new ones arise? Readers encounter a compact example of Lachmann testing economic explanation against changing resources and purposeful action.

How can economists measure the gains from technical progress when innovation changes the capital they are measuring? In this 1942 review of Spurgeon Bell’s Productivity, Wages, and National Income, Ludwig Lachmann welcomes evidence on American productivity and income distribution while challenging the accounting used to interpret it. He singles out Bell’s finding that, after 1933, productivity gains accrued to wage earners rather than consumers and profit recipients. His sharper objection concerns comparisons of capital across periods marked by idle capacity, asset write-downs, and machinery replaced before it wears out. This compact review shows why, for Lachmann, empirical detail and theoretical criticism belong together: a study can document technological change yet conceal its effects through the measures it employs.

Does the power of bankers mark a new stage of capitalism, or does it arise when industry faces problems its own managers cannot solve? In this 1944 article, Ludwig Lachmann tests the finance-capitalism thesis against contrasting British, German, and American experience. His decisive distinction is between financial influence—lending, underwriting, or holding legal rights—and entrepreneurship: actively planning and carrying out economic change. He argues that financiers sometimes assume this role by reorganising industries or reconstructing failed enterprises, rather than inevitably taking command as capitalism matures. The article offers a concrete way to distinguish control over securities from initiative in production, while showing how investment opportunities can be created through the recombination of existing productive assets.

Investment opportunities are never simply "there"; they are the result of human action, the outcome of a process in which will-power and intensity of effort play a most prominent part.

Criticism of perfect competition is not yet a programme for economic policy. That distinction drives Ludwig Lachmann’s brief 1945 review of the first volume of Walter Adolf Jöhr’s Theoretische Grundlagen der Wirtschaftspolitik. Jöhr identifies monopoly, frictions, weakened profit motivation and power as obstacles to the theoretical market model; Lachmann asks what would protect economic freedom and competition under those conditions. His objection is precise: rejecting laissez faire leaves the constructive task unresolved. Yet his verdict is not simply dismissive. He welcomes Jöhr’s movement from advocacy of a corporative economy towards appreciation of competitive markets. The review offers a compact example of Lachmann separating recognition of a market’s imperfections from an account of how policy should address them.

Why does one price movement leave expectations unchanged while another forces people to rethink the future? In this article, Ludwig Lachmann distinguishes measuring the responsiveness of expectations from explaining it. Against accounts based on fixed psychological sensitivity or a single expected price, he examines the range of outcomes people consider plausible. A movement near its boundary may encourage expectations of reversal; a movement beyond it may undermine the very assumptions on which a forecast rests. His distinctive claim is that expectations arise through interpretation: people diagnose the forces at work before predicting their effects. The article shows why identical numerical changes can carry different economic meanings—and why a narrow range of expectations can both stabilise a market and make its eventual disruption more abrupt.

The formation of expectations is always incidental to the diagnosis of the situation in which we find ourselves; no prognosis without diagnosis.

Dispersed ownership may explain why salaried managers gain power, but it does not identify who actually exercises entrepreneurial judgement. This distinction anchors Ludwig Lachmann’s 1946 review of Robert Aaron Gordon’s Business Leadership in the Large Corporation. Welcoming Gordon’s evidence from American corporations, Lachmann presses him on the boundaries between initiating decisions, approving them, and coordinating an organisation. The return of commanding individuals during corporate crises complicates any simple account of entrepreneurship dissolving into managerial routines. His praise also stops short of endorsing Gordon’s proposed governmental approval of directors: a pointed reference to Nazi German company legislation challenges that remedy. This compact review distinguishes the economic explanation of managerial authority from the unresolved problem of controlling it.

"Separation of ownership and management" tells us nothing about the location of the entrepreneurial function within the managerial hierarchy.

Can a theory grounded in the logic of purposeful action explain how people learn from markets? In this 1951 review of Ludwig von Mises’s Human Action, Ludwig Lachmann presses that question while defending economics as an explanation of unfolding plans rather than equilibrium alone. His admiration for Mises does not prevent him from finding a gap: coordination requires changing knowledge, and learning is not simply a logical operation. Lachmann reconstructs an answer from Mises’s account of entrepreneurship, where profits are signals that must be interpreted and productive assets continually recombined. Readers can discover how this emphasis on interpretation and heterogeneous capital changes the diagnosis of economic crises: idle resources may indicate missing complementary assets, not merely insufficient demand. The result is a critical engagement with Mises, not a restatement of his system.

What makes a theory of capital realistic: attention to tools, or an account of how different resources work together? In this 1960 review of B. S. Keirstead’s Capital, Interest and Profits, Ludwig Lachmann welcomes the challenge to established theories but disputes the proposed alternative. Defining capital as tools, he argues, obscures the complementary relationships that make investment productive. His criticism asks how failed plans reshape investment and how share prices reflect the capital combinations being valued. A closing example—ships making the ocean usable for transport and trade—clarifies his alternative: progress depends not simply on adding equipment, but on discovering better uses for existing resources. This compact review shows what Lachmann demands of an explanation connecting entrepreneurial judgment, capital structure, and economic change.