value is subjective because knowledge is created subjectively
knowledge supersedes preferences
and knowing the extent of other people’s knowledge forms a part of accurate and complete information, because other human beings are part of the reality with which your theory must be concerned
my thoughts on lachmann (ch. vi)
his focus on the Control Structure somewhat anticipated activists and their influences
my thoughts on lachmann (ch. vii)
the invisible hand doesn’t exist independently—it exists because of humans and to the extent of their knowledge—and since knowledge is created subjectively ex nihilo, it’s not one hand but many and it literally changes hands
How I found Lachmann
20250701
In the evenly rotating economy, businesses somewhat become interchangeable.
Mises and Rothbard are both theorists, and I am sure that Sherlock (and likely Deutsch and Taleb) would criticize their treatment of government intervention, saying it doesn’t explain how it came about in the first place.
20250704
me doubting the concept of evenly rotating economy
money is demanded because there is change, but in the ERE there is no change, but the ERE assumes money
I can convince myself that this makes sense if the ERE is the end state towards which the reality tends toward
but yet another question—is it really?
ludwig lachmann and bohm-bawerk argued otherwise (vs Rothbard and Mises)
capital is not homogenous
every capital good is a function of a plan—relate this with how you cannot predict how people will use technologyTODO
20250705
5-1b1a2—the problem with the ERE (evenly rotating economy) is the problem I encountered with Deutschean concept of universality—what is specifically universal is subjectivity
Also 9-1b2
For Lachmann, there is no such thing as mispricing, at least in the objective sense
Price as it would be in free market is not the same one as it would be in free market with knowledge creation.
Knowledge creation can negate difference between free market and one with intervention
E.g., ケマルアタテュルク (an intervention which facilitated knowledge creation)
20250707
embedding error-correction in capital theory, that’s what Lachmann did
20250708
The evenly rotating economy framework is useful because it clearly shows economic theory which disregards knowledge creation
20250710
Lachmann’s focus on capital configuration is similar in spirit to constructor theory of David Deutschrevisit
20250713
Lachmann vs Rothbard
MPP is knowledge-dependent—it changes
and although knowledge goes from private to public, some knowledge are kept hidden forever unless it is created in the mind
rothbard: time preference → interest → cap structure
time pref → capital
lachmann: knowledge → cap structure → coordination (which includes interest)
inverted: no capital → no demonstrated choice → no revealed time pref
rothbard would’ve reached the same conclusion, had he taken his praxeological stance thoroughlyrevisit
knowledge → capital → revealed time pref
20250714
expectations are not fully capturable in a price
because perfect replication is impossible
rothbard assumes price can exhaust something other than itself—e.g., in the ERE, he assumes that prices exhaust MPP and MVPrevisit
“Homogeneous capital” in Rothbard’s use assumes a shared valuation of capital goods (same MVP), because everyone sees the same MPP.
Lachmann challenges this by showing that MPP is subjective, and hence valuation is fragmented—depending on each actor’s knowledge, expectations, and purpose
and this is the meaning of heterogeneous capital
this is evident in rothbard arguing how different goods cannot be aggregated, but the “same” goods can be aggregatedrevisit
that capital is heterogenous is implied in the multiverserevisit
homogenous capital theory ignores culture
it ignores the fact that we are and will be always shifting from anti-rational to rational memes
20250715
MES Ch. 7-1 ~ 9-2E
Real-income (MPP/d) doesn’t rise or fall—because commensurable MPP doesn’t exist where there’s knowledge creation—it just becomes different.
The more is different to the extent that more creates knowledge.
This means that MPP curves change rather than shift.
The latter assumes constant environment but since knowledge is unpredictable, what happens in reality is the former.
This clearly shows how knowledge creation is not a function of time (Lachmann), which is also related with how there’s no beginning or end in our perception of reality, which further relates to why we always adjust to the facts of reality.
The book doesn’t have to be read in order, you can discover the meaning as you read (which means, you can read the way you like)—in fact, this is how we go about life (including scientific discoveries).
If there’s no additional saving, then profit must be made out of other people’s losses (by other people’s mistakes).
Facilitated via market
Optimal level of anything assumes constant environment.
We can discuss productivity in marginal terms, but only with conjunction in terms of knowledge held by those who are related to the productivity at hand.
That is, the factor’s marginal productivity doesn’t exist objectively—it exists only to the extent of the knowledge held by the producer who uses that factor.
This is why MPP curves cannot be aggregated—they are subjective just like any other preferences.
20250726
there is no beginning or end because there is no commensurable unit (e.g., time)
as Lachmann said, knowledge is created in time, but not a function of it