Subjectivism and the Austrian School of Economics
- New Thinking in Political Economy series
Chapter 5: A World of Discovery
5. A World of Discovery ___________________________________________________ The analysis of market formation allows certain elements of intersubjectivity to appear, which we can use to explain market exchanges mechanisms. Yet the prices formed from these monetary transactions cannot be seen as a way of removing all ignorance. Even when the market exists, when exchanges have established monetary prices, agents are still incapable of grasping all the available information; they still have to deal with ignorance. Catallaxy here becomes a central point in dealing with this problem, the market mechanisms thus becoming a means not of getting rid of ignorance but of encouraging discovery. Catallaxy places ignorance in the very centre of the study of economic phenomena, obliging much more specific examination of the themes of disequilibrium and equilibrium (1). The Austrian tradition considers the market as a process and claims the entrepreneur plays an important role in its activities (2). In turn, entrepreneurship in a market economy cannot be analysed independently of the institutional context which structures its activities: competition (3). 1. MARKETS, EQUILIBRIUM AND DISEQUILIBRIUM The Austrians carefully separate ‘information’ from ‘knowledge’ (1.1). From this distinction comes the idea that market prices are disequilibrium prices (1.2). Agents commit errors, governed as they are by the logic of disequilibrium; in trying to correct them, they show the market to be a process (1.3). 1.1 Information is Not the Same as Knowledge Evidence of agents’ ex ante ignorance means the market’s role can be conceptualised. The latter’s function, as we noted in Part 1,...
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