Audio Lecture by Ludwig M. Lachmann

I have just found this talk by Ludwig M. Lachmann, delivered at the Department of Economics at the University of Colorado in the 1970s. Some biographical trivia:

(1) Lachmann obtained a PhD from the University of Berlin, where from 1924 to 1933 he was a graduate student.

(2) Lachmann went to England in 1933, and was at the London School of Economics (LSE) as research assistant to Hayek.

(3) Lachmann went to South Africa in 1948.

Here are some comments:

(1) Lachmann ascribes the Austrian view of time to George L. S. Shackle, which I find interesting.

(2) From 8.31 onwards Lachmann gives what he calls the Austrian view of macroeconomic entities: he says Austrians don’t deny the existence of macroeconomic entities (consumption, investment, etc.). Lachmann objects to the idea that these entities have mechanical effects on each other.

(3) Lachmann (27.44 onwards) notes that Schumpeter was early on affiliated with the Austrian school, but became a Walrasian.

(4) From 43.14 Lachmann describes the victory of Keynesianism at the LSE: by 1939 he and Hayek, he says (perhaps with some exaggeration), were the only Austrians left!

(5) From 44.55, Lachmann refers to the early writings of George L. S. Shackle, and includes these writings as making a contribution to his own work on time.

(6) From 55.38, in response to a question about policies for the macroeconomy, Lachmann explicitly allows government intervention in a depression: he notes that Hayek retreated from his liquidationism of 1932 (“Hayek has now realised that that was wrong,” he says from 56.53). “In a situation in which nothing really is scarce” there can be government intervention to increase employment (56.57). That is very significant, and I have written about it here:

“A Startling Admission from Ludwig Lachmann,” July 11, 2011.

“Ludwig Lachmann on Government Intervention,” July 9, 2011.

Lachmann was a different Austrian from the hordes of modern Austrian anarcho-capitalists. In fact, one gets a wonderful insight into Lachmann’s thinking on this from his Austrian Economics Newsletter (AEN) interview:

“AEN: After you moved to England in 1933 you became a research assistant to Hayek. What type of topics were usually of interest in the famous Hayek-Robbins seminar.

Lachmann: In general, problems of the business cycle and of capital theory. I actually worked on secondary depressions. That is to say, what Hayek first used to call the process of secondary deflation, a word that had been coined by a German economist to denote that part of the process of depression which goes beyond any kind of primary maladjustment. That is to say, that kind of depression that would not be an adjustment process in the Hayekian sense. It was by then (1933) admitted that a depression of this kind could develop and I think everybody admitted that by 1933 the world was in a process of secondary depression.”

Ludwig Lachmann, “An Interview with Ludwig Lachmann,” The Austrian Economics Newsletter, Volume 1, Number 3 (Fall 1978), Mises.org.

When I read this I thought: it’s all falling into place! (as an aside, in the same interview, Lachmann talks of Paul Rosenstein-Rodan’s comments on the role of expectations and the Austrian trade cycle theory).

(7) From 59.14, Lachmann rejects the gold standard for the modern world.

(8) From 1.06.20 Lachmann gives his view on government. He confirms that he was a Classical liberal who supported a minimal state, like Mises, as the institutional foundation of the market. Lachmann sees modern democracy in which voters choose to re-distribute wealth as a problem.

(9) From 1.08.12 onwards, Lachmann argues that Austrian economics is consistent with Popper’s methodology. Lachmann quotes Keynes’s letter to Roy Harrod of 16 July 1938 on the proper method for the social sciences.

Other Resources on Lachmann:

Peter Lewin, “Biography of Ludwig Lachmann (1906-1990): Life and Work,” Mises.org.

Ludwig Lachmann, “An Interview with Ludwig Lachmann,” The Austrian Economics Newsletter, Volume 1, Number 3 (Fall 1978), Mises.org.

I strongly urge people to read the interview with Lachmann.

NOTE: The Ludwig von Mises Institute has given permission under the Creative Commons license that this audio presentation of Lachmann can be publicly reposted as long as credit is given to the Mises Institute and other guidelines are followed. More info at: http://creativecommons.org/licenses/by/3.0/us/

My blog Social Democracy for the 21st Century: A Post Keynesian Perspective is in no way endorsed by or affiliated with the Ludwig von Mises Institute, any of its lecturers or staff members.