Ludwig Lachmann
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Ludwig Maurits Lachmann (; ; 1 February 1906 – 17 December 1990) was a German economist, economic theorist and important contributor to the
Austrian School The Austrian school is a Heterodox economics, heterodox Schools of economic thought, school of economic thought that advocates strict adherence to methodological individualism, the concept that social phenomena result primarily from the motivat ...
of Economics. Lachmann,
Israel Kirzner Israel Meir Kirzner (also Yisroel Mayer Kirzner ; born February 13, 1930) is a British-born American economist, historian, rabbi, and Talmudist closely identified with the Austrian School. Early life and education The son of a well-known rabbi a ...
, and
Murray Rothbard Murray Newton Rothbard (; March 2, 1926 – January 7, 1995) was an American economist of the Austrian School,Ronald Hamowy, ed., 2008, The Encyclopedia of Libertarianism', Cato Institute, Sage, , p. 62: "a leading economist of the Austri ...
were the three primary catalysts of the Austrian 'revival', beginning in 1974. He wrote on economic theory, history, and methodology, as well as on the application of
Hermeneutics Hermeneutics () is the theory and methodology of interpretation, especially the interpretation of biblical texts, wisdom literature, and philosophical texts. As necessary, hermeneutics may include the art of understanding and communication. ...
to economic thought, in order to interpret economic phenomena.


Life


Early life

Ludwig Lachmann was born in Berlin, Germany on 1 February 1906 into a Jewish middle-class family. His father was a metal manufacturer, and his mother came from an intellectual background and had a strong influence on young Ludwig. His mother's brother, a bank official, also had a strong influence upon his nephew's early intellectual development. Ludwig was an only child, and initially was educated by his mother, but was later enrolled in . His childhood years are generally described as happy, which would contrast with his later life in Germany, surrounded by constant political and economic instability and crisis.


Education and 'pre-revival' career

Lachmann enrolled at the University of Berlin in 1924, studying under, among others,
Werner Sombart Werner may refer to: People * Werner (name), origin of the name and people with this name as surname and given name Fictional characters * Werner (comics), a German comic book character * Werner Von Croy, a fictional character in the ''Tomb Rai ...
, who introduced Lachmann to the works of Weber, that had a lifelong influence on Lachmann's work. He took a semester at the University of Zurich in 1926, and around the same time, he was introduced into the works of
Ludwig von Mises Ludwig Heinrich Edler von Mises (; ; September 29, 1881 – October 10, 1973) was an Austrian-American political economist and philosopher of the Austrian school. Mises wrote and lectured extensively on the social contributions of classical l ...
and
Friedrich Hayek Friedrich August von Hayek (8 May 1899 – 23 March 1992) was an Austrian-born British academic and philosopher. He is known for his contributions to political economy, political philosophy and intellectual history. Hayek shared the 1974 Nobe ...
. He graduated in 1930, and spent a few years to teach at the University. When Adolf Hitler rose to power in 1933, Lachmann moved to England with his girlfriend Margot. The couple struggled financially, and Lachmann, unable to find a post in an academic position, enrolled at the London School of Economics. At the
London School of Economics The London School of Economics and Political Science (LSE), established in 1895, is a public research university in London, England, and a member institution of the University of London. The school specialises in the social sciences. Founded ...
he was a student and later colleague of
Friedrich Hayek Friedrich August von Hayek (8 May 1899 – 23 March 1992) was an Austrian-born British academic and philosopher. He is known for his contributions to political economy, political philosophy and intellectual history. Hayek shared the 1974 Nobe ...
. One of Lachmann's fellow students was George Shackle, whose ideas would influence Lachmann's later work. He deepened his interest in the Austrian School, and was one of the few who chose Hayek's side, though not uncritically, following the so-called '
Keynesian Revolution The Keynesian Revolution was a fundamental reworking of economic theory concerning the factors determining employment levels in the overall economy. The revolution was set against the then orthodox economic framework, namely neoclassical econom ...
'. In 1938, Lachmann was awarded the Leon Fellowship from the University of London to study 'secondary depressions'. In this research project, he traveled to the United States, where he met
Alfred Schütz Alfred Schutz (; born Alfred Schütz, ; 1899–1959) was an Austrian philosopher and social phenomenologist whose work bridged sociological and phenomenological traditions. Schutz is gradually being recognized as one of the 20th century's leadin ...
and
Frank Knight Frank Hyneman Knight (November 7, 1885 – April 15, 1972) was an American economist who spent most of his career at the University of Chicago, where he became one of the founders of the Chicago School. Nobel laureates Milton Friedman, George S ...
, and attended the seminars of the latter. Following the outbreak of war in Europe, Lachmann, a German national, was interned by British authorities from July to December 1940. In 1941, following his release, he was appointed as an economic lecturer at the University of London. In 1943, he was appointed to the Head of the Department of Economics at the
University of Hull The University of Hull is a public research university in Kingston upon Hull, a city in the East Riding of Yorkshire, England. It was founded in 1927 as University College Hull. The main university campus is located in Hull and is home to the Hu ...
, a position he held until he departed from England in 1948. In 1948, Lachmann moved to
Johannesburg, South Africa Johannesburg ( , , ; Zulu language, Zulu and Xhosa language, Xhosa: eGoli ) (colloquially known as Jozi, Joburg, Jo'burg or "The City of Gold") is the most populous city in South Africa. With 5,538,596 people in the City of Johannesburg alon ...
, where he accepted a professorship at the
University of the Witwatersrand The University of the Witwatersrand, Johannesburg (), commonly known as Wits University or Wits, is a multi-campus Public university, public research university situated in the northern areas of central Johannesburg, South Africa. The universit ...
. During this time, he published his seminal work, ''Capital and Its Structure'' in 1956. He served as president of the Economic Society of South Africa from 1962 to 1963. He remained teaching at Witwatersrand until retiring in 1972.


Austrian 'revival', 1974–1987 and death

In 1974, a conference on Austrian economics was organized in South Royalton, Vermont, in which Lachmann was a key speaker, along with Israel Kirzner and Murray Rothbard. This conference led to the publication of the 1976 book, ''The Foundations of Modern Austrian Economics'', to which Lachmann contributed. Following the conference, Lachmann began annual trips to New York City, where he worked with Kirzner at
NYU New York University (NYU) is a private research university in New York City, New York, United States. Chartered in 1831 by the New York State Legislature, NYU was founded in 1832 by Albert Gallatin as a non-denominational all-male institutio ...
, advancing research and lecturing to students. Lachmann also was engaged in an economic debate with Kirzner regarding notions of equilibrium, and the role of the entrepreneur Lachmann continued this work from 1975 to 1987, when he re-retired to Johannesburg. Lachmann died on 17 December 1990. To commemorate Lachmann, his widow established a trust to fund the ''Ludwig M. Lachmann Research Fellowship'' at the Department of Philosophy, Logic and Scientific Method of the London School of Economics.


Personal life

Lachmann met his future wife, Margot Wulff, in the late 20's at an Italian language class. They ran into each other again in Sankt Moritz, and began a relationship. When their financial situation became secure, the couple got married in England, in 1939. Their marriage was described as, "a successful match," by Ludwig's former colleague, Karl Mittermaier. Lachmann himself has been described as "a very unusual man" and an "old world European gentleman" and one with a personality that left a lasting impression on those who knew him. He was described as "unfailingly gracious and considerate". He was also described as both intentionally and unintentionally humorous.


On economics

Lachmann grew to believe that the Austrian School had deviated from
Carl Menger Carl Menger von Wolfensgrün (; ; 28 February 1840 – 26 February 1921) was an Austrian economist who contributed to the marginal theory of value. Menger is considered the founder of the Austrian school of economics. In building his margi ...
's original vision of an entirely subjective economics. To Lachmann, Austrian Theory was an evolutionary, or "genetic-causal" approach, as opposed to the equilibrium and perfect-knowledge models used in mainstream
neoclassical economics Neoclassical economics is an approach to economics in which the production, consumption, and valuation (pricing) of goods and services are observed as driven by the supply and demand model. According to this line of thought, the value of a go ...
. He was a strong advocate of using
hermeneutic Hermeneutics () is the theory and methodology of interpretation, especially the interpretation of biblical texts, wisdom literature, and philosophical texts. As necessary, hermeneutics may include the art of understanding and communication. ...
methods in the study of economic phenomena. Lachmann's "fundamentalist Austrianism" was rare as few living Austrian economists departed from the mainstream. He underscored what he viewed as distinctive from that mainstream: economic subjectivism, imperfect knowledge, the heterogeneity of capital, the
business cycle Business cycles are intervals of general expansion followed by recession in economic performance. The changes in economic activity that characterize business cycles have important implications for the welfare of the general population, governmen ...
,
methodological individualism In the social sciences, methodological individualism is a method for explaining social phenomena strictly in terms of the decisions of individuals, each being moved by their own personal motivations. In contrast, explanations of social phenomen ...
, alternative cost and "market process". His brand of Austrianism now forms the basis for the " radical subjectivist" strand of Austrian Economics. His work influenced later American developments of the Austrian School. Fellow Austrian Economist
Israel Kirzner Israel Meir Kirzner (also Yisroel Mayer Kirzner ; born February 13, 1930) is a British-born American economist, historian, rabbi, and Talmudist closely identified with the Austrian School. Early life and education The son of a well-known rabbi a ...
was a close friend of Lachmann's whom he aligned with intellectually (though they disagreed on some finer details).


Contemporary social science research

Lachmann's ideas continue to influence contemporary social science research. Many social scientific disciplines explicitly or implicitly build on the subjective theory of value, developed by
Carl Menger Carl Menger von Wolfensgrün (; ; 28 February 1840 – 26 February 1921) was an Austrian economist who contributed to the marginal theory of value. Menger is considered the founder of the Austrian school of economics. In building his margi ...
and the Austrian School of Economics.


Selected bibliography


''The Role of Expectations in Economics as a Social Science''
1943 *
Capital and Its Structure
', 1956
''From Mises to Shackle: an essay on Austrian economics and the Kaleidic society''
1976 * ''The Market as an Economic Process'', 1986 * ''Austrian Economics: a hermeneutic approach'', 1990


See also

* Kaleidics *
Austrian School The Austrian school is a Heterodox economics, heterodox Schools of economic thought, school of economic thought that advocates strict adherence to methodological individualism, the concept that social phenomena result primarily from the motivat ...
* Post-Keynesian School


References


Further reading

* (Biographical aspects) * * * * (on Lachmann's view of government) * * *


External links


Critique on The History of Economic Thought Website
cepa.newschool.edu *

" Review of ''The Market as an Economic Process'' by Roger Garrison, Critical Review vol. 1, no. 3 (Summer), 1987, pp. 77–89. *
The Lachmann Legacy: An Agenda for Macroeconomics
" Roger Garrison * {{DEFAULTSORT:Lachmann, Ludwig 1906 births 1990 deaths Jewish German scientists German emigrants to South Africa Jewish emigrants from Nazi Germany to the United Kingdom South African people of German-Jewish descent Austrian School economists Alumni of the London School of Economics German libertarians Libertarian theorists 20th-century German economists Member of the Mont Pelerin Society