The Review of Austrian Economics, 17:1, 139–144, 2004.
2004 Kluwer Academic Publishers. Manufactured in The Netherlands.
Leland B. Yeager (2001) Ethics as Social Science: The Moral Philosophy of Social
Cooperation, Northampton: Edward Elgar.
What is a good Austrian subjectivist to do? On the one hand, he believes that human action
is driven by subjectively held values, perceptions and expectations that are, in themselves,
unobservable and vary across individuals, and that this implies that, in many cases, there is
no automatic tendency for action to be coordinated around a set of commonly held values,
perceptions and expectations;
and further that all normative pronouncements that rely on
such coordination for the application of value metrics to social outcomes are, in its absence,
doomed to failure. On the other hand, he also believes that it ought to be possible to say
something normatively meaningful about social outcomes in general and economic policy
in particular. But how can one judge policies in the absence of an agreement on both the
affects that it will produce and on how to value these effects?
At one level the problem is solved by the so-called value-fact dichotomy—while the
economist-qua-economist cannot judge between outcomes as objectively better or worse,
he can, using good economic science, often describe the most likely outcomes and point
out where they deviate from what policy-makers and others intend or desire. So, for exam-
ple, while the economist cannot say that minimum wages are necessarily a bad thing, he
presumably can say that the imposition of an effectively-enforced minimum wage above
the market wage will have the effect of raising the level of unemployment especially for
those who are the targeted beneﬁciaries of such a policy.
This is likely to be less than completely satisfactory, however, for the analyst who wants
to be able to say more, for example, that societies that adopt regulatory policies like mini-
mum wages will achieve a lower level of coordination than those who do not. The problem
here is “measuring” the “level of coordination.” For a subjectivist it is clear that human
action may be discorrdinating as well as coordinating, depending on whether plans are
facilitated or frustrated—the abolition of minimum wages will frustrate some peoples’
plans and enhance the plans of others—and there appears no way in principle to weigh
the former against the latter. One cannot simply tally up the number of plans advanced
against the number frustrated or some such crude arithmetic, under the assumption that all
plans are equal in importance. This, of course, is an instance of the species of problems
falling under what we may call the “incommensurability problem.” Its most familiar form
is the inability to make “interpersonal comparisons of utility” which, depending on how
“utility” is interpreted is actually a catchall phrase implying that thoroughgoing subjec-
tivist economists are impotent in the face of alternative economic policies.
So the original
Such was my state of mind, though dimly perceived, when as a young graduate economist I
discovered Leland Yeager’s approach to these questions (Yeager 1978). I found in Yeager’s
article a profoundly simple, compelling, yet neglected approach to the role of policy in