The Continuing Relevance of Keynes's Philosophical Thinking: Reflexivity, Complexity, and Uncertainty

Forthcoming in Annals of the Fondazione Luigi Einaudi: An Interdisciplinary Journal of Economics, History and Political Science

22 Pages Posted: 8 Dec 2016

See all articles by John B. Davis

John B. Davis

Marquette University; University of Amsterdam; Tinbergen Institute

Date Written: December 6, 2016

Abstract

This paper explains the continuing relevance of Keynes’s philosophical thinking in terms of his anticipation of complexity thinking in economics. It argues that that reflexivity is a central feature of the philosophical foundations of complexity theory, and shows that Keynes employed an understanding of reflexivity in both his philosophical and economic thinking. This argument is first developed in terms of his moral science conception of economics and General Theory beauty contest analysis. The paper advances a causal model that distinguishes direct causal relationships and reflexive feedback channels, uses this to distinguish Say’s Law economics and Keynes’s economics, and explains the economy as non-ergodic in these terms. Keynes’s policy activism is explained as a complexity view of economic policy that works like self-fulfilling and self-defeating prophecies. The paper closes with a discussion of the ontological foundations of uncertainty in Keynes’s thinking, and comments briefly on what a complexity-reflexivity framework implies regarding his thinking about time.

Keywords: Keynes, Complexity, Reflexivity, Non-Ergodic, Policy Activism, Uncertainty, Time

JEL Classification: E12, B41

Suggested Citation

Davis, John B., The Continuing Relevance of Keynes's Philosophical Thinking: Reflexivity, Complexity, and Uncertainty (December 6, 2016). Forthcoming in Annals of the Fondazione Luigi Einaudi: An Interdisciplinary Journal of Economics, History and Political Science. Available at SSRN: https://ssrn.com/abstract=2881573 or http://dx.doi.org/10.2139/ssrn.2881573

John B. Davis (Contact Author)

Marquette University ( email )

P.O. Box 1881
Milwaukee, WI 53201-1881
United States

University of Amsterdam ( email )

Amsterdam
Netherlands

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

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