Keynes's Section 8 of Chapter 12 of the General Theory Completely Refutes Shackle's Unknowledge Definition of Uncertainty, His Attack on IS-LM and All 'Chapter 12' Types of Keynesianism
31 Pages Posted: 27 Dec 2018
Date Written: December 9, 2018
Shackle’s attempt to completely redefine Keynes’s definition of uncertainty in chapter 12 of the General Theory, which was that uncertainty is an inverse function of the weight of the evidence as discussed in chapters 6 and 26 of the A Treatise on Probability, as unknowledge (no knowledge of the future ), fails once Keynes’s concluding section of chapter 12, section 8, is read. Keynes’s position is that there exists partial probable knowledge of the near future.
Therefore, complete uncertainty can only exist in the far and distant future or long run ,a long run in which we are all dead, which Keynes denoted as 10 years in the General Theory ,and 20 to 33 years in his 1937 Quarterly Journal of Economics article. Keynes’s IS-LM(LP) model therefore allows an economist, who is knowledgeable and careful about Keynes’s extensive qualifying discussions concerning the use of his IS-LM(LP) model on pages 298-303 of the General Theory, to calculate a quantitative, determinate, equilibrium position for the IS and LM(LP) curves in(Y) Aggregate Income-(r) rate of interest space. Shackle’s claim, that no IS-LM equilibrium can ever be calculated, due to his own definition of uncertainty as unknowledge, was completely rejected by Keynes on pages 298-303 of the General Theory.
The “Chapter 12” interpretation of the General Theory, as defined by A. Coddington in a 1976 article in the Journal of Economic Literature, and supported by Joan Robinson, Shackle, and Paul Davidson, has nothing to support it once it is realized that Shackle’s unknowledge claims about Keynes’s uncertainty concept were completely and totally rejected by Keynes himself in his summary to chapter 12 of the General Theory,as well as by Keynes’s own definition on page 148 of chapter 12 of the General Theory.
Keywords: IS-LM, IS-LP(LM), Shackle, Reddaway, Champernowne, Keynes, Chapter 21, Chapter 15, Keynes’s Views of Math
JEL Classification: B10, B12, B14, B16, B20, B22
Suggested Citation: Suggested Citation