Keynes’s Canonical Statements on Uncertainty Appear in his 1921 a Treatise on Probability in Chapter 26 on Pages 309-312: Statements about Uncertainty in the General Theory in 1936 and the 1937 Quarterly Journal of Economics Article are, at Best, Very Small Footnotes to Chapter 26 of the A Treatise on Probability
34 Pages Posted: 24 Sep 2019
Date Written: September 14, 2019
The Townshend–Keynes exchanges over decision making, weight of the argument (evidence), non numerical probabilities (Keynes’s term for Boole’s constituent probabilities, used in The Laws of Thought in 1854, that appears on page 163 of the A Treatise on Probability in chapter 15 on inexact measurement and approximation), and the connection between the A Treatise on Probability, the General Theory,and the 1937 Quarterly Journal of Economics, reveal that Keynes’s discussions about uncertainty in the General Theory, and the 1937 Quarterly Journal of Economics article are simply small ,minor footnotes to the A Treatise on Probability.
Nowhere in the exchanges between Keynes and Townshend in 1937 and 1938 does either Keynes or Townshend mention or make any reference to the 1937 Quarterly Journal of Economics article, which Joan Robinson, G L S Shackle, Paul Davidson, and Post Keynesian and heterodox economists claim marked a major change in Keynes’s approach to decision making.
Keynes, in his replies to Townshend, simply reinforced the strong connections that existed between his concepts of non numerical probability, weight,and his liquidity preference theory of the rate of interest on pages 148 and 240 of the General Theory. There is nothing in the 1937 Quarterly Journal of Economics article that is innovative or original that is not already discussed in far greater depth in chapter 26 of A Treatise on Probability. At best, the 1937 Quarterly Journal of Economics article is a minor footnote to pages 309-312 of chapter 26 of the A Treatise on Probability, which applies to all decision making. The 1937 QJE article emphasizes specifically economic decision making, but does not differ in any way from Keynes’s discussion in 1921.
Heterodox economists have simply read into the 1937 QJE article Shackle’s contradictory concept of complete and total uncertainty, which heterodox economists call radical, fundamental, irreducible, genuine, or their latest term, deep, uncertainty. Shackle’s chaotic – kaledic view of a world of complete and total uncertainty was completely rejected by Keynes in his lifetime. Nowhere is this viewpoint even mentioned in the 1937-1938 Keynes-Townshend exchanges. Shackle’s chaotic – kaledic view of a world of complete and total uncertainty appears to be related to the great emphasis he places on the imagination of the decision maker, where decision makers are supposed to make things up based on their constantly changing dreams of the future.
Keywords: risk versus uncertainty, A treatise on A probability Generaal Theory the 1937 Quarterly Journal of economics article
JEL Classification: B10, B12, B14, B16, B20, B22
Suggested Citation: Suggested Citation