The Foundation for Keynes’s Decision Theoretic Approach to Uncertainty in the General Theory (1936) and the 1937 Quarterly Journal of Economics Reply Article was Acknowledged by Keynes to Be Based on His General Theory of Decision Making Presented in the A Treatise on Probability (1921) in the 1937–38 Correspondence with H. Townshend
25 Pages Posted: 2 Oct 2019
Date Written: September 22, 2019
Keynes made it clear to Townshend in their 1937-38 exchanges that Townshend’s assessment, that Keynes ‘s theory of liquidity preference in the General Theory was based on Keynes’s non numerical probabilities and weight of evidence(argument)analysis from the A Treatise on Probability, was correct. No mention at all is made about Frank Ramsey and subjective probability. No mention at all is made about the 1937 QJE article. No mention at all is made by either Townshend or Keynes about fundamental (irreducible, deep, radical, genuine, etc.) uncertainty. What is mentioned explicitly by Keynes to Townshend is the importance of Keynes’s comments on pages 148 and 240 of the General Theory.
There is absolutely no support for any heterodox and/or Post Keynesian claim, based on a number of assessments made by Joan Robinson and G L S Shackle over their lifetimes, that the 1937 QJE article represents a major or fundamental change in Keynes’s view about uncertainty from those expressed in the A Treatise on Probability in 1921 and the General Theory in 1936.
Keywords: Keynes -Townshend exchanges, Boole's constituent probabilities, Keynes's non numerical probabilities
JEL Classification: B10, B12, B14, B16, B20, B22
Suggested Citation: Suggested Citation