Keynes and Knight on Uncertainty: Peas in a Pod or Chalk and Cheese?

Packard, MD, Bylund, PL, Clark, BB. 2021. "Keynes and Knight on Uncertainty: Peas in a Pod or Chalk and Cheese?" Cambridge Journal of Economics.

43 Pages Posted: 28 May 2021

See all articles by Mark Packard

Mark Packard

University of Nevada, Reno

Per L. Bylund

School of Entrepreneurship; Ratio Institute; Mises Institute

Brent Clark

University of Nebraska Omaha

Date Written: May 10, 2021

Abstract

For many years, the ideas of Knight and Keynes have been widely understood to overlap greatly and they are presumed to have developed notions of uncertainty that deeply intersect, both describing a state where outcomes have non-probabilistic likelihoods. Further, even their political philosophies are historically somewhat homogenized, both considered ‘liberals.’ We critically review the historical records and writings of these key scholars with the purpose of dehomogenizing their political philosophies, scientific epistemologies, and their famous works on uncertainty, published in the same year—1921. We show that neither Keynes nor Knight has been considered fairly by history. Keynes, far from a liberal, was a political socialist who supposed that economic futures could be predicted rationally via deduced probabilities (in an abstract sense) and concluded that expert economists could and should engage in economic planning. Knight, in stark contrast, was something of a radical liberal, holding uncertainty and paradox to be the permeating fact of human existence, which implied, for Knight, significant political and economic complexities far beyond any planner. In short, Knight and Keynes held to radically different philosophic assumptions and, consequently, derived distinctive theories of uncertainty, much further apart than previously supposed. By more fully and accurately placing their ideas within the context of their ideological priors, we gain a stronger sense of how they truly understood the mechanics of economies.

Keywords: Frank H. Knight, John Maynard Keynes, Uncertainty

JEL Classification: D8

Suggested Citation

Packard, Mark and Bylund, Per L. and Bylund, Per L. and Clark, Brent, Keynes and Knight on Uncertainty: Peas in a Pod or Chalk and Cheese? (May 10, 2021). Packard, MD, Bylund, PL, Clark, BB. 2021. "Keynes and Knight on Uncertainty: Peas in a Pod or Chalk and Cheese?" Cambridge Journal of Economics., Available at SSRN: https://ssrn.com/abstract=3853917

Mark Packard

University of Nevada, Reno ( email )

United States

Per L. Bylund (Contact Author)

School of Entrepreneurship ( email )

Oklahoma State University
424 Business building
Stillwater, OK 74078
United States
4057444301 (Phone)

HOME PAGE: http://business.okstate.edu/directory/694946.html

Ratio Institute ( email )

P.O. Box 3203
SE-103 64 Stockholm
Sweden

Mises Institute ( email )

518 West Magnolia Avenue
Auburn, AL 36832
United States

HOME PAGE: http://mises.org/bylund

Brent Clark

University of Nebraska Omaha ( email )

6708 Pine St
228s Mammel Hall
Omaha, NE 68182-1101
United States

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