Keynes on Uncertainty and Tragic Happiness: Complexity and Expectations (Palgrave Studies in the History of Economic Thought)

Most economists who read the General Theory candidly admitted that they could not understand the theoretical apparatus and found it easy to recast it in traditional terms. This book provides a masterful guide to the generally unrecognized methodological revolution that supported the new theoretical concepts -- a veritable lodestone that complements and expands understanding on the treatment of the economic magnitudes appropriate to the ideal of generality in the social sciences, to the applicability of probability, to the formulation of decision-making under uncertainty, and the foundations of economic policy in interdependent economic systems. _Jan Kregel, Levy Economics Institute Anna Carabelli sets out Keynes’s understanding of economics as a way of thinking, encompassing method and morals, rather than as a doctrine. She does so with her customary admirable scholarship and also her willingness to take controversial positions. I commend the volume most highly to Keynes scholars as a drawing-together and development of the themes that Carabelli has pursued since the publication of her 1988 classic, On Keynes’s Method . Further Keynes’s approach was designed to be applied to different contexts, so I enthusiastically recommend the volume also as a foundation and guide for anyone open to such a ‘new way of reasoning in economics’ for the modern era. _Sheila Dow, University of Stirling This book examines the philosophy and methodology of Keynes, highlighting its novelty and how it presented a new form of economic reasoning. Exploring Keynes’s use of non-demonstrative logic, based on probability, commonalities are found in his economics, ethics, aesthetics, and international relations. Insights are provided into his reasoning and his approach to uncertainty, rationality, measurability of complex magnitudes, moral and rational dilemmas, and irreducible conflicts. This book investigates methodological continuity within Keynes’s work, in particular in relation to uncertainty, complexity, incommensurability, happiness and openness. It will be relevant to students and researchers interested in Keynes, probability, ambiguity, ethics and the history of economic thought. Contents 1 Introduction References 2 Rationality as Reasonableness: Probability Probability as Reasonableness Economic Expectations, Reasonableness and Conventional Rules Speculator’s Knowledge Ignorance and Uncertainty Reasonable Economic Policy: The Reasonable Justification of Economic Policy and Intervention Public Institutions and Limited Knowledge References 3 Complexity and Incommensurability: Multidimensional, Heterogeneous and Interdependent Magnitudes. Probability and Economic Magnitudes Probability: Measurement and Comparison CASE-III: Non-Quantitative Comparison of Probabilities and Incommensurability The Hypothesis of Homogeneity Joint Judgements: Direct and Organic Judgements Joint Judgements of Probability and the Weight of Argument Joint Judgements of Probability and Goodness: Right Conduct Keynes’s Philosophy of Measure: Intrinsically Incommensurable Magnitudes From Probability to Economic Quantities General Price Level Utility Incommensurability and Incomparability Due to Heterogeneity in Dimension Keynes’s Choice of the Units of Quantities and Measure in Economics Units of Time and Comparison in Time and Space The Atomic Hypothesis (the Hypothesis of Independence). Organic Interdependence. Wholes and Parts ‘Complex or Manifold’ Economic Magnitudes References 4 Keynes’s Methodology of Criticism: Probability and Classical Economic Theory. Logical Fallacies: The Introduction of the Tacit Assumptions of Homogeneity and Independence The Methodology of Critique of Probability in a Treatise on Probability The Methodology of Critique of Classical Economic Theory Critique of Premises Search for Tacit Assumptions Types of Tacit Assumptions Characteristics of Classical Tacit Assumptions The Limits Set to the Classical Tacit Assumptions What Keynes Means By a ‘General Theory’ The Logical Flaw in Classical Theory: ‘Ignoratio Elenchi’ The Epistemological Role of Classical Tacit Assumptions Keynes’s Own Method of Reasoning in the General Theory References 5 Uncertainty as the Legacy of Greek Tragedy: Uncertainty as Tragic Choice Tragedy: Main Themes Tragic Moral Dilemmas Keynes’s Ethics of Virtues Pluralism and Heterogeneity of Ends and Values Irreducibility of Heterogeneous Plural Ends and Values: Keynes’s Pleasure, Goodness and Happiness References 6 Happiness as Tragic Aristotelian Eudaimonia The ‘Fragility of Goodness’ The Greek Legacy of the Ethics of Virtues Against Utilitarianism Aesthetics as Sublime: ‘Tragic Beauty’. Pluralism in Aesthetics, the Beautiful and Sublime References 7 Moral and Rational Conflicts and Dilemmas Keynes on Moral Conflicts and Dilemmas Keynes on Rational Conflicts and Dilemmas References 8 International Relations: Complexity, Interdependence and Multilateralism—A Tragic Dilemma Indian Currency and Finance (1913) and the Economic Consequences of the Peace (1919) The General Theory (1936) and International Relations The Commod Control Scheme (1938–1942) The Interwar Period: Protection and Trade as a Means of Exporting Unemployment The International Clearing Union, or on Trade as Exchange of Goods Against Goods Memorandum ‘Overseas Financial Policy in Stage III’ (1945) Keynes, Current Global Imbalances and the Euro-Zone Project References 9 Conclusions References Index Most economists who read the General Theory candidly admitted that they could not understand the theoretical apparatus and found it easy to recast it in traditional terms. This book provides a masterful guide to the generally unrecognized methodological revolution that supported the new theoretical concepts -- a veritable lodestone that complements and expands understanding on the treatment of the economic magnitudes appropriate to the ideal of generality in the social sciences, to the applicability of probability, to the formulation of decision-making under uncertainty, and the foundations of economic policy in interdependent economic systems. _Jan Kregel, Levy Economics Institute Anna Carabelli sets out Keynes's understanding of economics as a way of thinking, encompassing method and morals, rather than as a doctrine. She does so with her customary admirable scholarship and also her willingness to take controversial positions. I commend the volume most highly to Keynes scholars as a drawing-together and development of the themes that Carabelli has pursued since the publication of her 1988 classic, On Keynes's Method. Further Keynes's approach was designed to be applied to different contexts, so I enthusiastically recommend the volume also as a foundation and guide for anyone open to such a 'new way of reasoning in economics' for the modern era. _Sheila Dow, University of Stirling This book examines the philosophy and methodology of Keynes, highlighting its novelty and how it presented a new form of economic reasoning. Exploring Keynes's use of non-demonstrative logic, based on probability, commonalities are found in his economics, ethics, aesthetics, and international relations. Insights are provided into his reasoning and his approach to uncertainty, rationality, measurability of complex magnitudes, moral and rational dilemmas, and irreducible conflicts. This book investigates methodological continuity within Keynes's work, in particular in relation to uncertainty, complexity, incommensurability, happiness and openness. It will be relevant to students and researchers interested in Keynes, probability, ambiguity, ethics and the history of economic thought. Anna M. Carabelli is Professor of Political Economy at the University of Eastern Piedmont, Italy. Most economists who read the __General Theory__candidly admitted that they could not understand the theoretical apparatus and found it easy to recast it in traditional terms. This book provides a masterful guide to the generally unrecognized methodological revolution that supported the new theoretical concepts -- a veritable lodestone that complements and expands understanding on the treatment of the economic magnitudes appropriate to the ideal of generality in the social sciences, to the applicability of probability, to the formulation of decision-making under uncertainty, and the foundations of economic policy in interdependent economic systems. \_Jan Kregel, Levy Economics Institute This book examines the philosophy and methodology of Keynes, highlighting its novelty and how it presented a new form of economic reasoning. Exploring Keynes’s use of non-demonstrative logic, based on probability, commonalities are found in his economics, ethics, aesthetics, and international relations. Insights are provided into his reasoning and his approach to uncertainty, rationality, measurability of complex magnitudes, moral and rational dilemmas, and irreducible conflicts.