P1: Reading Keynes

I am planning a sequence of posts on re-reading Keynes, where I will try to go through the General Theory. This first post explains my motivations for re-reading Keynes. As always, my primary motive is self-education; this will force me to go through the book again — I first read it in my first year graduate course on Macroeconomics at Stanford in 1975, when our teacher Duncan Foley was having doubts about modern macro theories, and decided to go back to the original sources. At the time, I could not understand it at all, and resorted to secondary sources, mainly Leijonhufvud, to make sense of it. Secondarily, i hope to be able to summarize Keynes’ insights to make them relevant and useful to a contemporary audience. Thirdly, there are many experts, especially Paul Davidson, on this blog, who will be able to prevent me from making serious mistakes in interpretation.

Reasons for Studying Keynes

The heart has its reasons of which reason knows nothing.” Blaise Pascal

In line with the objectives of the WEA Pedagogy Blog, I am initiating a study group with the aim of [re-]reading Keynes’ classic The General Theory of Employment, Interest and Money. There are many reasons why I think this is a worthwhile enterprise. I hope to make weekly posts summarizing various aspects of the book, as we slog through the work, which can be difficult going in some parts. At the very least, this will force me to re-read Keynes, something I have been meaning to do for a long time. In this first post, I would like to explain my motivation in doing this exercise.

  1. It is my hope and ambition to write a radical and revolutionary textbook with the theme: “Macro-economics for the twenty first century” which will re-create the field from scratch. In fact, every revolution builds upon the accomplishments of earlier revolutionaries – we reach heights by standing on the shoulders of our predecessors. For several reasons, studying the thoughts of Keynes is a necessary first step towards a radical re-thinking of macroeconomics.
  2. In pursuit of this ambition, it is essential to study Keynes, because this is exactly what he wanted to do: to launch a revolution in economics. Furthermore, he was extra-ordinarily successful in achieving this goal. The economic theory and policy of the twentieth century has been deeply influence by Keynes. Some quotes from the preface to his book show that Keynes was well aware of the revolutionary nature of his theories. He writes that “The matters at issue are of an importance which cannot be exaggerated.” He himself underwent a revolution in his own thought: “I myself held with conviction for many years the theories which I now attack.” Revolution begins at home – that is, an internal thought revolution is required as a first step to creating an external revolution.
  3. The current economic situation is like the one faced by Keynes. Leading economists, including Keynes, had forecast ever-increasing prosperity, and had minimized the significance of the Great Depression when it occurred, forecasting a quick recovery from a temporary glitch. When this failed to happen, the reputation of economists and of economic theory was substantially damaged. Keynes writes that he wishes to resolve the “deep divergences of opinion between fellow economists which have for the time being almost destroyed the practical influence of economic theory”. He writes that the “struggle of escape from habitual modes of thought and expression” was the main obstacle in arriving at his new, revolutionary, theory. Our current situation after the Global Financial Crisis, which has deeply damaged the reputation of economists and economic theories, bears a strong resemblance to the problems which Keynes faced and resolved with outstanding success. One of our main problems today is failure to recognize and reject many foundational assumptions – habitual modes of thought and expression.
  4. In some ways, the Keynesian revolution was aborted before it was launched. That is, many central Keynesian insights never made it into the textbooks. For example, while Keynes stated very clearly that demand and supply in the labor market need not reach equilibrium because the real wage was not in control of either the laborers or the capitalists. Negotiations could only take place in nominal wages, and increasing or decreasing nominal wages would not necessarily have the desired effects on the real wage. However, most extant interpretations trivialize Keynes by saying that wage rigidities were responsible for unemployment. Similarly, Keynes states clearly that money is not neutral in the short run and in the long run. Also Keynes argued that the future was fundamentally unpredictable. These Keynesian insights make no appearance in textbooks and models purporting to be “Keynesian”. Again, this furnishes an important reason to study the original Keynes, bypassing fake imitations.
  5. We have all studied the Keynesian IS-LM model. However, this interpretation of Keynes was developed by Hicks and Samuelson. Hicks later agreed that this model missed most of what Keynes was trying to say, and was of limited use beyond a “classroom gadget.” Keynes was trying to integrate money into the real economy, while the IS-LM model separates the monetary sector from the real sector. The crucial role of uncertainty in Keynes is completely absent from the IS-LM framework. There are many reasons to suspect that the two curves cannot be separated; factors affect both, and the two curves also affect each other. There are other ways in which the standard interpretation of Keynes is a distortion of Keynesian thought.

All of the above provide reasons why a re-reading of Keynes promises to reveal some new insights into our contemporary economic problems. However, eighty years of experience following the publication of Keynes book in 1936 allows us to provide some additional insights not present in Keynes work. While there are many dimensions in which we hope to enrich the analysis of Keynes, our main contributions will be on the methodological front. It is my hope to use Keynes and Keynesian theory as a test-bed for “The Methodology of Polanyi’s Great Transformation” — in this paper, I describe how the methodology used by Polanyi is fundamentally and radically different from conventional economic methodology. These new methodological principles will be illustrated later, in context of applications. A very brief sketch of some of main ideas is given below, just as a starting point.

  1. Contemporary economic methodology is axiomatic-deductive. Lionel Robbins wrote that: “The propositions of economic theory, like all scientific theory, are obviously deductions from a series of postulates.” Robbins is mistaken in his belief that science is axiomatic-deductive. This is actually the Greek methodology for mathematics, which failed miserably as a basis for natural science. For details on why axiomatic-deductive is not a suitable methodology for science, see: Economists Confuse pre-scientific Greek Methodology with Science
  2. The axioms upon which economics is based, the famous micro-foundations, are demonstrably false empirically. The massive amount of evidence against them has been summarized in The Empirical Evidence Against Neoclassical Utility Theory: A Survey of the Literature. Individuals do not maximize utility, firms do not maximize profits, and prices are not determined via a supply and demand equilibrium. All fundamental propositions of economic theory are wrong. For a brief exposition see Fundamental Flaws in Economic Theories.

Further evidence for the failure of methodology is furnished by the large numbers of comments by leading economists about the bankruptcy of modern economic theory. For instance, Romer said that macroeconomics has been going backwards for the past three decades. Loss of knowledge, and failure of cumulation of experience is indicative of serious methodological flaws. Economists never succeeded in escaping from the “habitual modes of thought and expression” which Keynes struggled with; with passage of time, they lapsed back into the same pre-Keynesian errors. My own study of The  Methodology of Polanyi reveals several methodological principles which are radically different from those currently in use in modern economic theory. I will mention just one important principle here.

  1. Theories arise out of the attempt to understand historical experience. In turn, historical experience cannot be understood without the help of theories. This means that the historical context and social science theories are “inextricably entangled”. We cannot understand Keynes without understanding his historical context, the economic crises he lived through, as well as the bank of ideas which was available to him to interpret that experience. The current methodological framework treats economics as a “science” which means trying to understand Keynesian economics as a set of universal laws which operate without any historical, geographical, or political constraints. This makes it impossible to understand Keynes.

In this re-reading of Keynes, we will attempt to understand Keynesian theories within their historical context. The mathematical/scientific school won the battle of methodologies against the German historical school at the end of the 19th century. As in Ecclesiastes, “The race is not to the swift or the battle to the strong.” The wrong side won the battle, which led to loss of knowledge in the economics profession. We cannot put economics back on track without re-absorbing the lessons of history and historical context.

BLOG Posts are useful for discussion and comments, but not for keeping systematic track of an organized collection of materials. For the purpose of organizing materials related to this project, I am using a Google website: 21st Century Macroeconomics This site also provides links to lots of supplementary materials related to the post.

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13 comments
  1. “… a re-reading of Keynes promises to reveal some new insights into our contemporary economic problems. However, eighty years of experience following the publication of Keynes book in 1936 allows us to provide some additional insights not present in Keynes work. While there are many dimensions in which we hope to enrich the analysis of Keynes, our main contributions will be on the methodological front. It is my hope to use Keynes and Keynesian theory as a test-bed for “The Methodology of Polanyi’s Great Transformation” — in this paper, I describe how the methodology used by Polanyi is fundamentally and radically different from conventional economic methodology”.

    So providing the historical context of an understanding (i.e. interpretation) is radically different from a mathematical interpretation. But the “Great Transformation” was eight years, not eighty, after the “General Theory”, and in the eighty years society has been dramatically transformed by revolutions in computing, communications, control, automation and transportation technologies and techniques, including mathematics: transformations not fully articulated before Keynes’ untimely death nor widely understood even now, yet arising from the same milieu as his (the milieu of Einstein’s non-Euclidian geometry and Eddington’s expanding universe), so that it is not unreasonable to believe he to some extent intuited theories of the new information science particularly relevant to economics. I am referring in particular to the Shannon/Wiener cybernetic theories published post-war of PID servo control of automatic processes, which transform Smith’s analogy of control by an invisible hand into an automatic pilot using information feedbacks about directional and positional errors or looming hazards to correct not the intended outcome but for deviation from it. Keynes saw the equivalent of steering a ship or armada (adjusting prices) not being enough: one also needed to correct occasionally for positional errors accumulating over time or resulting from hazard avoidance.

    This needs talking through, but IS/LM versus Keynes certainly bears comparison with Wheatstone’s Bridge (look up the diagram) versus a PID Servo system (schematically having the same diagram) in which one of the four triangular circuits powers and directs the system and the other three provide PID feedbacks. The question is, which way is the “battery” connected? What powers and directs the economic system: money, or the energy of people who are also animals with biological needs? Get this wrong, and the error-correcting negative feedback becomes the hazard-avoiding positive feedback and vice versa, so that all we do seems to make matters worse.

    Enough for now, but I would like to say AGAIN that the errors of capitalism long pre-date Logical Positivism, originating in Adam Smith’s mate David Hume’s Euclidian interpretation of Cartesian coordinates and discounting of invisible energy and communication, implying an infinite universe having no need of a Creator, and a “science” based not on invisible causes but on agreement about mutually visible formal records of observations. When that is of us at the centre of a Cartesian cross-roads it fails to show even a divine light shining down from (what is to us) above.

  2. David Chester said:

    I applaud this proposal to re-study Keynes’es seminal book. I hope to your summaries.

  3. Per textbooks and many “experts” Keynes is the inventor of “Keynesian economics,” that totally changed macroeconomics. I have no reason to question those assertions. My concerns with Keynes and his “theories” are the same as my concerns with economics and economists in general. In particular, 1) economies exist; 2) economists know how economies work; 3) economists know what markets are, how they work, and can instruct us on how to create, defeat, or modify markets to achieve specified objectives. Economists can do none of these things. Economies did not exist until the middle of the 19th century. And then the term was used only by academics. This economy gradually displaced οἰκονόμος (household management), from the Greek. The use of this new term evolved in several directions, simultaneously. Debates among economists about it continue today. Debates outside academic economics are even more intense and complex. It’s difficult for me to accept that economists know how economies work, since they can’t agree on what an economy is. Certainly, Keynes’ notions about it are not universally accepted. As to markets, I always marvel at just how little economists know or understand actual historical markets. Economic historians demonstrate they possess at least minimal knowledge of such markets, but then economic history is not an important part of the education of most academic economists. The creation of markets and the study of that creation process is fascinating, but never complete. Markets are ALWAYS evolving (by necessity, accident, and error). Anyone who says s/he knows what markets are and how they work either has never looked closely or is a liar. So, my objection to Keynes is that with all these issues to address Keynes chose to remain just an economist. Albeit a contrarian economist.

    • ” … my objection to Keynes is that with all these issues to address Keynes chose to remain just an economist”.

      How untrue is that! Keynes was also a statesman who in very few years literally worked himself to death trying to get reasonable international economic policies adopted in political circles in the teeth of extremely influential, self-serving, conniving and even downright dishonest opposition from almost the whole of the banking fraternity and its hacks.

      Do you know what “conniving” means, Ken? Look it up, then examine your conscience, if you have any.

  4. Allow me to re-phrase my concerns with Keynes. He was probably the most gifted British intellectual (a word Keynes would object to) since Thomas Malthus. As a conservative, Edwardian Keynes wanted to reconvene the world of Victorian conventions that produced the long state of peace and general prosperity called “Pax Britannica” in which he grew to adulthood. He was not particularly taken with democracy. Preferring instead government by intellectual aristocracy. Keynes moved toward economics, in part I think because during his life and before political economics was the most important moral discipline in the UK, and by reference to the British Empire in the world. Only moral individuals should be allowed to participate in economics. And Victorian values were the only morality suited to such a purpose. Once so “moralized,” to use Keynes’ term individuals could be released from external standards and controls. Only in this way could capitalism survive. Unfortunately, sometimes Keynes made the error (I think) of confusing being rich and well-born with being moral. Keynes never considered himself an economist. He looked at himself as a mathematician, historian, statesman, and philosopher. In the end, it was Keynes’ fascination with the psychology of money and stock exchange gambling (which he knew from a practical rather than academic standpoint) that moved him toward economics. But like everything else he did Keynes was a contrarian economist. He rejected economic laws except as summaries of observed consequences of actions. His definition of economics was practical and straight forward, “… a science of thinking in terms of models joined to the art of choosing models which are relevant to the contemporary world … Good economists are scarce because the gift of using ‘vigilant observation’ to choose good models appears to be a very rare one.” Today this gift is no longer just rare. It is virtually non-existent in professional economists, even ones who claim to follow Keynes. It’s more common today among historians, sociologists, and anthropologists. One of the reasons among others I contend economics is best terminated as a profession. Keynes choose, unfortunately to invest his skills and intellect in a discipline that did not repay him in kind.

    • I’ll accept this as an apology. What I was objecting to was ad hominem belittling of a good and brave man, who in any case did much more good in the real world than have done the conniving bankers’ hacks who have been his enemies: who have merely winked in acknowledgement of rather than explored the truths he acted on, then misinterpreted them perversely in his name. Even your rephrasing sounds like it is out of a book rather than from personal familiarity with and reflection on Keynes’s life and personality, but your quoting Keynes directly is certainly helpful:

      “His definition of economics was practical and straight forward, ‘… a science of thinking in terms of models joined to the art of choosing models which are relevant to the contemporary world … Good economists are scarce because the gift of using “vigilant observation” to choose good models appears to be a very rare one.’ ”

      ‘Vigilant’ is an interesting word, meaning watchful rather then listening for. Political doctrines are neither right nor left, but their creators and followers tend to be about 70% right-handed and 30% left-handed, i.e. predominantly left-brained or right-brained, hence logical (reasoning with words) or intuitive (reasoning with visualisable patterns, i.e. models); so your “mathematician, historian, statesman, and philosophers” tend to be rare, [to be all four together even rarer], and even most followers of intuitive reasoners tend to grasp the letter rather than the spirit of their doctrines. Though as a Keynes-type thinker myself (with an awareness of it triggered by Chesterton), one cannot choose a good model until one comes across it, and it doesn’t always happen with “eureka” moments like Archimedes’ in his bath or Newton’s with his falling apple. In most cases one has already been “seeing through a glass darkly” and the “gestalt” experience known in religious circles as “conversion” amounts giving up one way of looking at things in favour of another which works better. In my own case that happened when I was shown Leavitt’s Diamond and saw immediately that my economic model of traders at different levels short-circuiting the circuit of consumption, reproduction and distribution; a corresponding model of thought involving “bypass” memory as well as sensing, evaluation and reaction; the evolution of relationships in the life cycles of entities in an information system, and even Mankind as standing outside the Trinitarian God, could all be hung more simply on this minimally complex structural form; PID servomechanisms and Jungian personality theory too, when I was introduced to them.

      I’m spelling this out because if Asad wants Keynes re-interpreted in his historical context, then it is fundamental to point out that Keynes was not always “a contrary economist”, as you put it, Ken, at the end of your first comment. He had a conversion experience, and in 1936 was man enough to be able to contradict what he himself had been saying in 1930. Had he been introduced to the concept of the PID servo, I believe he was intuitive enough to have recognised in it the bones of what he was trying to say.

      • Just how old do you think I am? Of course, my knowledge of Keynes is out of books, periodicals, and newspapers. I never met him directly or indirectly. And my remarks are not an apology. I still believe as my final comment notes, “Keynes choose, unfortunately to invest his skills and intellect in a discipline that did not repay him in kind.” In short, I believe Keynes could have accomplished more had he become a member of the British Foreign Office, or joined MI6, or become a member of Parliament. But these choices would have required Keynes to focus his talents more narrowly. Something that was difficult for Keynes.

        Little doubt based on the records of Keynes’ conversations that he was very much an intuitive thinker. He looked to entire patterns and around and through them to create models which in his words are relevant to the world around him. But at the same time, he loved to play with probability and statistics. I assume when you mention Keynes’ conversion experience you are talking about his re-evaluation of the overarching Christian framework of the Britain in which Keynes grew up. As a young man, he rejected this framework as overly restrictive. But later, and with more experience he recognized the value of this framework in providing the moral basis for social and economic life. But after reading his biographies and notes I conclude that his admiration for such morality was focused on a general code for right actions among people rather than a specific faith in God or Jesus. As to PID controllers I can’t say what Keynes would have thought. Don’t think you can either.

  5. Asad, can you please get changed the RWER blog title for its link to yours. “Pedagogy Bog” sounds like a deliberate insult!

  6. Since this blog does not allow me to directly follow Ken’s last reply to my last comment, I am replying here.

    Ken, I am sad you rejected the olive branch I offered, and my attempt to explain from first hand experience what it is like to have an intuitive mind. You have now compounded your original belittling of Keynes’s practical achievements and misrepresentation of his methods of addressing what he saw to be the major problems of his day, with denigration of all economists and “Keynes chose to remain just an economist”.

    I tried to explain what it is like to have an intuitively visual mind like Keynes so that you could to some extent imagine his mental state when evaluating what more formal scholars have said about him on the basis of written records they have seen (“It must be true, I saw it in the newspaper). You have now responded by misrepresenting my explanation in terms of scientific “eureka”and “gestalt” experiences (merely mentioning religion to make use of the more familiar religious term “conversion”), with “I assume when you mention Keynes’ conversion experience you are talking about his re-evaluation of the overarching Christian framework of the Britain in which Keynes grew up”.

    I assumed no such no such thing, for as you had already said, and I had accepted, he didn’t. What I explicitly pointed out that his conversion was from being a mainstream “equilibrium” theorist to being a theorist of persistent error such as happens to an engine speed when it comes under load (or in this case, the foot is taken off the economic “accelerator”).

    We are who we are. I don’t blame my wife for being extremely left-brained, i.e. right-handed and literal, as you seem to be. What will not accept is her or you misrepresenting what I say in order to defend opinions based on what she or you have been taught to like rather than on observation of and coming to her own understanding of the facts. I am happy to accept a difference of opinion, and to give way where it doesn’t matter, but in an attempt like Asad’s to get out of the economic quagmire, it matters very much whether we act like lemmings following the crowd over a cliff, or like sane humans, backing away from the precipice because, by using both sides of their brain, they can see where it is going.

    I have had to choose between not wasting my time arguing with you, or trying to make something constructive out of what you say relevant to Asad’s re-reading of Keynes. I’m going on because, even if you don’t see what I’m on about, hopefully Asad will.

    A first point concerns the Keynes of the Treatise and interest in everything, who is not just intuitive but also logical and practical. As Chesterton wrote of mystics [prior to Jung’s word ‘intuitive’]: “His spiritual sight is stereoscopic, like his physical sight”. The Myers-Briggs statistics for the US suggest there are around 26% predominantly intuitive but only about 1% like Keynes and I with that INTJ combination. And curiously, all the other ones I know personally are women.

    My second concerns the conclusions of the Treatise itself. Anyone who has actually read and understood it may remember how he concludes that probabilities never lead to definite answers: in the end one has to choose whether to believe what they suggest, or not. Historically, the probable insanity in the Versailles treaty of 1919 led him to give up being a mere Civil Servant and professional spokesperson for the financial establishment, choosing independence not just to study but to reevaluate and teach more critically the crazy economics of his day. Cardinal Newman, another graduate mathematician whose “Apologia” describes how he converted from mainstream Anglicanism to Roman Catholicism, also had to grapple with “accumulated probabilities” as he weighed historic evidence against the protestant prejudices he had been brought up with. I, reading Keynes as I studied reliability data, consciously choose to follow the information processing rather than physical side of electronics because the latter was probably already being done better than I could do it; then a few years’ experience of Thatcher had me consciously choosing to apply my “stereoscopic vision” to economics, and a few years of experimenting with data processing had choosing to develop a relational informational system model rather than my earlier one based on physical short-circuiting. As it happened, I found the Wheatstone Bridge/ PID servo model involved both.

    My third concerns the probability of Ken’s opinion being justified: “As to PID controllers I can’t say what Keynes would have thought. Don’t think you can either.” As Ken is evidently a logical but not an intuitive thinker he’s probably right about himself. I can and have offered only an opinion on what Keynes might have thought, being able to venture that because of the probability that I think like him and can remember how I reacted to being introduced to it.

    That leads me to the more fundamental issue of economics being all “smoke and mirrors”, so that we have to choose what we are going to believe. Here my mentor has been the famously paradoxical G K Chesterton, though even as an intuitive it took me about twenty years to understand what he is on about in “The Maniac”: the second chapter of his little autobiographical social philosophy, “Orthodoxy” (rated not just by me as the greatest work of literature in the twentieth century”), and in the end I have advanced by negating the negative interpretation of two visual models he used. More directly to the point was a famous essay of his called “The Diabolist”, in which a sceptic proposes and GCK chooses not to accept a step which would have left him not unable to recognise truth if he saw it.

    Recently, I picked up a book of short stories called “Labyrinths” by Jorge Luis Borges, because I had gathered he two was a Chestertonian. The first story in it turns out to be an extraordinarily elaboration of “The Diabolist”, who as I have always thought could only be Hume, though Hume ending the line of thought from Descartes through Locke and Berkeley. Borges says:

    “Hume noted for all time that Berkeley’s arguments did not admit the slightest refutation nor did they cause the slightest conviction. This dictum is entirely correct in its application to the earth, but entirely false in Thon”. [

    Reminds one of Samuel Butler’s “Erewhon”? Smoke and mirrors. Confronted with an image and its mirror image, one has to choose which is which, and if one gets it wrong not just the detail but the whole picture is inverted, as when we see the earth at the centre of the solar system rather than circulating round it. I’d love to see what Ken would make of Borges’ story.

    Today, a question I got wrong in a TV quiz game had me reaching for the answers in another book by another Chestertonian, C.S.Lewis: “A Prelude to Paradise Lost”. Chapter XI of this, on “Hierarchy”, explores the difference between Hume’s republicanism and the reflection of the Christian heavenly monarchy on earth. It begins:

    “Johnson has complained that Milton [writer of Paradise Lost] thought men made only for rebellion and women for obedience. Others [the literal minded?] have assumed that since he was rebel against the monarchy of the Stuarts he must also have been a rebel against the monarchy of God and secretly of the devil’s party. At the very least, there is felt to be a disquieting contrast between republicanism for the earth and royalism for Heaven. In my opinion all such opinions are false and argue a deep misunderstanding of Milton’s central thought. …

    “Now once the conception of hierarchy is fully grasped, we see that order can be destroyed in two ways: (1) by ruling or obeying natural equals, that is, by Tyranny and Servility. (2) By failing to obey a natural superior or to rule a natural inferior – that is, by Rebellion or Remission”.

    My point relative to Keynes is that it was not him who rebelled against the conclusions of his Treatise: it was a young upstart called Ramsey who smoked the argument by changing the topic and defending the start rather than the end of Keynes’ argument. Of course it was much easier for the establishment to follow Ramsey rather than even to take the trouble to read Keynes’ argument, for it meant they were back where they started and didn’t have to change anything.

    More recently, of course, the Ramsey line has reappeared in the Rational Expectations controversy. Keynes at least knew what he was talking about, and I know where and why I don’t entirely agree with him, cf. the Bayesian controversy.

    • Apologies for a couple of inconvenient typos. Towards the end of the paragraph beginning “My second…”, experimenting with data processing “had ME choosing” etc. In the paragraph beginning “That leads me to …” the double negative at the end was indeed unintentional: Chesterton would have been simply “unable to recognise truth if he saw it”.

    • Dave, you and I disagree on the contributions of economics. As for Keynes, I agree that he was a first-rate intellect and made many worthwhile contributions to solving real-world problems. But he also, in my view made errors, one of which was to publish as an economist (although by all accounts he did not consider himself an economist). As to dissing economists that’s my right. One I will not give up.

      Thanks for explaining your views more fully. I obviously made errors in interpreting what they are. As for Keynes, however you and I are not on the same page. For over 50 years some like Assad have tried to use Keynes’ ideas to as you say, “… get out of the economic quagmire.” With little success. I don’t blame Keynes for this failure. But it does in my mind illustrate just how little influence Keynes’ ideas have today in such vital areas as economic inequality, finance, and austerity. On your points about Keynes and Ramsey no arguments from me. I’ve faced too many attorneys and economists in court armed with “Ramsey pricing” to see any merit in Ramsey’s arguments. Arguments promoting explanation by rational decision making and its opposite bug me a lot. I’ve asked (on the record) again and again what is rational and how do we know it’s working in any situation? No answers. Homo sapiens’ reasoning can be identified genetically and in terms of evolution. But no other way I’m aware of. Such reasoning involves every member of the species. Only way to argue, in court or elsewhere that a person is not rational is to contend that person is a member of another species.

      I’ve not read Chesterton or Borges. But I have read Camus, Sartre, Latour, Serres, John Law, Donald MacKenzie, Michael Polanyi, William James, Veblen, Gadamer, Thomas Huxley, Bertrand Russell, Erich Fromm, Merleau-Ponty, and most publications in American history, history of science and technology, USSR/Russia, Economic history, business history, electricity history, public utility history, and western civilization. I don’t follow the math literature as closely as I used to. And I’ve almost totally lost touch with the philosophy literature. My “fiction” tastes run mostly to classics, including Islamic, Russian, and Chinese. And war poetry.

  7. Ken, thank you for this conciliatory response (I hate disagreeing on important issues!), and for your reading list, which contains a few names I am not (yet) familiar with. Without access to university libraries, I must have collected about 3000 books myself, which try to sample their diverse fields and eras, along with author collections relevant to my own work, of whom only Russell and Fromm are on your list: these including Ruskin,J H Newman, Chesterton, Whitehead, de Bono (on thinking), Handy (on management philosophy), E F Schumacher, Robertson of NEF, J K Galbraith and what little I have been able to lay my hands on of Keynes (the Treatise, GT, Essays in Persuasion and The Economic Consequences of the Peace, plus books about him). I try to study “the enemy” as well as those who inspire me. In my old age, I must say the increasing availabilty of work over the internet has been a delight.

    Perhaps we don’t actually disagree on the contributions of economics. To me it is important because it has been and still is influential, in much the same way as physical theory not just influences but largely determines engineering. As Asad has realised, it is influential because it is educational, and therefore it is important to get it right.

    All the best, Dave

    • Thanks for the discussion. Stimulating. Best to you, as well.

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