Uncertainty and the pretty, polite techniques of economics

6 February, 2017 at 18:13 | Posted in Economics | 2 Comments

All these pretty, polite techniques, made for a well-panelled Board Room and a nicely regulated market, are liable to collapse. At all times the vague panic fears and equally vague and unreasoned hopes are not really lulled, and lie but a little way below the surface.

check-your-assumptionsPerhaps the reader feels that this general, philosophical disquisition on the behavior of mankind is somewhat remote from the economic theory under discussion. But I think not. Tho this is how we behave in the marketplace, the theory we devise in the study of how we behave in the market place should not itself submit to market-place idols. I accuse the classical economic theory of being itself one of these pretty, polite techniques which tries to deal with the present by abstracting from the fact that we know very little about the future.

I dare say that a classical economist would readily admit this. But, even so, I think he has overlooked the precise nature of the difference which his abstraction makes between theory and practice, and the character of the fallacies into which he is likely to be led.

This is particularly the case in his treatment of Money and Interest.

John Maynard Keynes

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2 Comments »

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  1. Thanks for the quote but please leave a source and year. I searched and eventually found it is from “The General Theory of Employment” (1937) but why do I have to?

    • No, indeed, why should you?
      The author’s name in the quote is blued, and if you put your mouse pointer on it and click you will get to the source … 🙂


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