Keynes, Uncertainty and the Global Economy

Keynes, Uncertainty and the Global Economy

Beyond Keynes, Volume Two

Edited by Shelia C. Dow

The revival of interest in Keynesian economics since the late 1980s reinstates the importance of Keynes’s contribution to economic theory and policy. This is the second of two volumes in which authoritative contributions are presented by an outstanding group of international experts to celebrate Keynesian economics, and to review and further the developments of post Keynesian economics of recent years.

Chapter 7: Keynes's views on information

Sohei Mizuhara

Subjects: economics and finance, post-keynesian economics


7. I Keynes’s views on information Sohei Mizuhara1 INTRODUCTION We need a basis for judgment in order to make decisions and take action under conditions of uncertainty. John Maynard Keynes was interested in explaining behaviour under uncertainty in his works as a whole, but especially in A Treatise on Probability and the General Theory.2 The purpose of this chapter is to explore the ways in which Keynes dealt with information in order to analyse behaviour under uncertainty, and the developmental changes in the way he dealt with the issue in the two books.3 The structure of this chapter is as follows. Section II sets out the basic framework for analysing behaviour under uncertainty, which Keynes developed in A Treatise on Probability. Section III gives an account of his approach to information in this context. Section IV explains how he treats information in the General Theory. Section V provides some conclusions regarding Keynes’s views on information. II AN ANALYTICAL FRAMEWORK FOR BEHAVIOUR UNDER UNCERTAINTY Whenever people carry out any act with future consequences in the real world, they are forced to behave without any precise knowledge of these consequences. As it often takes a long time for these future consequences to ensue, it is never possible for them to be forecast accurately. The following is Keynes’s explanation of this point: Sometimes we are not much concerned with their remoter consequences, even though time and chance may make much of them. But sometimes we are intensely concerned with them, more so, occasionally,...

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