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Keynes’s General Theory

Keynes’s General Theory

Seventy-Five Years Later

Edited by Thomas Cate

This volume, a collection of essays by internationally known experts in the area of the history of economic thought and of the economics of Keynes and macroeconomics in particular, is designed to celebrate the 75th anniversary of the publication of The General Theory.

Chapter 3: Keynes’s Economic Theory – Judgement under Uncertainty

Elke Muchlinski

Subjects: economics and finance, economic psychology, history of economic thought, post-keynesian economics


Elke Muchlinski1 INTRODUCTION This chapter is an attempt to explain why there is no ‘Keynes-rule’ to be found in Keynes’s economic theory by concentrating on two elements in his writings: ‘vagueness’ and ‘state of confidence’. Both concepts are important per se as signposts to his understanding of judgement under uncertainty. I want to emphasize that Keynes also made economic theory the subject of discussion as conceptual investigation. The concept of ‘rule’ he introduced in his economic theory, monetary policy, and international monetary relations went beyond rigidly designed propositions and assumptions of certainty and complete knowledge. Furthermore any reference to formal aestheticism or rigidly defined concepts or rules, seems to imply an inadequate interpretation of his work. The traditional way of asking, what he really meant is not the way I have chosen in this chapter since no answer is possible. Any link from Keynes’s work to current debates should be as cautious as possible. The reading of Keynes’s work is inevitably itself an interpretation (Rorty 1991). In this chapter I intend to provide textual evidence that Keynes’s scepticism to rigidly fixed rules as formal description in economic theory is rooted in a view he also shared with some contemporaries and which is related to a common theoretical background and to intellectual upheavals in Cambridge, UK. John Maynard Keynes (1883–1946), Bertrand Russell (1872–1970), and Ludwig Wittgenstein (1889–1951) lived contemporaneously in Cambridge, UK. They created important theories which revolutionized philosophy and economics in the 1920s. The chapter argues that...

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