Keynes, Uncertainty and the Global Economy
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Keynes, Uncertainty and the Global Economy

Beyond Keynes, Volume Two

Edited by Shelia C. Dow and John Hillard

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.
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Chapter 2: Innovation, equilibrium and welfare

Beyond Keynes, Volume Two

G.B. Richardson


2. Keynes’s ‘microeconomics’: some lessons Piero V. Mini The well-worn paths are easy to follow and lead into good company. Advance along them visibly furthers the accredited work which the science has in hand. Divergence from the paths means tentative work, which is necessarily slow and fragmentary and of uncertain value. (Veblen, [1898]1961: 79) I REASON AND UNCERTAINTY In 1933 Keynes observed that ‘Albert and the blond beasts make up the world between them. If either cast the other out, life is diminished in its force’ (CW XXVIII: 22). Einstein and the Nazis, reason and passion are the warp and the woof of history. The juxtaposition of reason and passion in the short essay on Einstein is no passing observation of Keynes. It is the theme of the General Theory where we read that often ‘human decisions affecting the future, whether personal or political or economic, cannot depend on a strict mathematical expectation, since the basis for making such calculations does not exist’. We calculate ‘where we can’, but where we cannot we are fortunate to be able to depend on ‘other motives’ – other, that is, than a mathematical calculation of costs and returns. We depend on our ‘innate urge to activity’, on our ‘sanguine temperament’, on our ‘whim or sentiment or chance’, on our sense of ‘satisfaction (profit apart)’ in doing something, on our ‘innate optimism’, on the ‘pleasure’ we derive in outwitting ‘gulls’ and professionals alike, on the ‘nerves and hysterias’, on ‘our spontaneous...

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