Max wrote:
That's a good one, but my recollection is a remark going directly
to business purchase of plant and equipment, some kind of actual
project rather than securities.
He claims business investment isn't like a "crap shoot," i.e. like a
"game of roulette." It's normally characterized by "uncertainty" in
Keynes's particular sense.
"By 'uncertain' knowledge, let me explain, I do not mean merely to
distinguish what is known for certain from what is only probable. The
game of roulette is not subject, in this sense to uncertainty; nor is
the prospect of a Victory bond being drawn. Or, again, the
expectation of life is only slightly uncertain. Even the weather is
only moderately uncertain. The sense in which I am using the term is
that in which the prospect of a European war is uncertain, or the
price of copper and the rate of interest twenty years hence, or the
obsolescence of a new invention, or the position of private wealth
owners in the social system in 1970. About these matters there is no
scientific basis on which to form any calculable probability
whatever. We simply do not know." (XIV pp. 113-4)
The analytical implication is:
“It is safe to say the enterprise which depends on hopes stretching
into the future benefits the community as a whole. But individual
initiative will only be adequate when reasonable calculation is
supplemented and supported by animal spirits, so that the thought of
ultimate loss which often overtakes pioneers, as experience
undoubtedly tells us and them, is put aside as a healthy man puts
aside the expectation of death.” (VII p, 162)
This is different from what David described as "people with no clue
getting loans from people with no clue and then making investments
with no clue" which is better described by the claim about the vast
majority of financial market participants. The difference explains
Keynes's criticisms of financial market arrangements that gave these
markets significant influence over business investment.
Ted_______________________________________________
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