Julio Huato wrote:
IMHO, dynamic systems, statistics, and game theory provide the
sharpest and most economical framework for people (e.g. young people)
to grasp what Keynes' is really up to in chapter 12 of his General
Theory. In human anatomy lies the key to understanding the anatomy of
apes.
Well, you can't "grasp what Keynes is really up to in chapter 12 of
his General Theory" by means of a conceptual framework that's
radically inconsistent with it. When you teach it in his way, you
prevent "young people" from discovering that there are ways of
thinking about economic phenomena different from and more realistic
than those misidentified with "economics" in modern economics
departments. You also prevent them from learning how to read with
understanding.
In Marx and Engels, the last claim is an appropriation of Hegel's
idea that the "in itself" of humanity, the "idea" of humanity, is
only "implicit" at the beginning of history so it's only possible to
understand earlier stages of a developmental process, conceived in
terms of this idea, from the perspective of the actualized "end" when
the "in itself" has become "for itself."
I've explained before the limitations the ontological idea of
"internal relations" place on any form of axiomatic (including
mathematical) reasoning. Keynes didn't have to have any acquaintance
with the particular form know as "game theory" to for his criticism
of over-generalization of the form to be applicable to it. To
understand the ontological point at issue, he just had to have been
an astute student of Marshall and Whitehead. You can find
Whitehead's explanation of the point here: <http://
archives.econ.utah.edu/archives/pkt/2000m03/msg00238.htm>.
I explained the relation of this to Keynes's idea of "uncertainty,"
and, hence, to this aspect of chap. 12, in a 1989 Economic Journal
article, "Organic Interdependence, Uncertainty and Economic Analysis."
<http://links.jstor.org/sici?sici=0013-0133(198912)99%3A398%3C1173%
3AOIUAEA%3E2.0.CO%3B2-1>
The ontological idea of "internal relations" - of "organic unity" -
is one of the grounds on which Keynes rejects Edgeworth's
mathematical elaboration of "utilitarian psychology" as "mathematical
psychics," i.e. rejects "the bright idea of reducing Economics to a
mathematical application of the hedonistic calculus of
Bentham!" (Collected Writings, vol. X, p.184)
"Mathematical Psychics has not, as a science or study, fulfilled its
early promise. In the 'seventies and 'eighties of the last century
it was reasonable, I think, to suppose that it held great prospects.
When the young Edgeworth chose it, he may have looked to find secrets
as wonderful as those which the physicists have found since those
days. But, as I remarked in writing about Alfred Marshall's gradual
change of attitude towards mathematico-economics (pp. 186-7 above),
this has not happened, but quite the opposite. The atomic hypothesis
which has worked so splendidly in physics breaks down in psychics.
We are faced at every turn with the problems of organic unity, of
discreteness, of discontinuity - the whole is not equal to the sum of
the parts, comparisons of quantity fail us, small changes produce
large effects, the assumptions of a uniform and homogeneous continuum
are not satisfied. (vol. X, p. 262)
Here he is rejecting it as a rational basis for dealing with the future:
"it was, I think, an ingredient in the complacency of the nineteenth
century that, in their philosophical reflections on human behaviour,
they accepted an extraordinary contraption of the Benthamite School,
by which all possible consequences of alternative courses of action
were supposed to have attached to them, first a number expressing
their comparative advantage, and secondly another number expressing
the probability of their following from the course of action in
question; so that multiplying together the numbers attached to all
the possible consequences of a given action and adding the results,
we could discover what to do. In this way a mythical system of
probable knowledge was employed to reduce the future to the same
calculable status as the present. No one has ever acted on this
theory. But even today I believe that our thought is sometimes
influenced by some such pseudo-rationalistic notions." (vol. XIV, p.
124)
Here he is elaborating the irrationality underpinning "conventional"
responses to "uncertainty" in way that makes "the psychological
attitude to liquidity" and "the psychological expectation of future
yield from capital assets" internal relations phenomena inconsistent
with the requirements for mathematical representation (this is
consistent with the fact that he uses an "equation" to represent
liquidity preference in the GT if you interpret this use as
rhetorical "poetical economy," an interpretation readily supportable
with other textual evidence).
“Why should anyone outside a lunatic asylum wish to use money as a
store of wealth?
"Because, partly on reasonable and partly on instinctive
grounds, our desire to hold money as a store of wealth is a barometer
of the degree of our distrust of our own calculations and conventions
concerning the future. Even though this feeling about money is
itself conventional or instinctive, it operates, so to speak, at a
deeper level of our motivation. It takes charge at the moments when
the higher, more precarious conventions have weakened. The
possession of actual money lulls our disquietude; and the premium
which we require to make us part with money is the measure of the
degree of our disquietude.” (vol. XIV, p. 116)
Here he is, in a 1944 letter to Abba Lerner quoted by Skidesky in the
3rd vol. of his biography of Keynes, invoking an internal relations
conception of the "good," as a basis for rejecting "Benthamite
arithmetic" in ethics:
"He found Abba Lerner's The Economics of Control a 'grand book',
deploring only its reliance on 'Benthamite arithmetic', which led
Lerner to advocate income equality. 'The whole complication and
fascination (and truth) of the ethical doctrine of organic unity
passes you by ...' he wrote to him, in a half-remembered echo of the
debates of his youth.” (Skidelsky 2000, p. 361)
Here he is, in "My Early Beliefs" (which also records his rejection
of the idea that "human nature is reasonable"), rejecting the
"Benthamite calculus" in ethics on the ground of its "over-valuation
of the economic criterion."
“I do now regard that ['the Benthamite tradition'] as the worm which
has been gnawing at the insides of modern civilisation and is
responsible for its present moral decay. We used to regard the
Christians as the enemy, because they appeared as the representatives
of tradition, convention and hocus-pocus. In truth it was the
Benthamite calculus, based on an over-valuation of the economic
criterion, which was destroying the quality of the popular
Ideal.” (vol. X, pp. 445-6)
Speaking to the "evolution" of society toward the "ideal social
republic" focused on "non-economic interests," he says:
"The natural evolution should be towards a decent level of
consumption for everyone; and, when that is high enough, towards the
occupation of our energies in the non-economic interests of our
lives. Thus we need to be slowly reconstructing our social system
with these ends in view." (vol. XXI, p. 393)
And, as I've also frequently pointed out, in "Economic Possibilities
for Our Grandchildren, having characterized the "main motive force"
dominant in capitalism as "a somewhat disgusting morbidity, one of
those semi-criminal, semi-pathological propensities which one hands
over with a shudder to the specialists in mental disease,” he looks
forward to a future dominated by a rational conception of the "good"
life, a future when we will be free
”to return to some of the most sure and certain principles of
religion and traditional virtue—that avarice is a vice, that the
exaction of usury is a misdemeanour, and the love of money is
detestable, that those walk most truly in the paths of virtue and
sane wisdom who take least thought for the morrow. We shall once
more value ends above means and prefer the good to the useful. We
shall honour those who can teach us how to pluck the hour and the
day virtuously and well, the delightful people who are capable of
taking direct enjoyment in things, the lilies of the field who toil
not, neither do they spin.”
<http://www.eco.utexas.edu/~hmcleave/368keynesgrandchildrentable.pdf>
