by From Peter Radford I am not quite sure what to make of the phrase “radical uncertainty”. It pops up in most discussions of Keynes as being a critical, if not the critical, point of departure of his thinking from the silliness we know as classical economics. Is radical uncertainty a redundant statement? If something is uncertain, what is it that can make it radically so? Surely the whole point of uncertainty is that we have no idea just how radical that lack of knowledge may be. Worse, how do we identify uncertainty? Isn’t it simply a concept that describes our inherent lack of knowledge? In any case, it is precisely because of uncertainty that I find Keynes so appealing. Whether or not he dealt with it correctly is another matter, but at least he was sensible enough to eschew the
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from Peter Radford
I am not quite sure what to make of the phrase “radical uncertainty”. It pops up in most discussions of Keynes as being a critical, if not the critical, point of departure of his thinking from the silliness we know as classical economics.
Is radical uncertainty a redundant statement? If something is uncertain, what is it that can make it radically so? Surely the whole point of uncertainty is that we have no idea just how radical that lack of knowledge may be. Worse, how do we identify uncertainty? Isn’t it simply a concept that describes our inherent lack of knowledge?
In any case, it is precisely because of uncertainty that I find Keynes so appealing. Whether or not he dealt with it correctly is another matter, but at least he was sensible enough to eschew the nonsense embraced by others that economics can be theorized about as if humanity had all the knowledge it will ever have right now.
Imagine the lunacy attaching to the notions underpinning mainstream economics. The implication is that humanity has access to the future with sufficient acuity not only to reduce it to manageable proportions in the present, but to place knowable limits on it. And then, to make things even more absurd, to be able to calculate and make “rational” decisions based upon this other-worldly capacity.
When you try to explain the mainstream core tenets to someone not infected by its disease you often get told not only about its transparent lack of reality, but also of its extraordinarily radical nature.
Keynesian thought not only embraces uncertainty as the central feature of reality, but it, more importantly, rejects “radical certainty”.
It is because of its adoption of the unreal and radical idea of certainty that mainstream economics — call it whatever you will — became so anti-social. Basing itself on certainty was a necessary maneuver to eradicate a role for government or any other institution that society has developed to deal with uncertainty. Once we know everything, absolutely everything, we can abandon all our defenses against the vicissitudes of life precisely because there are no vicissitudes of life. The great weight of not knowing is lifted from our shoulders and we can reduce our lives to the calculus of maximizing efficiency, allocation, and so on.
This extraordinary fantasy is what is sold as economics.
That it is arrant nonsense ought to be self-evident, but because of the closure off of its intellectual milieu from the disinfecting current of reality, mainstream economists can pretend to have discovered something of value.
That they might deny its virulent anti-social nature is simply an admission that they don’t believe what they teach. So too are all the kluges that adopt in an attempt to bend it to the evidence around them. The problem they face is the more kluges they add the more cumbersome and contradictory the entire edifice becomes.
For instance, it is laughable to speak of a representative household. Show me one. I hope it isn’t mine. And exactly which of Apple, Amazon, Google, General Motors, IBM et al is the representative firm?
The idea that such novelties are just devices to assist in the discovery of great truths about the economy is well, let me repeat myself, just laughable. No they are not. They are devices designed to mask the failure of an intellectual tradition. More to the point they are designed to make the machinery of analysis tractable. Which itself is an admission of a failure to recognize the texture of the subject it purports to discuss.
And that, I think, is the core dishonesty of the entire project.
Economics takes as its subject the most complex possible set of arrangements: human interaction on its quest for material self sufficiency and survival. Those interactions are incalculable given the size of the population and the variety of personal opinions and abilities involved. Any sensible enquiry into those arrangements has to account for its history, its emergence, its social setting, and the oddities of human psychology. And it has to be humble in its admission of the difficulty of its task.
Economics, as it developed, steadily shaped itself into a caricature of denial of all that complexity. Instead it lauds its ability to use simple representations such as representative households, to make sweeping judgements about human psychology such as rational expectations, and to reduce all the rest to irrelevance by ridding itself of uncertainty. The consequent analysis is a tautology based upon the assumptions put in place to enable its existence.
It is a tautology designed to prove the superiority of something called “markets” over all other allocative devices.
So, as I said before, mainstream economics is simply anti-social. It is designed to be. It is meant to be. And it is.
Job well done if you’re of that mindset.
Now, if you want to talk about the economy as it actually exists. Well, that’s another story.