> The Shakespearean originated theory does seem like it might be one of
> the
> long run though ,if it is valid still in 2000 (?)
Shakespeare provides insight into a type of mentality. The type involves an internally related set of traits e.g. clinical depression and "fragmentation" of self and other. The type will be characteristic of the internal social relations which constitute it. If we remain sufficiently abstract we can, as do Marx and Keynes, treat the traits as characteristic of the mentality dominant in capitalism per se.
From this perspective Shakespeare provides the kind of universally valid insight into human nature Keynes attributes to Ibsen. Keynes claims of Ibsen's plays that:
"they can be seen sub specie eternitatis, remote from contemporary moods and problems, as tragedies of character, exploring the depths and often the crannies of human motive with the imagination of a poet and the insight of a novelist. If the plays have sometimes been felt to be painful, it is because Ibsen can penetrate too deeply into regions which we prefer to keep concealed even from ourselves." ( Collected Writings, vol. XXVIII, p. 327)
At this more abstract level of analysis, the fragmentation (diversification) underpinning Antonio's mistaken feeling of confidence will have important aspects in common with the fragmentation underpinning the mistaken feeling of confidence associated with the investment strategy of Long-Term Capital Management. To make the analysis actually fit the concrete circumstances of each case, however, we would have to take account of the specific way in which the specific social relations and the psychological traits that issue from them create differences in the concrete form fragmentation takes in each.
The reason that diversification of the kind present in both cases doesn't reduce risk is given by Keynes.
"To carry one's eggs in a great number of baskets, without having time or opportunity to discover how many have holes in the bottom, is the surest way of increasing risk and loss." (Collected Writings, vol. XII, p. 99)
As Keynes himself points out, the General Theory provides only the "dry bones" of an analysis of any concrete capitalist context (where, by capitalism, he means any system having as its "essential characteristic" "the dependence upon an intense appeal to the money-making and money-loving instincts of individuals as the main motive force of the economic machine"). You need to put flesh on these bones to make it fit a concrete context e.g. English capitalism in the early 17th century, contemporary Japanese capitalism, etc. etc. This methodological point applies also to Marx e.g. he claims, as I pointed out earlier, that the "passions" of early capitalism differ significantly from the "passions" of mature industrial capitalism. (Marx also treats Shakespeare as a source of universally valid insight into human nature, specifically into the nature of "greed.")
Analysis of a concrete context has to treat many things as "given" and so can't normally be made a basis for long period extrapolation. The things reasonably treated as "given" for purposes of short period analysis cannot reasonably be treated as given in the long period.
Ted