[lbo-talk] Risk and Keynesian Uncertainty

Charles Brown cbrown at michiganlegal.org
Mon Aug 1 06:52:19 PDT 2005


Miles Jackson:

Whatever "buffering" role the state plays, I think Keynes' point is a good one: what faces investors and workers in a free-market society is not risk in the sense of outcomes with known probability distributions but rather uncertainty. --Contrast rolling a die with the chance that the job market will improve in the U. S. in the next 10 years: on any one roll of a die, I don't know for sure what I'll get, but I can be confident that I'll get a 3 one-sixth of the time. In contrast, the job market could get better, worse, or tread water, depending on a wide variety of unforeseeable events; the probability of a specific outcome cannot be ascertained, even in "the long run". (As with most economic concepts, probabilistic "risk" is more or less useless in making sense of actual human behavior.)

Miles

^^^^^ CB: Is this like Heisenberg uncertainty, in that we are _certain_ that we _can't_ know it ? :>)



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