[lbo-talk] Risk and Keynesian Uncertainty

[Miles Jackson]

Doug Henwood wrote:
> Cseniornyc at aol.com wrote:
> 
>> For Keynes, however, most economic events were non ergodic, i.e. 
>> lacking immutable market fundamentals with objective probability 
>> distributions. Therefore, for him, in this uncertain world, the 
>> fundamentals do not provide a reliable guide to the future, which is 
>> subject to sudden and violent changes and,  therefore, future market 
>> valuations were subject to dissapoinment.This was his standard 
>> response to classical general equilibrium models which assume ergodicity.
> 
> 
> Keynes was writing during the Depression, a time of serious rupture. 
> That's not the way things are in advanced capitalist economies today. 
> The state has taken on the role that Negri wrote about in his essay on 
> Keynes - of stabilizing expectations.
> 
> Doug

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