> Cseniornyc at aol.com wrote:
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>> 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.
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> 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.
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Keynes's idea of "uncertainty" has an ontological basis in a "dialectical" view of social reality. If, as he assumes, social relations are "internal relations" forming a nested hierarchy of increasing degrees of stability, the forecasting of social phenomena becomes more and more difficult the farther forward in time are the phenomena being forecasted. The reason is that the farther forward in time the fewer will be the relations that can reasonably be treated as "given" and the less possible it will be to abstract from the effects of changes in them. He points to aspects specific to capitalism that accentuate this uncertainty and suggests policies to mitigate it, but the ultimate ontological basis remains.
In his economics, uncertainty is primarily assumed to characterize the prospective yield of specific new real investment projects. Here too it varies with the nature of the project; for example, short lived projects will be less likely to be characterized by uncertainty than long lived ones.
It isn't the uncertainty itself that causes the problem, however. It's the psychopathology that Keynes assumes dominates decision- making in capitalism. For this psychopathology, the fact of uncertainty is psychologically intolerable. The fact is consequently denied and the future is treated as predictable even where this is not so. One particular form taken by this denial is the inappropriate use of mathematical and statistical methods to make such predictions. Among other things, such methods ignore the fact of internal relations (a point emphasized by Whitehead). Viewed as psychopathology, their use is an obsessional symptom. Expectations having this psychopathological basis will also be subject to manic/depressive waves which, for Keynes, constitute the main cause of the business cycle.
It isn't just private real capital formation that's dominated by this psychopathology, however. Keynes also treats it as dominating theory and policy. From this perspective, it's a mistake to treat state policy as a fully rational instrument operating in the interests of capital. On Keynes's understanding of the functioning of financial markets, for instance, the long run interest of capital is not served by deregulation. Ends and means form a "complex'; some degree of irrationality in the one necessarily implies some degree of irrationality in the other.
Ted