> Sometimes it is psychological, sometimes it isn't. In Marxian and
> neoclassical models, it all seems very mechanical - a rational
> valuation of expected profits. But there's a lot of play in the
> formation of expectations. Keynes overpsychologized, since he
> approached the matter of capital expenditures with a sensibility
> formed in the financial markets. But the others underpsychologize.
Keynes psychological treatment of the expectations underpinning the investment decision is connected to the ontological idea of internal relations.
The implication of the idea for long-run forecasting is that the farther into the future are the events to be forecast the more difficult rational forecasting becomes The reason is that the farther into the future the fewer are the internal relations which can reasonably be treated as "given" and the more we approximate to the impossible to meet requirement of needing to know everything before we can know anything. The problem is particularly acute in the case of social phenomena where relevant relations are much less stable than is the case with physical phenomena.
This is the basis of Keynes's idea of radical "uncertainty." Keynes sets out a ratiional way of dealing with this, but it doesn't involve actually attempting to forecast. Conventional approaches to the long run future deny this uncertainty (Keynes claims conscious awareness of it provokes disabling anxiety) and substitute for the knowledge that is unobtainable irrational forecasting "conventions" (one version of these being a mistaken obsessional use of mathematical and statistical methods).
Marx himself overlooks this implication of internal relations in his falling rate of profit, immiserization argument.
Keynes underpsychologized one area of capitalist decision-making, the decision-making involved in managing the labour process itself.
The psychoanalysis from which his own ideas of capitalist psychopathology derive was, however, eventually used, in the form given it by Melanie Klein, to provide a basis for the treatment of this aspect of capitalist decision-making as itself frequently significantly psychopathological. The starting point was the Kleinian Elliott Jacques's study of factory culture. Isabel Menzies Lyth applied it to institutions in general (see her essays collected in Containing Anxiety in Institutions and The Dynamics of The Social). Robert Young discusses Jacques, Lyth and other practitioners of the approach in a web available review essay, "The Psychodynamics of Institutions" (<http://human-nature.com/rmyoung/ papers/pap146h.html>).
The Bloomsbury psychoanalysts, particularly James and Alex Strachey, were, by the way, among Klein's most important supporters when she first arrived in England, the Strachey's having arranged her first visit to London in 1925. On that visit she delivered the set of six lectures that were to become The Psychoanalysis of Children in the house of Virginia Woolf's brother, Adrian Stephen and his wife Karin (both of whom were also practicing analysts). The house was at 50 Gordon Square in Bloomsbury, a few doors up from Keynes's at 46.
Ted