> On Sun, Nov 15, 2009 at 6:26 AM, Ted Winslow <egwinslow at rogers.com>
> wrote:
>
>> Actually, as I've many times spelled out and as I just did again,
>> Keynes
>> did have a "research program", one constituted by the ontological,
>> anthropological and psychological premises I just summarized.
>
> On Sat, Nov 14, 2009 at 11:00 AM, Ted Winslow <egwinslow at rogers.com>
> wrote:
>
>> I don't know of any such research program. Keynes's ideas, for
>> instance,
>> led to no such program.
They led to "no such program" in the sense that the ontological, anthropological and psychological premises were not made the basis of any such program. I pointed primarily to the psychological premises to demonstrate this, but the points about "individualism" elaborated in terms of "internal relations" and the treatment of the motives that define capitalism as "passions" refer to ontological and anthropological premises that also failed to be appropriated in research programs claiming derivation from Keynes.
> The Post Keynesians to whom you point aren't pursuing this research
> program.
>> They ignore, and, in several cases, explicitly deny that these are
>> Keynes's
>> premises, that is, they ignore or deny that Keynes's analysis of
>> financial
>> markets assumes the following:
>
> Actually, they know what Keynes wrote as well as you do. They just
> argue that he left something important out, and (implicitly or
> explicitly) disagree that financial booms and busts are all about
> psychology.
If you mean that they read Keynes as making the psychological premises to which I pointed and as basing his analysis of booms and busts on them, this isn't true.
Paul Davidson, for instance, has always insisted on attributing to Keynes the hypothesis that “decision makers” are “sensible” (a word he prefers to “rational” because the use of the latter in economics ignores the implications of “uncertainty” in Keynes’s radical sense for rational decision making) meaning by this that they “'know' that they do not, and can not , know the future outcome of certain crucial economic decisions made today’.” He re-iterates this claim in recent writing focused on the most recent crisis.
"The Keynes liquidity theory … presumes that decision makers 'know' that they do not, and can not , know the future outcome of certain crucial economic decisions made today. Thus the Keynes theory explains how the capitalist economic system creates institutions that permit decision makers to deal with an uncertain future while making allocative decisions and then sleep at night." (Davidson, <http://econ.bus.utk.edu/Davidson.html
>, p. 3)
Keynes, in contrast, claims that: "Peace and comfort of mind require that we should hide from ourselves how little we foresee."( (XIV 124) To do this, he claims, we "assume, contrary to all likelihood, that the future will resemble the past"; we "assume the future to be much more like the past than is reasonable." (XIV 124-5)
Davidson himself points to evidence contradicting the premise about decision-makers he mistakenly attributes to Keynes.
"The highly complex computer models used by investment bankers in Wall Street in recent years to evaluate and manage the risks of dealings with financial assets is based on statistical probability analysis of historical data to predict the future. Given the necessity of the government, in 2008, to bail out all these Wall Street investment bankers when their risk management tools failed, it should be obvious that their risk management computer models presumed the ergodic axiom while the real world environment was nonergodic. That is why all these risk management models failed to predict the 2008 future." (p. 6)
Minsky says of the relation of Post Keynesian economics to the hypothesis of "maximimizing behavior":
"In this [Post Keynesian] modeling maximizing behavior remains important but the maximizing behavior of critical importance takes the form of present decisions that the Ms [in M-C-M'] over time will exceed M with an ample margin of safety. The appropriate construct to use in modeling such relations is the family of short- and long-term cost curves.
"The maximizing decisions that lead to M [to] C action (financing M of spending on C of investment output) cannot be divorced from uncertainty." (Minsky, "The Essential Characteristics of Post Keynesian Economics" in Deleplace and Nell *Money in Motion* pp. 77-8)
> Quoting Keynes back in response isn't really helpful. At some point,
> surely, you have to go beyond Famous Quotations from the Old Masters.
Evidently it's not really helpful to you.
It is, however, helpful as supporting interpretive claims with textual evidence and, in this way, showing that interpretations such as those of Davidson and Minsky to which I've just pointed are mistaken.
More importantly, they're helpful if Keynes's psychological assumptions are insightful, if, for example, they provide insight into the inability to understand the ontological idea of "internal relations" and the limits it places on axiomatic deductive reasoning, into mistakenly "associating idle balances ... with some aspect of current saving" and into the resort to ad hominem when the quotations aren't helpful in these ways to you.
Ted