How Would J M Keynes Have Responded to Shackle’s 1949 ‘Probability and Uncertainty’ Paper?: Keynes Would Have Required That the Paper Must Be Revised Before Publication

Abstract

J M Keynes, in a letter to Joan Robinson on November 9th,1936, responded to the utter mess that Joan Robinson had made of his liquidity preference theory of the rate of interest in the General Theory by stating: “Dear Joan, I beg you not to publish. For your argument, as it stands is most certainly nonsense.” Robinson eventually cut out all of the material, that Keynes had described as nonsense, that dealt with Keynes’s liquidity preference theory of the rate of interest before it was published in book form in 1937. In 1949, Shackle published a paper that is in the same category as Joan Robinson’s paper that was very severely criticized by Keynes in his letter to her of November 9th, 1936. Shackle’s “Probability and Uncertainty”, which he republished uncorrected in 1955 in his book Uncertainty in Economics, demonstrates that Shackle simply did not understand that his entire understanding of probability and decision making was based on the antinomian fallacy. The antinomian fallacy asserts that all moments of time are unique. Therefore, there can be no similarities or dissimilarities, or analogies, or pattern recognition between past event, present events, or future events. The antinomian fallacy, which stands at the center of Shackle’s entire theory of possibility (Shackle had no theory of probability) means that no concept of probability is even possible. Thus, only deduction is possible. Keynes’s conceptualization of an inductive logic, based on his logical theory of probability in the A Treatise on Probability (1921) and its application in the General Theory (1936), had to be completely rejected by Shackle. Shackle’s system directly contradicts and is inconsistent with Keynes logical theory of probability. Keynes himself confirmed Townshend’s 1938 statement in correspondence that the theory of liquidity preference rests on “my theory of probability”, which consisted of (a) the logical relation of probability, P(a/h)=α, where α is a rational degree of belief,(b) non-numerical probability and (c)weight of the evidence. Given this confirmation by Keynes to Townshend, Keynes would have had no choice but to have informed Shackle that his argument in 1949(1955) is “certainly nonsense” which must be revised immediately. Naturally, Shackle never published any paper putting forth his antinomian based theory of possibility while Keynes was still alive. Shackle knew that the result would be a swift and complete critique of his system by Keynes that he could not answer intellectually.