J M Keynes Was Never Concerned About Ramsey’s ‘Critique’ of His Logical Theory of Probability Because He Realized That Ramsey Had No Idea About What His Theory of Imprecise Probability Entailed: Ramsey Was an Advocate of Precise Probability

Abstract

Keynes had successfully applied his theory of logical, imprecise probability in his Indian Currency and Finance(1913), during his time in the British Treasury from 1914 till 1919, and in his The Economic Consequences of the Peace(1919). What Keynes applied was the concept of inexact measurement and approximation, which in Part II of the A Treatise on Probability is clearly shown by Keynes to be an interval valued theory of probability of upper and lower bounds. In January, 1922,an 18 year old Frank Ramey published an extremely poor review of Keynes’s A Treatise on Probability in the Cambridge Magazine. Keynes realized immediately that Ramsey’s conceptualization of probability was an exact and precise version of additive mathematical probability with better epistemological foundations, while his theory was about inexact, imprecise, non additive interval valued probability. Keynes also realized that Ramsey’s theory always assumed that w, the evidential weight of the evidence, was complete, so that Ramsey’s foundation could only accommodate additivity, whereas for Keynes the foundation was always based on non-additivity, with additivity restricted to fields like physics and engineering. Keynes recognized, however, that Ramsey’s great intellectual capabilities would lead him to have a tremendous academic career, although Keynes himself was not an academic, given his vast understanding of actual, ambiguous, real world decision making. Keynes thus used his great influence and reputation to assist Ramsey’s academic career, while also clearly understanding that Ramsey’s theory of subjective probability was basically one that would be generally limited and restricted to academic and board room exposition in journals and business reports. It is amazing that after 100 years there still are no academics who have the slightest understanding of the interval valued theory of non additive, imprecise probability erected in Part II of the A Treatise on Probability by Keynes or the decision weight approach of the conventional coefficient C. There is not a single mention of Ramsey and/or subjective probability in: • Keynes’s pre-General Theory drafts and writings from 1932-35 • Keynes’s 1936 General Theory • Keynes’s 1937 Quarterly Journal of Economics article • Keynes’s correspondence with H. Townshend in 1937-1938 • Keynes’s exchanges with Tinbergen in 1938-1940