Keynes’s Concept of Uncertainty Has Absolutely Nothing to Do with the Post Keynesian or Heterodox (J. Robinson, G. L. S. Shackle, P. Davidson, R. Skidelsky, R. O’Donnell) Concept of Fundamental, Radical, or Irreducible Uncertainty: Uncertainty Was Always Defined as a Range by Keynes so that It Always Came in Degrees

Abstract

Keynes’s concept of uncertainty from his 1908 Cambridge Fellowship dissertation to his death in 1946 was a range concept like probability-it could be measured on the unit interval between 0 and 1[0,1]. Uncertainty was an inverse function of what Keynes defined to be the evidential weight of the argument, which was specified formally by Keynes over two chapters of his A Treatise on Probability, chapters 6 and 26 as V=V(a/h) =V(a/h1, h2, h3, h4……hn, hn+1….) =w, 0≤w≤1, where w=K/[K+I] and 1-w=I/[K+I] when K=knowledge and I =Ignorance. The erroneous Heterodox, Post Keynesian version is V(a/h)=V = K/(K+I),0≤V≤1. All Post Keynesian and heterodox economists reject Keynes’s formulation, which requires mathematical modeling that is non linear and non additive. Post Keynesian and Heterodox economists(PKHE) accept, instead, a definition of radical, fundamental or irreducible uncertainty that is equivalent to Keynes’s definition of ignorance, where w=0, which is an extreme outlier for Keynes that has limited relevance only in the far and distant future. Ignorance does not come in degrees and hence can’t be modeled mathematically, statistically, probabilistically or logically because w=0. The initial proponent of this anti-Keynes definition of uncertainty was Joan Robinson, an extraordinary mathematical illiterate, who had no idea about anything Keynes was talking about in either the A Treatise on Probability or General Theory. Keynes only realized this only after his exchanges with J. Robinson in September to November, 1936, available in Volume 14 of CWJMK on pp.134-148. The basic PKHE attack on formal, mathematical, technical modeling, which Keynes always viewed as being only approximations to reality, so that models could never be true, can be traced directly to J. Robinson. PKHE confuse Keynes’s work in this area with J. Robinson’s work, which was characterized by Keynes as being “nonsense” in his letter of November 9th ,1936.