On the Erroneous Heterodox and Post Keynesian Belief That Keynes’s Interval Valued Decision Theory in the A Treatise on Probability (1921) Was an Ordinal Theory of Probability

Abstract

Keynes’s initial, introductory presentation of his inexact measurement, approximation approach to interval valued probability occurred on pages 38-40 of chapter III of the A Treatise on Probability. Keynes used a simple diagram on page 38 to illustrate the non linear and non additive nature of interval valued probability. He also informed the reader on pages 37-38 that the introductory analysis on pp.38-40 would be a brief analysis whereas the analysis in Part II would be a detailed analysis. Post Keynesian, Institutionalist and heterodix economists have completely ignored Keynes’s warning and completely misinterpreted and misrepresented Keynes’s introductory analysis on interval valued probability as an ordinal theory of probability. The result of this misinterpretation and misrepresentation of Keynes’s decision theory can be seen in the response of public officials, who have been exposed to the misinterpretations and misrepresentations of heterodox economists, when they are considering how to base their country’s monetary and fiscal policy proposals on an analysis that is supposed to incorporate Keynes’s crucial positions on uncertainty and expectations.