Two Post-Keynesian Approaches to Uncertainty and Irreducible Uncertainty

Abstract

Uncertainty, especially irreducible uncertainty, is an essential component of Keynes’s General Theory and of post-Keynesian economics. Within post-Keynesianism, however, two contrasting understandings of uncertainty and its cognate concepts have emerged over the last few decades. These are the Human Abilities/Characteristics approach and the Ergodic/Nonergodic approach, which are often portrayed as epistemological uncertainty and ontological uncertainty respectively. According to the former, uncertainty is ultimately grounded on certain inescapable limitations in human knowledge and abilities to acquire knowledge, regardless of the ontology of the domain being investigated. According to the latter, uncertainty is ultimately grounded on the ontology of the domain being investigated, regardless of any limitations in human knowledge or ability. This chapter provides a detailed dissection and explanation of the core constituents of the two approaches, and concludes by summarizing their differences and posing some questions for reflection.