George Shackle Research Articles

Economics for an uncertain world

Uncertainty, where we do not know the likelihood of future events, dominates our world. This article examines how economics as a profession and discipline can address uncertainty. From Frank Knight to John Maynard Keynes to Friedrich von Hayek to George Shackle, economics has highlighted the importance of uncertain knowledge and distinguished this from calculable risk. In this article we show how such insights were lost through the rise of narrow neoclassical thinking and were excluded through the emergence of a dominant economics of control that rose to prominence during the twentieth century and especially in the neoliberal era. However, through a range of perspectives in economics that emphasise the importance of complexity, informality, positionality and narratives, uncertainty is once again being embraced within an increasingly heterodox economics. In many ways, this chimes with the work of Albert Hirschman who, starting from the mid-1960s, emphasised the importance of addressing uncertainty in development theory and practice. Through two examples on pastoral development and global financial governance, we highlight the continued relevance of Hirschman’s thinking on the importance of adaptation, flexibility and learning-by-doing as responses to uncertainty and for the development of reliable, robust approaches to development policy and practice. In conclusion, we argue that economics theory, methodologies, professional practice and training need to change, recovering some of the insights from previous generations of economic thinkers and practitioners, in order to reinvent an economics appropriate for our uncertain world.

Shackle’s analysis of choice under uncertainty: its strengths, weaknesses and potential synergies with rival approaches

This paper offers a constructively critical examination of George Shackle’s theory of expectations and decision-making under uncertainty, a theory that Shackle developed because he questioned the relevance of objective probabilities as foundations for expectations. His theory is cast in terms of degrees of possibility and potential for surprise associated with disbelief that comes from imagining things that could prevent outcomes from eventuating. His idea that there may be ranges of mutually exclusive “perfectly possible” events has posed a problem for blending his thinking with the subjective probability approach, but here it is argued that this idea is flawed. Shackle’s theory of how expectations are deployed in making choices involves a reference-dependent theory of attention that results in focus on best-case and worst-case pairs of outcomes for each scheme. The paper identifies potential synergies with this idea and prospect theory and explores emotion- and satisficing-based perspectives as well as Shackle’s formal analysis of how focus outcomes are used in ranking rival schemes of action.

Firm Survival as a Function of Individual and Local Uncertainties: An Application of Shackle's Potential Surprise Function

: The link between the management of uncertainty and knowledge creation is the core element behind firm survival, as these two factors are critical for true innovation. This article links the survival of highly innovative firms to their knowledge creation and application in the context of two types of uncertainty management: (i) the individual firm's ability to handle uncertainty; (ii) the aggregate local “neuroticism” in facing uncertainty that characterizes the geographic location where the firm operates. The study is inspired by Audretsch and Dohse's model of firm growth and geographic location. We augment this model with George Shackle's potential surprise function for handling individual uncertainty. Additionally, we extend the model by also considering the psychological profile of localities, in particular their level of neuroticism according to the so-called Big Five taxonomy. Using data for the highly innovative Cambridge Region (UK) for the period 2010–2014, we find that, on individual level, the daring companies survive less frequently, but appear to live longer if they manage to survive. Survival also appears to be influenced by locational characteristics related to the local level of neuroticism. In particular, being located in a place with higher neuroticism is associated with lower survival rates.

Macro Theory within a Diachronic, Non-Equilibrium Motif

The relation between micro theory and macro theory is necessarily one between the parts of something and the whole of that thing. This simple recognition entails numerous analytical complexities which contemporary macro theories do more to conceal than to reveal, mostly out of a concern with constructing theories that are analytically tractable. I don’t deny the value of analytical tractability, but I also think that from time to time it is good to probe whether some of the analytical fictions invoked in the name of tractability might be overcome thorough some alternative scheme of analysis. In this paper I seek to sketch some contours of a possible bypass. In doing this, I follow up on three joint efforts (Lewis and Wagner 2017), Veetil and Wagner (2015), Caton and Wagner (2015) along with my earlier effort (Wagner 2012a) to treat a macro economy as an ecology of plans. This paper also seeks to extend George Shackle (1972, 1974) and Ludwig Lachman (1956, 1977) by working within a diachronic and non-equilibrium analytical motif.

Shackle on time, uncertainty and process

This paper is intended both as a contribution to the conceptual work on process in economic thought and as an attempt to connect a non-institutionalist, non-evolutionary thinker to it. The paper has two principal objectives: (i) to delineate a broad, philosophically grounded conception of what an economic process theory (EPT) is; and (ii) to locate the contributions of George Shackle within this broad conception of EPT. In pursuing these two objectives, I hope to draw out the originality and significance of Shackle’s economics with a particular emphasis on what he adds to process conceptions developed within other heterodox traditions such as institutional and evolutionary economics. I will also highlight some of the perceived limitations of Shackle’s approach and link them to the limitations of process philosophy.

Viennese kaleidics: Why it’s liberty more than policy that calms turbulence

The idea of a kaleidic economy or society is strongly associated with George Shackle and his vision of Keynesian kaleidics. This essay asserts that the central thrust of the Austrian tradition in economic analysis can be described by the term Viennese kaleidics. In either version of kaleidics, the analytical stress is placed on treating time seriously and not just notionally. Either version of kaleidics leads to recognition that economic processes are better treated as turbulent than as equilibrated. While that turbulence is a natural feature of the unavoidable incompleteness of intertemporal coordination, it is subject to mitigation. This essay explains how it is that individual liberty and private ordering is generally superior to state policy and public ordering in calming the turbulence that naturally characterizes a kaleidic economy.

The Ideas of George Shackle and Henry Boettinger

G.L.S. Shackle’s collected papers are held at Cambridge. One correspondent was Henry Boettinger, a senior corporate executive. Their letters and published writings reveal aspects of their ideas on economics as a practical art, an applied science and as creative theory. Boettinger had reflected upon his practical experience in making critical decisions, and Shackle sought to explain how such decisions were made.

Viennese Kaleidics: Why Liberty and Not Policy Calms Turbulence

The idea of a kaleidic economy or society is strongly associated with George Shackle and his vision of Keynesian kaleidics. This essay asserts that the central thrust of the Austrian tradition in economic analysis can be described by the term Viennese kaleidics. In either version of kaleidics, the analytical stress is placed on treating time seriously and not just notionally, which leads in turn to recognition that economic processes are better treated as turbulent than as equilibrated. While that turbulence is a natural feature of the unavoidable incompleteness of intertemporal coordination, it is subject to mitigation. This essay explains how it is that individual liberty and private ordering is generally superior to state policy and public ordering in calming the turbulence that naturally characterizes a kaleidic society.

The Philosophical Foundations of a Radical Austrian Approach to Entrepreneurship

The equilibrium-based approaches that dominate entrepreneurship research offer useful insights into some aspects of entrepreneurship, but they ignore or downplay many fundamental entrepreneurial phenomena such as individuals’ creative imaginations, firms’ resource (re)combinations, and markets’ disequilibrating tendencies—and the genuine uncertainty and widespread heterogeneity these imply. To overcome these limitations, scholars have recently introduced a nonequilibrium approach to entrepreneurship based on Ludwig Lachmann’s “radical subjectivist” brand of Austrian economics. Here, this radical Austrian approach is extended beyond Lachmann to include the work of radical subjectivism’s other noted theorist: George Shackle. More important, the article extends entrepreneurship research by systematically comparing and contrasting the nascent, radical Austrian approach to entrepreneurship with three dominant equilibrium-based approaches: neoclassical, Kirznerian, and Schumpeterian economics. Specifically, the article (a) explicates the paradigmatic philosophical assumptions about the nature of individuals, firms, and markets that underlie these approaches; (b) demonstrates how metaphor is employed as a device to concretize these assumptions; (c) examines the research questions that arise from the assumptions these metaphors reflect; and (d) uses the Japanese “beer wars” of the 1980s and 1990s to illustrate one methodological approach (hermeneutics) researchers can adopt to apply these assumptions, metaphors, and questions to study entrepreneurial phenomena from a radical subjectivist perspective.

Shackle's Economic Agent and Modern Decision Theory

This paper assesses the rationale of George Shackle's argument against Bayesian decision making in the light of recent developments of modern decision theory. The focus is on the so-called non-additive probability approach to decision theory under uncertainty, which, not unlike Shackle's analysis, stresses the inability of agents to describe uncertain environments. A discussion of the pros and cons of the parallel between Shackle's theory and the non-additive developments is provided.

Reflections on George Shackle: Three Excerpts from the Shackle Collection

Reflections on George Shackle: Three Excerpts from the Shackle Collection

Uncertainty and the Environment

This thought provoking book is concerned with the need to deal adequately with uncertainty in environmental decision making. The author advances a critique of the use of traditional models and then develops an alternative model of decision making under uncertainty, based on the work of George Shackle.

Competition as a rivalrous process

The Theory of Economic Equilibrium was written in the period of what George Shackle calls the “Years of High Theory”. Unlike the works that Shackle discusses, da Empoli’s volume received little attention and played no part in shaping the analytical formulations of the time. The Theory of Economic Equilibrium offered an alternative to the then conventional approach to the treatment of competition as an adjective. For da Empoli, competition was a rivalrous process, a verb. It is arguable that had da Empoli’s formulations found their way into the literature of the time, the recent revival of interest in competition as a process would now be at a more advanced state.

Alfred Schütz and George Shackle: Two Views of Choice

Within the Austrian school of economics, Ludwig Lachmann identified Alfred Schutz and George Shackle as master “subjectivists.” Subjectivists trace aggregate economic phenomena back to the subjective thoughts and expectations of individuals. Schutz was a member of the “Mises Circle” of Austrian economists. Shackle was a student of the Austrian economist F.A. Hayek, but a follower of Hayek's great rival, John Maynard Keynes. Austrians respect both figures as important subjectivists who offered valuable accounts of the role of uncertainty in human action. The paper serves two purposes. First, it is a useful primer on the distinct theories of Schuts and Shackle. Second, it draws attention to the problem of change and novelty in the work of Schutz and Shackle. Schutz underemphasized the role of novelty in society. Shackle, by contrast, exaggerated the role of novelty in choice. A middle ground position is defended.

Typicality and Novelty: Schütz and Shackle on the Paradox of Choice

This paper discusses the thoughts of the Austrian/American phenomenologist Alfred Schutz (1899–1959) and the British economist George Shackle (1903–1992) and their views on choice, which are in many ways very different, perhaps even inconsistent, but also complementary and may even have some shared elements. This is in particular so with regard to the problem of the paradox of choice, the overall insight that for choice to be informative, it must neither be predetermined nor random. Shackle has mainly focused on the creative aspect—on how choice originates while Schutz has tended to focus more on how people are able to make non-random choices by referring to the “typical” features of action. The paper argues that there are many differences Schutz and Shackle. The possibility that they are complementary approaches is indicated.

Rationality, imagination and intelligence: some boundaries in human decision-making

This paper explores the concept of 'bounded rationality' by contrasting it to notions of rationality that are not bounded. It mainly attempts to deepen understanding of the concept by outlining and comparing different versions of 'bounded rationality', in this case the versions of Herbert A. Simon, George Shackle and James G. March. Simon is the 'father' of procedural rationality, at least in modern times. His ideas, and those of his Carnegie School colleagues, about bounded, or limited, rationality enable recognition of the importance of behavioral and cognitive incompleteness. Shackle was a loner in economics because he took seriously the importance of time, not in a mathematical but in a psychological sense. The paper will exploit his ideas to argue the importance of imagination as an integral part of human decision-making. Finally, March is known for his more irrational models of human decision-making. The pursuit of intelligence in the longer run requires us occasionally to betray the canons of rationality in the short run. These three sets of ideas lead to different versions of bounded rationality: procedural, aesthetic and retrospective rationality respectively.

The Primitive Uncertainty Construct: Possibility, Potential Surprise, Probability and Belief; Some Experimental Evidence

This paper investigates the nature of the primitive uncertainty measure by means of a laboratory experiment that consists of four uncertain situations. It considers the related pair of possibility and potential surprise associated with George Shackle; and the supposedly related pair, belief and probability. The assessment of the relative merits of potential measures of uncertainty is based upon modal responses and χ2 tests. It is found that the dominant uncertainty concept is potential surprise, and the subjects' explanations of their choice of an uncertainty concept gave substantial weight to possibility where it is felt that there is vagueness or doubt about the outcomes in a given situation

G. L. S. Shackle (1903-1992): A Life with Uncertainty

Such was George Shackle: the most courteous, considerate, and humble of men. He never uttered an unkind word about anyone. Even in his specifically exegetical writings he was reluctant to be critical: and he always found something positive to say about a paper or book whose arguments he had effectively destroyed. George Shackle was a frail person and throughout his life, especially in his retirement years, he had to fight against bouts of serious ill health and of debility. He was also an intellectual giant; with his death we have lost one of the few Olympian figures in the history of both British and world economics. George Shackle belonged to that exceptionally gifted generation of economists who began their training or had just embarked upon their careers as dons, in Britain in the early to mid I930s. The London School of Economics which Shackle joined as a doctoral student in I 935 contained some of the most illustrious names in economics: John Hicks, Abba Lerner, Lionel Robbins, Brinley Thomas, Friedrich von Hayek, and Nicholas Kaldor. In common with these economists, George Shackle had catholic interests in economics, an enviable intuitive understanding of its subject matter, and a determination to resist the trend towards the mathematical presentation of economic ideas. To him economics was best articulated in language; and he was blessed with an exceptional prose style, which he used to full advantage. He had a remarkable facility of being able to draw upon clear expository illustrations from the real world, from English literature, from Philosophy and from Science. Many of his writings have been at the interface of Economics, Philosophy and Psychology. Some of his contributions have been amongst the most original to our subject and others by their synthesis of existing literature have afforded invaluable insights into the nature and limitations of economic analysis. Shackle's early life suggested that he was destined to pursue an academic career, and to do so by the conventional path. He was nurtured in an academic environment. His father, Robert Shackle, who was a Wrangler, taught Mathematics, and coached Keynes for his scholarship to Eton. Shackle attended the Perse School, Cambridge, his father's old School. When he was seventeen he was due to enter his father's old college, St Catharine's,

George Shackle and uncertainty: a revolution still awaited

George Shackle has set out three key points in his work. First, in an uncertain world we make choices which are frequently unique. We cannot understand these by assuming away uncertainly, nor by using a mathematical model which employs a probability which logically depends on repeated experiment. Secondly, in considering the alternative outcomes of a line of action, we receive stimuli which are the joint consequence of the (positive or negative) attractiveness by which we have chosen to measure the outcomes, and the degrees of subjective belief which we hold about the occurance of the outcomes. Thirdly, in considering alternative lines of action, we compare the most important stimuli to which they give rise (in relation to our preferences for safety or risk), but possibly in a more complex way than Shackle suggests.

On the indeterminacy of Keynes's monetary theory of value

In this article I propose to reconsider Hugh Townshend's contribution in terms of the assessment made by George Shackle that Townshend proved the indeterminacy and nihilism inherent in the General theory. What I shall show, however, is that Townshend did not conclude that asset prices were indeterminate, but rather that they fell within a range of determinacy depending upon the relative magnitude of certain conventional criteria. And whilst it is true that Keynes clearly felt that an econonmy would be unpredictably unstable when these conventions broke down his motivation was to focus on the conditions by which the instiutional and conventional generative mechanisms could explain the relative stability of an economy when the prospective yield of assets were uncertain.