Monday, 25 December 2017

Fighting talk

A new working paper from M E Brady will not go down well with everyone.

"G. L. S. Shackle Was J. M. Keynes's Rival and Opponent: He Was an Austrian and Never a Keynesian of Any Type"

Michael Emmett Brady, California State University - Department of Operations Management

Shackle was a tireless opponent of both Keynes and the Keynesian revolution. He was a 100% Austrian subjectivist. He never was a disciple of Keynes at any time in his life. Shackle was successful in a tricky sleight of hand and legerdemain due to the support of Joan Robinson and Paul Davidson, neither of whom had any idea of the concept of the weight of the evidence from the A Treatise on Probability that was the foundation for Keynes’s uncertainty analysis in both the A Treatise on Probability and General Theory.

Shackle successfully substituted his rival and directly conflicting definition (See for example, pages 162-164 of Epistemics and Economics) of uncertainty, which meant total and complete ignorance. Shackle’s concept of total and complete ignorance goes under the synonyms irreducible uncertainty, fundamental uncertainty, unquantifiable uncertainty, utter uncertainty and radical uncertainty. None of Shackle’s analysis holds except in the special, but important, case of investment in long lived, physical durable capital or producer goods that are subject to innovation, technological change and advance, and obsolescence over time. Keynes’s treatment in the A Treatise on Probability and General Theory is superior to Shackle’s, so there is no need for any consideration of Shackle’s convoluted approach based on possibilities (not probabilities), imagination and the entrepreneur’s private dreams.

Keynes was the first to put forth an original IS-LP (LM) model in October, 1933. This model appeared in the 1934 draft copy of the GT. This original model is very inferior to the final model constructed in chapters 10, 11, 12, 13, 14, and 15 of the GT. It was presented in its entirety in chapter 21 in sections IV, V and VI and briefly in Section IV of chapter 15. The investment multiplier and marginal propensity to consume are both missing. Keynes had not yet integrated Y, Aggregate realized or actual Income, into the LP equation because he had not yet formulated his D-Z model, which allowed him to present an elasticity analysis in Section VI of chapter 21.

There is no Shackleian interpretation of the GT. There is a deliberate, Shackleian misinterpretation of the 1937 QJE article, in which Shackle tries to sabotage the Keynesian revolution by attempting to claim that Keynes was really an Austrian Subjectivist like Shackle.

Fitzgibbons was not able to come to the correct conclusion regarding Shackle simply because his belief in a Shackleian interpretation of Keynes makes no sense because Keynes had always rejected Austrian Subjectivism.

King’s 2002 “history” is a version of Shackle’s claim that Keynes was an Austrian Subjectivist. King’s “History” is completely contradicted by the 1937-38 Keynes-Townshend correspondence, where Keynes agrees with Townshend’s tentative conclusion that the Theory of Liquidity Preference, as presented in the General Theory, is based on Keynes’s TP concepts of weight of the evidence and non numerical probabilities, which are interval valued probabilities that can be indeterminate or imprecise. The Keynes-Townshend correspondence represents a complete rejection of Shackle’s and Joan Robinson’s claims about radical uncertainty being the foundation of the GT.

The Uncertainty fraud is the foundation upon which Post Keynesianism and Institutional economics is founded. This foundation is composed of the myths made up by Joan Robinson and GLS Shackle about Keynes and the GT. These myths were then passed on to hundreds of thousands of readers by way of Paul Davidson during the 37 years, from 1978-2014, that he was the editor of the Journal of Post Keynesian Economics.

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