M. E. Brady’s Critique of Post Keynesianism

As far as I can see the major criticisms are these:

(1) Post Keynesians (and philosophers of probability, mathematicians and economists generally) have not understood Keynes’s Treatise on Probability properly, and in particular his idea of relegating the frequentist interpretation of probability to a highly limited domain, and that non-objective probabilities (in the sense of non-a priori probabilities or non-relative frequency probabilities) can nevertheless be mathematically represented with imprecise, interval estimates (apparently called “approximation” by Keynes), the first explicit such interval estimate, lower-upper bound model of probability, developed from George Boole’s calculus in The Laws of Thought (1854).

This forms the basis of Keynes’s decision-making theory, with mathematics behind it, superior to the Ramsey/Savage/neoclassical EUT and consistent with Daniel Ellsberg’s decision making theory.

(2) Brady contends that Post Keynesians misunderstand Keynes’s conception of uncertainty, and do not recognise grades/degrees of uncertainty:

“Paul Davidson assumes that Keynes’s and Shackle’s views are the same. The Post Keynesians DO NOT accept the concept of uncertainty coming in different grades or gradations. They fall back on Shackle’s own words … – Uncertainty is the opposite of certainty. … There is nothing in between certainty and uncertainty. This, of course, leads to complete nihilism. The Post Keynesian school is doomed intellectually because it does not have a solid foundation to deal with uncertainty as a range. Radical uncertainty only has import in decisions involving innovation/long run capital investment. Any attempt to put it at the center of decision making leads to intellectual chaos.”
Michael Emmett Brady, April 21, 2008
http://www.amazon.com/review/R1S4VWTIJF8J6O/

(3) the charge that Post Keynesians have mistakenly held that Keynes had no or little formal mathematical analysis in the General Theory or that Keynes had “no microeconomic foundation in the ... General Theory to support his D-Z model of Effective Demand because he had not taken the 20 minutes necessary to study the theory of value.” According to this view, the theory of effective demand in the General Theory is “completely worked out in detail in chapters 20 and 21 using the D-Z model.”

That is, Brady contends that Paul Davidson’s interpretation and version of Keynes’s D-Z model is wrong, and that Post Keynesians have not properly understood Chapters 20 and 21 of the General Theory and that Keynes had a sophisticated mathematical model in those chapters.

While charge (1) is probably true, I think it is clear that charge (2) is false: there are Post Keynesians who do recognise degrees of uncertainty, such as, for example, Dow (1994 and 1995), Jespersen (2009: 8), Lars Syll, and (if he self-identifies as a Post Keynesian) Crocco (2002).

But I would like to see someone respond to charge (3).

BIBLIOGRAPHY
Crocco, M. 2002. “The Concept of Degrees of Uncertainty in Keynes, Shackle, and Davidson,” Nova Economia 12.2: 11–28.

Dow, Sheila C. 1994. “Uncertainty,” in Philip Arestis and Malcolm Sawyer (eds.), The Elgar Companion to Radical Political Economy. Edward Elgar, Aldershot. 434–438.

Dow, Sheila C. 1995. “Uncertainty about Uncertainty,” in S. C. Dow and J. Hillard (eds.). Keynes, Knowledge and Uncertainty. Edward Elgar, Aldershot. 117–127.

Jespersen, Jesper. 2009. “Post-Keynesian Economics: Uncertainty, Effective Demand & (Un)sustainable Development,” Paper, Dijon-conference, Dijon, 10–12 December 2009.