tag:blogger.com,1999:blog-6245381193993153721.post6875424098871526452..comments2024-03-17T00:23:24.896-07:00Comments on Social Democracy for the 21st Century: A Realist Alternative to the Modern Left: Risk and Uncertainty in Post Keynesian EconomicsLord Keyneshttp://www.blogger.com/profile/06556863604205200159noreply@blogger.comBlogger10125tag:blogger.com,1999:blog-6245381193993153721.post-65359921174842514522016-05-22T06:00:11.212-07:002016-05-22T06:00:11.212-07:00Complexity theory is probably relevant to inductio...Complexity theory is probably relevant to induction. Uncertainty and complexity live side by side. Induction may be unjustifiable in the context of uncertainty and yet be efficient in relation to complexity.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-34240152791655182712010-12-24T06:59:07.356-08:002010-12-24T06:59:07.356-08:00Thank you for the comprehensive responses!
I will...Thank you for the comprehensive responses!<br /><br />I will add these to my reading list.TJhttps://www.blogger.com/profile/00095813897930533591noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-11898001842563175892010-12-22T01:28:39.114-08:002010-12-22T01:28:39.114-08:00I'll add one more comment, before I write a wh...I'll add one more comment, before I write a whole new post here!<br /> <br />For more on the misuse and abuse of the concept of Darwinian evolution in economics and the misuse of it in attempts to justify the free market, see:<br /><br />Stephen P. Dunn, 2008. <i>The “Uncertain’ Foundations of Post Keynesian Economics: Essays in Exploration</i>, Routledge, Abingdon, Oxon, England. pp. 135ff.<br /><br />Geoffrey M. Hodgson, 1993. <i>Economics and Evolution: Bringing Life back into Economics</i>, Polity Press, Cambridge.<br /><br />Geoffrey M. Hodgson (ed.). 2009. <i>Darwinism and Economics</i>, Edward Elgar, Cheltenham, UK and Northampton, MA.<br /><br />Geoffrey M. Hodgson, 1999. <i>Economics and Utopia: Why the Learning Economy is not the End of History</i>, Routledge, London and New York.<br /><br />Geoffrey M. Hodgson, 1994. “Optimisation and Evolution: Winter’s critique of Friedman Revisted,” <i>Cambridge Journal of Economics</i> 18: 413–430.<br /><br />Basically, there is no reason to think that markets operating in an alleged “evolutionary” manner will lead to economic optimality or efficiency.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-54928333110141205642010-12-22T01:03:39.577-08:002010-12-22T01:03:39.577-08:00Also, a correction to the last quotation of Terzi ...Also, a correction to the last quotation of Terzi above:<br /><br /><i>"in a nonergodic world, a strategy that succeeds under given conditions may fail under different conditions. To pursue the analogy, even Taleb’s black swan argument may face its own “black swan”!"</i><br /><br />Andrea Terzi, 2010, “Keynes’s uncertainty is not about white or black swans,” Journal of Post Keynesian Economics 32.4: p. 564-5.<br /><br />So can there be any real and successful evolutionary process of selection in such a system?<br /><br />I think the problem is that the economy is a nonergodic stochastic system. <br />Our environment in the past in less complex/primitive human societies was probably not (but maybe I am wrong).Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-88636451315958057532010-12-22T00:57:28.534-08:002010-12-22T00:57:28.534-08:00I will also note that the neo-Austrians are subjec...I will also note that the neo-Austrians are subject to a very similar flaw in their thinking.<br />The Austrians believe in epistemological uncertainty, not ontological uncertainty (as in Post Keynesian economics).<br />The Austrians think there is some kind of market process analogous to evolution by natural selection that produces pattern/plan co-ordination in the free market (their version of the neoclassical concept of “equilibrium”).<br />But in the face of ontological uncertainty and subjective expectations that argument just doesn’t work.<br /><br />Some further reading:<br /><br />Paul Davidson, 1989. “The Economics of Ignorance or Ignorance of Economics?,” <i>Critical Review</i> 3.3/4: 467–487<br /><br />McKenna, E. J. and D. Zannoni, 1997/1998. “Post Keynesian economics and the philosophy of individualism,” <i>Journal of Post Keynesian Economics</i> 20.2 (Winter): 235–249.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-81857343276517817292010-12-22T00:03:28.584-08:002010-12-22T00:03:28.584-08:00And, also, the policy prescriptions of Post Keynes...And, also, the policy prescriptions of Post Keynesian economics to deal with ontological uncertainty are superior.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-11316719645136542802010-12-22T00:01:56.664-08:002010-12-22T00:01:56.664-08:00Another article worth looking at on Taleb’s Black ...Another article worth looking at on Taleb’s Black Swan Theory from the Post Keynesian perspective is:<br /><br />Andrea Terzi, 2010, “Keynes’s uncertainty is not about white or black swans,” <i>Journal of Post Keynesian Economics</i> 32.4: 559–566.<br /><br />Taleb’s “black swan events” are essentially ones whose probabilities are incalculable.<br /><br />But long before Taleb, Frank Knight, J. M. Keynes, George L.S. Shackle were stressing that we face fundamental uncertainty about many events in the future.<br /><br />In fact, Taleb’s theory doesn’t go far enough:<br /><br /><i> “Keynes’s intractable uncertainty is a deeper matter, and Taleb’s swans seem to float on the surface of it. Keynes used this concept to describe a world where the future outcomes of today’s economic decisions are largely influenced by agents’ current behavior and beliefs. … Paul Davidson has reformulated Keynes’s assumption of uncertainty in terms of the nonergodic hypothesis. Uncertainty cannot be permanently reduced, but the consequences of uncertainty can be controlled by devising institutional arrangements … and using the properties of a sovereign monetary system. System robustness increases when public policies address a system’s failures through the provision of demand and liquidity”</i> (Terzi 2010: 564).<br /><br />Taleb’s Darwinian approach is self-defeating in a non-ergodic system with ontological uncertainty. <br /><br /><i>“survival of the fittest is a self-defeating approach under ontological uncertainty: in a nonergodic world, a strategy that succeeds under given Keynes’s Uncertainty is Not About White or Black Swans conditions may fail under different conditions. To pursue the analogy, even Taleb’s black swan argument may face its own “black swan”!</i> (pp. 564-565).<br /><br />So I would have to say that the Post Keynesian concept of uncertainty is better than Taleb’s.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-86680400478604442702010-12-21T14:25:23.240-08:002010-12-21T14:25:23.240-08:00I have to admit I have not read Nassim Nicholas Ta...I have to admit I have not read Nassim Nicholas Taleb's work.<br /><br />But there is a useful article here by the Post Keynesian economist Paul Davidson that discusses it:<br /><br />http://econ.bus.utk.edu/Text%20Documents/BLACKfinalSWANS%20AND%20KNIGHTS%20EPISTEMOLOGICAL2final.doc<br /><br />Davidson thinks Taleb’s Black Swan Theory is just a new form of Frank Knight’s concept of uncertainty (see Knight, <i>Risk Uncertainty, and Profit</i> New York, 1921). <br /><br />What is crucial is the difference between "epistemological uncertainty" in an ergodic system and "ontological uncertainty" in a nonergodic system. The economy is a nonergodic stochastic system, and we face fundamental uncertainty about many events in the future. <br /><br />But to be honest, I really have to read Taleb's work - I will put it in my "to read" list.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-24651669540923502152010-12-21T09:20:11.983-08:002010-12-21T09:20:11.983-08:00This is a fantastic article.
Reading it, I was wo...This is a fantastic article.<br /><br />Reading it, I was wondering if you had any thoughts on Nassim Taleb's "Black Swan" or "Fooled by Randomness", as he is interested in a lot of these ideas.<br /><br />If you have read any of his books, do you agree what he writes?TJhttps://www.blogger.com/profile/00095813897930533591noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-33611457023392082762010-12-10T10:17:27.879-08:002010-12-10T10:17:27.879-08:00I hate to be that post-modern guy, but the word &q...I hate to be that post-modern guy, but the word "uncertainty" is a euphemism for "disaster is coming but we don't want people to listen to the cranks that were smarter than us".Anonymousnoreply@blogger.com