Michael Emmett Brady’s Papers on Keynes: A Bibliography

I am deeply immersed in the biography of John Maynard Keynes at the moment. I am also rapidly coming to the point in my readings where Keynes publishes his Treatise on Probability (1921). That being so, I will start a list below of papers by Michael Emmett Brady on Keynes’s contribution to probability theory and on broader issues:

Brady, Michael Emmett, 1983. The Foundation of Keynes’s Macrotheory: His Logical Theory of Probability and its Application in the General Theory and After, Ph.D. Dissertation, University of California, Riverside.

Brady, Michael Emmett, 1987. “J. M. Keynes’ Theory of Evidential Weight: Its Relation to Information Processing Theory and Application in the General Theory,” Synthese 71: 37–60.

Brady, Michael Emmett, 1988. “J. M. Keynes’s Position on the General Applicability of Mathematical, Logical and Statistical Methods in Economics and Social Science,” Synthese 76.1: 1–24.

Brady, Michael Emmett and Howard B. Lee, 1989. “Dynamics of Choice Behavior: The Logical Relation Between Linear Objective Probability and Nonlinear Subjective Probability,” Psychological Reports 64: 91-97.

Brady, Michael Emmett, 1990. “The Mathematical Development of Keynes’s Aggregate Supply Function in the General Theory,” History of Political Economy 22.1: 167-172.

Brady, Michael Emmett, 1993. “J. M. Keynes’s Theoretical Approach to Decision-Making under Conditions of Risk and Uncertainty,” The British Journal for the Philosophy of Science 44.2: 357–376.

Brady, Michael Emmett, 1994. “Keynes, Pigou and the Supply Side of the General Theory,” History of Economics Review 21: 34–46.

Brady, Michael Emmett, 1994. “A Note on the Keynes-Pigou Controversy,” History of Political Economy 26.4: 697–705.

Brady, Michael Emmett, 1994. “On the Application of J. M. Keynes’s Approach to Decision Making,” International Studies in the Philosophy of Science 8.2: 99–112.

Brady, Michael Emmett, 2010. “A Comparison-Contrast of Adam Smith, JM Keynes and Jeremy Bentham on Probability, Risk, Uncertainty, Optimism-Pessimism and Decision Making with Applications Concerning Banking, Insurance and Speculation,” SSRN Working Paper Series.
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1728225

Brady, Michael Emmett and Rogério Arthmar, 2010. “Keynes’ Lower-Upper Bound Interval Approach to Probability,” SSRN Working Paper Series (February 2).
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1546726

Brady, Michael Emmett, 2010. “How to Use Keynes’s Conventional Coefficient of Risk and Weight, c, to Clear Up Misunderstandings and Confusions About Keynes’s Views on the Use on His Principle of Indifference Versus the Use of Laplace’s Principle of Nonsufficient Reason,” SSRN Working Paper Series (November 27).
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1716043

Brady, Michael Emmett, 2011. “Comparing J. M. Keynes’s and F. Von Hayek’s Differing Definitions of Uncertainty as it Relates to Knowledge: Keynes’s Unavailable or Missing Knowledge Concept Versus Hayek’s Dispersal of Knowledge Concept,” SSRN Working Paper Series.
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1751569

Brady, Michael Emmett, 2011. “Keynes, Mathematics and Probability: A Reappraisal,” SSRN Working Paper Series, August 31.
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1920569

This is a quick list. No doubt I’ve left things out. I will update as needed.

Note that other treatments can be found in Carabelli (1988); Fitzgibbons (1988); O’Donnell (1989); Moggridge (1992: 143–166); and (Skidelsky 1992: 74–89). Other relevant works are in the bibliography below.


BIBLIOGRAPHY

Bateman, Bradley W. 1987. “Keynes’s Changing Conception of Probability,” Economics and Philosophy 3: 97-119.

Carabelli, Anna M. 1988. On Keynes’s Method, Macmillan, Basingstoke.

Cottrell, A. 1993. “Keynes’s Theory of Probability and its Relevance to His Economics: Three Theses,” Economics and Philosophy 9: 25-51.

Davidson, Paul. 1991. “Is Probability Theory Relevant for Uncertainty? A Post Keynesian Perspective,” Journal of Economic Perspectives 5.1: 129-143.

De Carvalho, Fernando J. Cardim. 1988. “Keynes on Probability, Uncertainty, and Decision Making,” Journal of Post Keynesian Economics 11.1: 66-81.

Fitzgibbons, Athol. 1988. Keynes’s Vision: A New Political Economy, Clarendon, Oxford.

Gillies, D. 2006. “Keynes and Probability,” in R. Backhouse and B. Bateman (eds.), The Cambridge Companion to Keynes Cambridge University Press, Cambridge and New York. 199-216.

Moggridge, D. E. 1992. Maynard Keynes: An Economist’s Biography, Routledge, London.

O’Donnell, R. M. 1989. Keynes: Philosophy, Economics and Politics: The Philosophical Foundations of Keynes’s Thought and their Influence on his Economics and Politics, Macmillan, Basingstoke.

Ramsey, F. P. 1989 [1922]. “Mr Keynes on Probability,” British Journal for the Philosophy of Science 40.2: 219-222.

Roncaglia, Alessandro. 2009. “Keynes and Probability: An Assessment,” European Journal of the History of Economic Thought 16.3: 489-510.

Rotheim, Roy J. 1988. “Keynes and the Language of Probability and Uncertainty,” Journal of Post Keynesian Economics 11.1: 82-99.

Skidelsky, R. J. A. 1992. John Maynard Keynes: The Economist as Saviour, 1920–1937 (vol. 2), Macmillan, London.

Michael Emmett Brady on Keynes’s Probability Theory in Mises and Rothbard

A quick post. There are some interesting reviews here by Michael Emmett Brady on Mises and Rothbard’s understanding of Keynes’ work on probability theory:

“Why Richard von Mises had no Clue about Keynes’s Approach,” http://www.amazon.com/gp/richpub/syltguides/fullview/R30TUJZSINCMJH

“Rothbard’s Many Errors about Keynes and Probability,” http://www.amazon.com/gp/richpub/syltguides/fullview/R83TIX8MB95QW

These bear careful reading, especially the second on Rothbard.

A sample:

‘Rothbard has made at least 10 errors in the space of 5 short paragraphs. The first 4 errors occur in Rothbard’s claim that “Keynes’s Treatise championed the classical a priori theory of probability, where probability fractions are deduced purely by logic and have nothing to do with empirical reality.” First, Keynes’s logical theory of probability is based on George Boole’s 1854 The Laws of Thought. It has nothing to do with the Classical theory of Laplace, whose Principle of Non Sufficient Reason Keynes decimated in the A Treatise on Probability in chapter 4. Second, all of Keynes’s probabilities are conditional. Third, the hypothesis, h, is always related to empirical evidence, e. Thus, a probability is always of the form P(h/e). Fourth, the claim that the “probability fractions are deduced purely by logic and have nothing to do with empirical reality” is simply bizarre as Keynes’s probabilities, in general, are intervals and are not sharp or point probabilities (fractions) except in the limiting case where the weight of the evidence, w, = or approaches 1. The condition that w = 1 or approaches 1 only occurs in the physical and biological sciences. Fifth, the probability relation is not deduced. It is perceived by the decision maker based on intuition, analogy and pattern recognition. …. Eighth, the claim that “… Keynes’s a priori theory was demolished by Richard von Mises (1951) in his 1920s work, ‘Probability, Statistics, and Truth’ is a bad joke. Richard von Mises incorrectly identifies Keynes as a subjectivist and committed the fatal error of overlooking Keynes’s requirement that all probabilities require that w > 0. Richard von Mises claim that Keynes specified probabilities for the case where w = 0 means that he never read the book he claimed to be discussing. Nineth, Rothbard’s claim that “Mises demonstrated that the probability fraction can be meaningfully used only when it embodies an empirically derived law of entities which are homogeneous, random, and indefinitely repeatable” had already been done by Keynes in chapters 8 and 33 of the TP. Keynes would have added the terms uniform and stable as he did in his debate with Tinbergen in 1939–40 in the Economic Journal. Ninth, the claim that “probability theory can only be applied to events which, in human life, are confined to those like the lottery or the roulette wheel” is only correct if one is using mathematical probability. Keynes includes interval probability as the main way in which people use probability. … Rothbard’s scholarship can only be characterized as pathetic.’
“Rothbard’s Many Errors about Keynes and Probability,” http://www.amazon.com/gp/richpub/syltguides/fullview/R83TIX8MB95QW

Comments are welcome: I have no hesitation in saying that the finer, technical points of probability theory are not my area.

Degrees of Uncertainty

There is an interesting review here by Michael Emmett Brady of Gerald P. O’Driscoll and Mario J. Rizzo’s The Economics of Time and Ignorance (2nd edn; Routledge, Oxford, UK., 1996):

http://www.amazon.com/review/R25I26NGH79Y3I

Towards the end, Michael Emmett Brady states that

“Let us now turn to p. 9. The authors make the bizarre claim that Paul Davidson’s Shacklean, Post Keynesian views, that there is only certainty and uncertainty, is a continuation of those parts of the [General Theory] … that represent a true subjectivist position. Unfortunately, Shackle never got past chapter 3 of the [Treatise on Probability] … and rejected Keynes’s entire [Treatise on Probability] … approach in toto. Neither Shackle nor Davidson are followers of Keynes because Keynes totally rejected nihilism and the bizarre Shackle-Davidson claim that there are no degrees/gradations of uncertainty which Keynes spelt out clearly in his 1937 QJE article, titled ‘The General Theory of Employment’. Uncertainty is a range that can be specified in the same identical manner as Keynes’s weight of the evidence index, w. Complete and total uncertainty (ignorance) would have a w = 0. The differing gradations of uncertainty would be between 0 and 1 (0 < w < 1). Complete certainty would have a w = 1. The two authors never specify what their term ‘genuine’ uncertainty is. Their discussions of the beauty contest example (p. 156, GT), which is a continuation of a discussion started by Keynes in his introductory chapter 3 of the [Treatise on Probability] … in 1921 (1908) on the measurement of probabilities, does not fit the bill.”

I have just re-read Keynes’s paper “The General Theory of Employment” (Quarterly Journal of Economics 51 [1937]: 209–223). The crucial passage where Keynes talks about degrees of uncertainty is here:

“By ‘uncertain’ knowledge, let me explain, I do not mean merely to distinguish what is known for certain from what is only probable. The game of roulette is not subject, in this sense, to uncertainty; nor is the prospect of a Victory bond being drawn. Or, again, the expectation of life is only slightly uncertain. Even the weather is only moderately uncertain. The sense in which I am using the term is that in which the prospect of a European war is uncertain, or the price of copper and the rate of interest twenty years hence, or the obsolescence of a new invention, or the position of private wealthowners in the social system in 1970. About these matters there is no scientific basis on which to form any calculable probability whatever” (Keynes 1937: 213–214).

It is indeed possible to see the concept of degrees of uncertainty, and Barkley Rosser describes Keynes’s views on the probability of future events in A Treatise on Probability (1921: 33), and how uncertainty comes in different forms:

“(i) ... there are no probabilities at all (fundamental uncertainty),
(ii) ... there may be some partial ordering of probable events but no cardinal numbers can be placed on them,
(iii) ... there may be numbers but they cannot be discovered for some reason, and
(iv) ... there may be numbers but they are difficult to discover” (Barkley Rosser 2001: 559).

There is also a literature about degrees of uncertainty, some of it by Post Keynesians (Runde 1990; Dow 1995; Crocco 2002; Dequech 1997).

At this point it is notable that Paul Davidson uses the concept of non-ergodicity to reject the view that there are degrees of uncertainty (Crocco 2002: 19). Nevertheless, there are Post Keynesians who recognise degrees of uncertainty, e.g., S. C. Dow (1994: 437). Moreover, here is Jesper Jespersen:

“Uncertainty is caused by lack of information. Therefore uncertainty might have different intensities or ‘stats of confidence’. You may feel(!) more or less uncertain, but except for rare cases all individual activities are characterized by (different degrees of) uncertainty, because one cannot know nor estimate the exact outcome. Hence, expectations are uncertain due to this inherent lack of information (and a constantly changing environment).”
Jesper Jespersen, “Post-Keynesian economics: uncertainty, effective demand & (un)sustainable development,” Paper, Dijon-conference, Dijon, 10-12 December 2009. p. 8.

It seems to me an exaggeration to say that the Post Keynesian school does not recognise degrees of uncertainty. Clearly not everyone follows Davidson.

BIBLIOGRAPHY

Barkley Rosser, J. 2001. “Alternative Keynesian and Post Keynesian Perspectives on Uncertainty and Expectations,” Journal of Post Keynesian Economics 23.4: 545–566.

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

Dequech, D. 1997. “Uncertainty in a Strong Sense: Meaning and Sources,” Economic Issues 2.2: 21–43.

Dow, S. C. 1994. “Uncertainty,” in P. Arestis and M. Sawyer (eds.), The Elgar Companion to Radical Political Economy, Elgar, Aldershot. 434–438.

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

Keynes, J. M. 1921. A Treatise on Probability (1st edn.), Macmillan, London.

Keynes, J. M. 1937. “The General Theory of Employment,” Quarterly Journal of Economics 51: 209–223.

Runde, J. 1990. “Keynesian uncertainty and the weight of arguments,” Economics and Philosophy 6.2: 275–292.

Michael Emmett Brady on Hayek’s Concept of Uncertainty

Some commentators have alerted me to the work of Michael Emmett Brady. I gather (correct me if I am wrong) that his undergraduate and postgraduate work has been in mathematics, and he has done work on Keynes’s theories of probability and other economic issues. That would appear to be a promising combination, as Post Keynesians like Steve Keen have complained in the past that economists are often poor mathematicians. While there are many papers of his to review, I will start with one I have already read here:

Michael Emmett Brady, “Comparing J.M. Keynes’s and F. Von Hayek’s Differing Definitions of Uncertainty as it Relates to Knowledge,” January 30, 2011.

This examines and compares Keynes’s concept of uncertainty with that of Hayek.

Michael Emmett Brady argues that Hayek’s concept of uncertainty and the role of knowledge are quite distinct from that of fundamental uncertainty as defined by Frank Knight and Keynes:

“Uncertainty for Hayek means that each individual decision maker only has a small piece of the puzzle. However, as a whole, the aggregated set of all decision makers have a complete set of all relevant knowledge. There are no pieces missing, lacking or unavailable from the puzzle. Market prices organize and synthesize the aggregate amount of knowledge so that market price signals, understood only by savvy, knowledgeable entrepreneurs, [eliminate] … any uncertainty.” (p. 14)

“Keynes, Knight and Schumpeter deny Hayek’s claim that the market generates price vectors which concentrate the knowledge so that savvy, knowledgeable entrepreneurs can act on this information and solve the problem of uncertainty. Uncertainty means vital important information is missing. Pieces from the puzzle are missing and will not turn up in the future” (p. 14).

“Hayek could not accept the standard concept of uncertainty as defined by Keynes, Knight and Schumpeter because it would then be impossible for market prices to concentrate knowledge that did not exist. In conclusion, nowhere in any of Hayek’s three articles on Knowledge in Economics in 1937, 1945 and 1947 does Hayek deal with the standard view that uncertainty means knowledge that is not there.” (p. 15).

Brady charges that the “Austrian use of the term ... uncertainty actually means dispersed knowledge” (p. 16), which bears further investigation.

One of Brady’s major conclusions is confirmed by other scholars who have also noted that the Austrian view of knowledge as fragmented and dispersed through market prices ignores the fact that a great deal of needed knowledge for investment decisions today does not yet exist (Hoogduin 1987: 61), and that the “market process” of Austrian theory is not capable of solving the knowledge problem, given that so much information about future relevant states has yet to be created when decisions are made in the present (Hoogduin 1987: 63). The inability of a decentralised market process to co-ordinate with reliable consistency what dispersed knowledge that does exist, when so much relevant knowledge does not exist with respect to a future that has yet to be created, is a fundamental insight of Post Keynesian economics (Dunn 2008: 140). The Hayekian view of the market as a co-ordinating mechanism in a type of evolutionary process that is capable of dealing with uncertainty and dispersed knowledge is therefore subject to serious criticism. Subjective expectations throw a spanner into the works of this view of the market, as does the non-existence at present of relevant information created in the future.

Brady also discusses G. L. S. Shackle’s break with Hayek over the issue of uncertainty, and points out Shackle saw that “Hayek’s discussion of uncertainty excluded by definition the existence of knowledge that would be unavailable to the entrepreneur.” (p. 8).


BIBLIOGRAPHY

Brady, Michael Emmett. “Comparing J.M. Keynes’s and F. Von Hayek’s Differing Definitions of Uncertainty as it Relates to Knowledge,” January 30, 2011.

Dunn, S. P. 2008. The ‘Uncertain’ Foundations of Post Keynesian Economics, Routledge, London.

Glickman, M. 2003. “Uncertainty,” in J. E. King (ed.), The Elgar Companion to Post Keynesian Economics, E. Elgar Pub., Cheltenham, UK and Northhampton, MA. 366–370.

Hayek, F. A. von. 1945. “The Use of Knowledge in Society,” American Economic Review 35.4: 519–530.

Hoogduin, L. 1987. “On the Difference between the Keynesian, Knightian and the ‘Classical’ Analysis of Uncertainty and the Development of a More General Monetary Theory,” De Economist 135.1: 52–65.

Schinckus, C. 2009. “Economic Uncertainty and Econophysics,” Physica A 388.20: 4415–4423.