John Maynard Keynes (1937): The General Theory of Employment https://delong.typepad.com/files/keynes-1937.pdf: 'I am more attached to the comparatively simple fundamental ideas which underlie my theory than to the particular forms in which I have embodied them.... I would... prefer... to reëxpress some of these ideas.... By "uncertain"... I... mean... the price of copper and the rate of interest twenty years hence, or the obsolescence of a new invention, or the position of private wealth-owners in the social system in 1970. About these matters there is no scientific basis on which to form any calculable probability whatever. We simply do not know. Nevertheless, the necessity for action and for decision compels us as practical men to do our best to overlook this awkward fact and to behave exactly as we should if we had behind us a good Benthamite calculation of a series of prospective advantages and disadvantages, each multiplied by its appropriate probability, waiting to be summed. How do we manage in such circumstances to behave[?]... We assume that the present is a... serviceable guide to the future.... We assume that the existing state of opinion as expressed in prices and the character of existing output is... correct.... We endeavor to conform with the behavior of the... average.... Now a practical theory of the future based on these three principles... based on so flimsy a foundation... is subject to sudden [p.215] and violent changes.... Our desire to hold Money as a store of wealth is a barometer of the degree of our distrust of our own calculations and conventions concerning the future.... It is not surprising that the volume of investment, thus determined, should fluctuate widely from time to time. For it depends on two sets of judgments about the future, neither of which rests on an adequate or secure foundation-on the propensity to hoard and on opinions of the future yield of capital-assets. Nor is there any reason to suppose that the fluctuations in one of these factors will tend to offset the fluctuations in the other.... The amount of consumption-goods which it will pay entrepreneurs to produce depends on the amount of investment-goods which they are producing.... Given the psychology of the public, the level of output and employment as a whole depends on the amount of investment.... This that I offer is, therefore, a theory of why output and employment are so liable to fluctuation...


#noted #2019-12-04

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