J M Keynes had already developed the theory of the Multiplier concept mathematically, logically, and technically in his "A Treatise on Probability" (1921). The same analysis can be found in his second Cambridge Fellowship Dissertation of 1908. Samuelson explicitly covered the material, Keynes’s risk (R) formula, presented by Keynes on page 315 of the A Treatise on Probability, in his 1977 article in the Journal of Economic Literature. However, Samuelson overlooked the footnote, footnote 1 on page 315 of the A Treatise on Probability, in which Keynes applies an explicit multiplier analysis to a geometric, declining, infinite series because Keynes left out the intermediate steps of taking the limit of the series as n, the number of terms in the series, approached infinity. Keynes simply gave the final answer one will obtain after he has taken the limit. Samuelson also overlooked Keynes’s generalized risk analysis on page 353 of the A Treatise on Probability ,which extended Keynes’s Risk analysis ,which used Chebyshev’s Inequality to derive a lower bound .This would be an imprecise probability that would become more accurate as more observations were obtained, leading eventually to a precise estimate of probability from the normal distribution if the decision maker could afford to delay action for the period of time needed. R. Kent’s 2007 article in the History of Political Economy leaves completely unresolved the issue of where Richard Kahn got the idea for the use of the multiplier from. Kahn, in 1936, stated, in a note on a paper of Neisser’s that appeared in the Review of Economic Statistics, that “…my own ideas were largely derived from Mr. Keynes.” (Kahn,1936, p.144). Kahn’s contribution originated in private conversations with Keynes, where Keynes showed Kahn his chapter 26 analysis contained in the A treatise on probability on page 315 in footnote 1. Keynes, and no one else in history, was the person who had already originated the mathematical theory of the multiplier, which Keynes in the General Theory called the logical theory of the multiplier. Keynes's discussion of the logical theory of the Multiplier on pp.122-123 of the General Theory is simply a literary description of the mathematical analysis presented by Keynes on page 315 of the A Treatise on Probability. Kent's belief that Keynes had presented a multiplier analysis in 1929 is correct. The issue of whether Keynes made an arithmetic error in adding up the terms of the series is completely irrelevant to the main issue, which is “who is the person who created the theory of the multiplier?”
在1921年出版的《概率论》一书中，凯恩斯已经从数学、逻辑和技术上提出了乘数概念。同样的分析可以在他1908年的第二篇剑桥奖学金论文中找到。萨缪尔森在1977年发表在《经济文献杂志》上的文章中明确提到了凯恩斯的风险(R)公式，该公式由凯恩斯在《概率论》第315页提出。然而，萨缪尔森忽略了《概率论》第315页的脚注1，凯恩斯在其中对一个几何级数进行了明确的乘数分析，这是一个递减的无穷级数，因为凯恩斯忽略了在级数中的项数n趋于无穷时取级数极限的中间步骤。凯恩斯只是给出了人们在取了极限之后会得到的最终答案。萨缪尔森还忽略了凯恩斯在《概率论》第353页的广义风险分析，该分析扩展了凯恩斯的风险分析，该分析使用切比雪夫不等式推导出了一个下界。这将是一个不精确的概率，随着获得更多的观察结果而变得更加准确，最终导致从正态分布中精确估计概率，如果决策者能够负担得起延迟所需时间的行动。肯特(R. Kent) 2007年在《政治经济史》(History of Political economics)上发表的文章完全没有解决理查德·卡恩(Richard Kahn)使用乘数的想法是从哪里得到的这个问题。1936年，卡恩在《经济统计评论》(Review of Economic Statistics)上发表的奈瑟的一篇论文的注释中说，“……我自己的想法主要来自凯恩斯先生。”(Kahn,1936，第144页)。卡恩的贡献源于与凯恩斯的私人谈话，凯恩斯向卡恩展示了他在《概率论》(A treatise on probability)第26章的分析，该分析位于第315页的脚注1。凯恩斯是历史上首创乘数数学理论的人，凯恩斯在《通论》中将其称为乘数逻辑理论。凯恩斯在《通论》第122-123页对乘数逻辑理论的讨论，只是对凯恩斯在《概率论》第315页提出的数学分析的文学描述。肯特相信凯恩斯在1929年提出了乘数分析，这是正确的。凯恩斯在把级数相加时是否犯了算术错误，这个问题与“谁是乘数理论的创造者”这一主要问题完全无关
{"title":"Keynes, and Only J. M. Keynes, Was Responsible for the Logical and Mathematical Development of the Multiplier Concept in 1921(1908) in His a Treatise on Probability (1921) That He Later Used in the General Theory (1936)","authors":"M. E. Brady","doi":"10.2139/ssrn.3282103","DOIUrl":"https://doi.org/10.2139/ssrn.3282103","url":null,"abstract":"J M Keynes had already developed the theory of the Multiplier concept mathematically, logically, and technically in his \"A Treatise on Probability\" (1921). The same analysis can be found in his second Cambridge Fellowship Dissertation of 1908. \u0000 \u0000Samuelson explicitly covered the material, Keynes’s risk (R) formula, presented by Keynes on page 315 of the A Treatise on Probability, in his 1977 article in the Journal of Economic Literature. However, Samuelson overlooked the footnote, footnote 1 on page 315 of the A Treatise on Probability, in which Keynes applies an explicit multiplier analysis to a geometric, declining, infinite series because Keynes left out the intermediate steps of taking the limit of the series as n, the number of terms in the series, approached infinity. Keynes simply gave the final answer one will obtain after he has taken the limit. Samuelson also overlooked Keynes’s generalized risk analysis on page 353 of the A Treatise on Probability ,which extended Keynes’s Risk analysis ,which used Chebyshev’s Inequality to derive a lower bound .This would be an imprecise probability that would become more accurate as more observations were obtained, leading eventually to a precise estimate of probability from the normal distribution if the decision maker could afford to delay action for the period of time needed. \u0000 \u0000R. Kent’s 2007 article in the History of Political Economy leaves completely unresolved the issue of where Richard Kahn got the idea for the use of the multiplier from. Kahn, in 1936, stated, in a note on a paper of Neisser’s that appeared in the Review of Economic Statistics, that “…my own ideas were largely derived from Mr. Keynes.” (Kahn,1936, p.144). \u0000 \u0000Kahn’s contribution originated in private conversations with Keynes, where Keynes showed Kahn his chapter 26 analysis contained in the A treatise on probability on page 315 in footnote 1. Keynes, and no one else in history, was the person who had already originated the mathematical theory of the multiplier, which Keynes in the General Theory called the logical theory of the multiplier. Keynes's discussion of the logical theory of the Multiplier on pp.122-123 of the General Theory is simply a literary description of the mathematical analysis presented by Keynes on page 315 of the A Treatise on Probability. Kent's belief that Keynes had presented a multiplier analysis in 1929 is correct. The issue of whether Keynes made an arithmetic error in adding up the terms of the series is completely irrelevant to the main issue, which is “who is the person who created the theory of the multiplier?”","PeriodicalId":226815,"journal":{"name":"Philosophy & Methodology of Economics eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-11-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132841524","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
F.A. Hayek argues that the best that economics can hope for is “explanation of the principle” of complex economic systems, arguing against the feasibility of precise prediction and thus of successful economic planning. However, subsequent work in economics, often under the heading of Market Design, has claimed some ability to design the contours of action situations for success. This essay attempts to resolve this apparent contradiction. We argue that Hayek is essentially correct about the limits of knowledge about broad-scale economic systems, but that local conditions are often close enough to closure to allow for more specific predictions and thus control. The distinction between the open system level and the somewhat closed local level is roughly analogous to the distinction between general equilibrium and partial equilibrium. We then distinguish between economic knowledge that is useful for experts and that which is useful for citizens.
{"title":"What Can Economists Do? Appreciative Theory, Market Design, and Open Systems","authors":"G. Furton, Adam Martin","doi":"10.2139/ssrn.3276897","DOIUrl":"https://doi.org/10.2139/ssrn.3276897","url":null,"abstract":"F.A. Hayek argues that the best that economics can hope for is “explanation of the principle” of complex economic systems, arguing against the feasibility of precise prediction and thus of successful economic planning. However, subsequent work in economics, often under the heading of Market Design, has claimed some ability to design the contours of action situations for success. This essay attempts to resolve this apparent contradiction. We argue that Hayek is essentially correct about the limits of knowledge about broad-scale economic systems, but that local conditions are often close enough to closure to allow for more specific predictions and thus control. The distinction between the open system level and the somewhat closed local level is roughly analogous to the distinction between general equilibrium and partial equilibrium. We then distinguish between economic knowledge that is useful for experts and that which is useful for citizens.","PeriodicalId":226815,"journal":{"name":"Philosophy & Methodology of Economics eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123377320","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
J. M. Keynes versus D. Robertson in 1936-37 pits two opponents, one, J. M. Keynes, a highly skilled, sophisticated, mathematically advanced thinker against another, D. Robertson, who doesn’t have even an elementary background in mathematics at the grammar school level. Basically, the intellectual exchanges that take place are so completely one sided in Keynes’s favor that it is questionable whether anything written by Robertson about Keynes should even be considered worth reading. However, the exchanges do give complete support to Paul Samuelson’s long-range goal of greatly increasing the mathematical sophistication and knowledge of the average economist. Robertson’s performance is simply intellectually horrid. Robertson demonstrates repeatedly in his exchanges with Keynes that he is not able to grasp any type of mathematical analysis involving any mathematical function except a mathematical function with one independent variable and one dependent. Robertson found Keynes’s mathematical analysis to be incomprehensible. He could not understand Keynes’s IS-LM (LP) model because it involved a set of simultaneous mathematical equations in r and Y that he had no capacity to grasp because he was a Marshallian used to using the ceteris paribus assumption at both the micro and macro levels. It was impossible for Robertson to follow Keynes’s theory, even though he constantly sought the mathematical advice and help of first AC Pigou and then Harry Johnson.
{"title":"Keynes Versus Robertson in 1936–1937: Robertson’s Mathematical Illiteracy Prevented Him From Understanding Keynes’s Is-Lm(lp) Model in the General Theory","authors":"M. E. Brady","doi":"10.2139/ssrn.3263179","DOIUrl":"https://doi.org/10.2139/ssrn.3263179","url":null,"abstract":"J. M. Keynes versus D. Robertson in 1936-37 pits two opponents, one, J. M. Keynes, a highly skilled, sophisticated, mathematically advanced thinker against another, D. Robertson, who doesn’t have even an elementary background in mathematics at the grammar school level. Basically, the intellectual exchanges that take place are so completely one sided in Keynes’s favor that it is questionable whether anything written by Robertson about Keynes should even be considered worth reading. However, the exchanges do give complete support to Paul Samuelson’s long-range goal of greatly increasing the mathematical sophistication and knowledge of the average economist. Robertson’s performance is simply intellectually horrid. Robertson demonstrates repeatedly in his exchanges with Keynes that he is not able to grasp any type of mathematical analysis involving any mathematical function except a mathematical function with one independent variable and one dependent. Robertson found Keynes’s mathematical analysis to be incomprehensible. He could not understand Keynes’s IS-LM (LP) model because it involved a set of simultaneous mathematical equations in r and Y that he had no capacity to grasp because he was a Marshallian used to using the ceteris paribus assumption at both the micro and macro levels. It was impossible for Robertson to follow Keynes’s theory, even though he constantly sought the mathematical advice and help of first AC Pigou and then Harry Johnson.","PeriodicalId":226815,"journal":{"name":"Philosophy & Methodology of Economics eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-10-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130135575","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
O Lange’s failure to read chapters 20 and 21 of the General Theory accounts for his failure to use Keynes already worked out simplifications for the case where the Aggregate Supply Curve was infinitely elastic or had a horizontal segment. Chapter 3 of the General Theory only presents an outline of what Keynes actually did later in the General Theory in chapters 20 and 21. No Aggregate Supply Curve was constructed in chapter 3 of the General Theory or even mentioned. Keynes gave general functional relationships for D and Z. Only in chapter 20 and the footnote on pp.55-56 does Keynes define what D and Z actually are, which is that D=pO and Z=P wN, where p is an expected price and P is expected profit. Keynes’s introduction of the aggregate supply curve occurs in chapter 6 on pages 55-56 in footnote two. The chapter in which his aggregate supply curve is fully analyzed is in chapter 20. Keynes then presents two simplifications of his aggregate supply curve in chapter 21. These simplifications specify a horizontal range of his aggregate supply curve that was completely elastic. However, Keynes never assumed that his aggregate supply curve was horizontal. He allowed for various simplifications to be made after he had presented his complete D-Z theory in chapter 20.A number of economists, such as Lawrence Klein and Franco Modigliani, have incorrectly followed Lange’s analysis, who failed to make it clear to the readers of his 1938 Economica article, that what was involved was actually two simplifications made by Keynes to Keynes’s chapter 20 analysis. Keynes never assumed a completely elastic or horizontal aggregate supply curve anywhere in the General Theory or his post General Theory writings.
{"title":"On Keynes’s Two Simplifications of His Aggregate Supply Curve Analysis in Chapter 21 of the General Theory: O. Lange (1938) Overlooked Chapter 20 and the Two Simplifications on Pages 295–296 of the General Theory in Chapter 21","authors":"M. E. Brady","doi":"10.2139/ssrn.3257209","DOIUrl":"https://doi.org/10.2139/ssrn.3257209","url":null,"abstract":"O Lange’s failure to read chapters 20 and 21 of the General Theory accounts for his failure to use Keynes already worked out simplifications for the case where the Aggregate Supply Curve was infinitely elastic or had a horizontal segment. Chapter 3 of the General Theory only presents an outline of what Keynes actually did later in the General Theory in chapters 20 and 21. No Aggregate Supply Curve was constructed in chapter 3 of the General Theory or even mentioned. Keynes gave general functional relationships for D and Z. Only in chapter 20 and the footnote on pp.55-56 does Keynes define what D and Z actually are, which is that D=pO and Z=P wN, where p is an expected price and P is expected profit. Keynes’s introduction of the aggregate supply curve occurs in chapter 6 on pages 55-56 in footnote two. The chapter in which his aggregate supply curve is fully analyzed is in chapter 20. Keynes then presents two simplifications of his aggregate supply curve in chapter 21. These simplifications specify a horizontal range of his aggregate supply curve that was completely elastic. However, Keynes never assumed that his aggregate supply curve was horizontal. He allowed for various simplifications to be made after he had presented his complete D-Z theory in chapter 20.A number of economists, such as Lawrence Klein and Franco Modigliani, have incorrectly followed Lange’s analysis, who failed to make it clear to the readers of his 1938 Economica article, that what was involved was actually two simplifications made by Keynes to Keynes’s chapter 20 analysis. Keynes never assumed a completely elastic or horizontal aggregate supply curve anywhere in the General Theory or his post General Theory writings.","PeriodicalId":226815,"journal":{"name":"Philosophy & Methodology of Economics eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-09-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127490385","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The economics 'credibility revolution' has promoted the identification of causal relationships using difference-in-differences (DID), instrumental variables (IV), randomized control trials (RCT) and regression discontinuity design (RDD) methods. The extent to which a reader should trust claims about the statistical significance of results proves very sensitive to method. Applying multiple methods to 13,440 hypothesis tests reported in 25 top economics journals in 2015, we show that selective publication and p-hacking is a substantial problem in research employing DID and (in particular) IV. RCT and RDD are much less problematic. Almost 25% of claims of marginally significant results in IV papers are misleading.
{"title":"Methods Matter: P-Hacking and Causal Inference in Economics","authors":"A. Brodeur, Nikolai Cook, A. Heyes","doi":"10.2139/ssrn.3249910","DOIUrl":"https://doi.org/10.2139/ssrn.3249910","url":null,"abstract":"The economics 'credibility revolution' has promoted the identification of causal relationships using difference-in-differences (DID), instrumental variables (IV), randomized control trials (RCT) and regression discontinuity design (RDD) methods. The extent to which a reader should trust claims about the statistical significance of results proves very sensitive to method. Applying multiple methods to 13,440 hypothesis tests reported in 25 top economics journals in 2015, we show that selective publication and p-hacking is a substantial problem in research employing DID and (in particular) IV. RCT and RDD are much less problematic. Almost 25% of claims of marginally significant results in IV papers are misleading.","PeriodicalId":226815,"journal":{"name":"Philosophy & Methodology of Economics eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-09-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125614549","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In August 1937, Keynes discovered that Pigou, with the very explicit and rabid support of Dennis Robertson, was planning on publishing a paper in the Economic Journal which deployed the same type of Marshallian, partial equilibrium,ceteris paribus (constant money income) analysis with functions containing only one independent variable that he had used in his 1933 "The Theory of Unemployment". In 1937, Pigou argued that there were two separate theories of interest rate determination. The first was that M=L(r), so that the demand and supply of money alone determined the rate of interest. The second was that M=L(Y), so that only aggregate income determined the rate of interest. Of course, there are no such functions in Aggregate Income-rate of interest (Y,r) space. Keynes correctly pointed out that the missing equation in Pigou’s paper was Keynes’s Liquidity Preference Function M=L(Y,r). Only this function exists in (Y,r) space. A subsidiary point in Pigou’s 1937 paper was that Pigou also argued that the rate of interest was equal to a constant rate of time preference. This, of course, is consistent with the deployment of a Marshallian ceteris paribus assumption about constant money income. Kaldor apparently believed that this was the central issue involved and the more important. Now Keynes knew better,but he,as the referee, allowed Kaldor to proceed because Kaldor correctly deployed Keynes’s IS-LP(LM), although Kaldor believed that it was Hicks’s model, to prove decisively in a diagram relegated to a footnote near the end of the article, that money wage cuts could only work by shifting the LP(LM) curve, which Hicks had renamed the LL curve ,to the right, so that Mw ,money in terms of wage units, would increase Y and lower as LP (LM) shifted to the right. Pigou’s 1938 comment in a note, that “I have not been able to follow the reasoning of Mr. Keynes’s short note, which preceded Mr. Kaldor’s�?, demonstrates that Pigou, and Robertson, were still not able to break away from the Marshallian, partial equilibrium,ceteris paribis type of analysis that was worthless at the macro level. Pigou and Robertson could not deal with a function that had two independent variables. Pigou never mentioned Kaldor’s graphical summary in his 1938 reply because he could not understand what was being done in Keynes’s IS-LP(LM) model. Keynes used the 1937 Kaldor comment on the erroneous assumptions and analysis of Pigou,who was fully supported by D. Robertson (see letter from A. Robinson to Keynes, CWJMK, vol.14,p.239), to set up a test for the Pseudo Keynesians. Keynes offered them publications in the EJ if they would reply to Pigou’s 1938, March article by simply deploying Keynes’s LP function from p.199 of the GT to show that Pigou’s model was completely misspecified. The Pseudo Keynesian response was to reject Keynes’s extraordinarily favorable offer and attempt to sabotage the Keynesian revolution in order to advance their own false, petty, and opportunistic claims.
1937年8月，凯恩斯发现，在丹尼斯·罗伯逊(Dennis Robertson)非常明确和热情的支持下，庇古正计划在《经济杂志》(Economic Journal)上发表一篇论文，该论文采用了他在1933年的《失业理论》(the Theory of Unemployment)中使用的马歇尔式、部分均衡、其他条件不变(constant money income)的函数分析，该分析只包含一个自变量。1937年，庇古提出有两种不同的利率决定理论。第一个是M=L(r)，因此货币的需求和供给单独决定利率。第二个是M=L(Y)，因此只有总收入决定利率。当然，在总利率(Y,r)空间中不存在这样的函数。凯恩斯正确地指出庇古论文中缺失的方程是凯恩斯的流动性偏好函数M=L(Y,r)。只有这个函数存在于(Y,r)空间中。庇古1937年论文中的一个次要观点是，庇古还认为，利率等于一个常数的时间偏好率。当然，这与马歇尔学派关于货币收入不变的条件不变假设的部署是一致的。卡尔多显然认为这是核心问题，而且更为重要。现在凯恩斯知道更好,但他,作为裁判,允许Kaldor继续因为Kaldor正确部署凯恩斯的IS-LP (LM),尽管Kaldor相信希克斯的模型,证明果断附近的图降到一个脚注的文章,这些钱削减工资只能通过改变LP (LM)曲线,希克斯已经更名为LL曲线,向右,所以兆瓦,货币工资的单位,将增加Y和低LP (LM)转移到右边。庇古在1938年的一篇笔记中评论道，“我无法理解凯恩斯先生的简短笔记的推理，它先于卡尔多先生的?”证明了庇古和罗伯逊仍然无法摆脱马歇尔式的、部分均衡的、其他条件相同的分析，这些分析在宏观层面上是毫无价值的。庇古和罗伯逊无法处理有两个自变量的函数。庇古在1938年的回复中从未提及卡尔多的图形化总结，因为他无法理解凯恩斯的IS-LP(LM)模型所做的事情。凯恩斯使用1937年卡尔多对庇古的错误假设和分析的评论，后者得到了D.罗伯逊的充分支持(见a . Robinson给凯恩斯的信，CWJMK，第14卷，第239页)，为伪凯恩斯主义者建立了一个测试。凯恩斯向他们提供了在《经济学人》上发表文章的机会，前提是他们能对庇古1938年3月发表的那篇文章做出回应，简单地从《总论》第199页中引入凯恩斯的LP函数，以证明庇古的模型完全是错误的。伪凯恩斯主义的回应是拒绝凯恩斯非常有利的提议，并试图破坏凯恩斯主义革命，以推进他们自己虚假、琐碎和机会主义的主张。
{"title":"Keynes's Anti Marshallian, General Theory Analysis Against the Marshallians, Robertson and Pigou, in 1937: Pigou' 'Money Wages in Relation to Unemployment'","authors":"M. E. Brady","doi":"10.2139/ssrn.3248897","DOIUrl":"https://doi.org/10.2139/ssrn.3248897","url":null,"abstract":"In August 1937, Keynes discovered that Pigou, with the very explicit and rabid support of Dennis Robertson, was planning on publishing a paper in the Economic Journal which deployed the same type of Marshallian, partial equilibrium,ceteris paribus (constant money income) analysis with functions containing only one independent variable that he had used in his 1933 \"The Theory of Unemployment\". In 1937, Pigou argued that there were two separate theories of interest rate determination. The first was that M=L(r), so that the demand and supply of money alone determined the rate of interest. The second was that M=L(Y), so that only aggregate income determined the rate of interest. Of course, there are no such functions in Aggregate Income-rate of interest (Y,r) space. Keynes correctly pointed out that the missing equation in Pigou’s paper was Keynes’s Liquidity Preference Function M=L(Y,r). Only this function exists in (Y,r) space. A subsidiary point in Pigou’s 1937 paper was that Pigou also argued that the rate of interest was equal to a constant rate of time preference. This, of course, is consistent with the deployment of a Marshallian ceteris paribus assumption about constant money income. Kaldor apparently believed that this was the central issue involved and the more important. Now Keynes knew better,but he,as the referee, allowed Kaldor to proceed because Kaldor correctly deployed Keynes’s IS-LP(LM), although Kaldor believed that it was Hicks’s model, to prove decisively in a diagram relegated to a footnote near the end of the article, that money wage cuts could only work by shifting the LP(LM) curve, which Hicks had renamed the LL curve ,to the right, so that Mw ,money in terms of wage units, would increase Y and lower as LP (LM) shifted to the right. Pigou’s 1938 comment in a note, that “I have not been able to follow the reasoning of Mr. Keynes’s short note, which preceded Mr. Kaldor’s�?, demonstrates that Pigou, and Robertson, were still not able to break away from the Marshallian, partial equilibrium,ceteris paribis type of analysis that was worthless at the macro level. Pigou and Robertson could not deal with a function that had two independent variables. Pigou never mentioned Kaldor’s graphical summary in his 1938 reply because he could not understand what was being done in Keynes’s IS-LP(LM) model. Keynes used the 1937 Kaldor comment on the erroneous assumptions and analysis of Pigou,who was fully supported by D. Robertson (see letter from A. Robinson to Keynes, CWJMK, vol.14,p.239), to set up a test for the Pseudo Keynesians. Keynes offered them publications in the EJ if they would reply to Pigou’s 1938, March article by simply deploying Keynes’s LP function from p.199 of the GT to show that Pigou’s model was completely misspecified. The Pseudo Keynesian response was to reject Keynes’s extraordinarily favorable offer and attempt to sabotage the Keynesian revolution in order to advance their own false, petty, and opportunistic claims.","PeriodicalId":226815,"journal":{"name":"Philosophy & Methodology of Economics eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-09-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130162459","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In spite of the detailed work, done by Keynes in 1908 ,1921,and 1936 in his second Fellowship dissertation for Cambridge University, A Treatise on Probability, and the General Theory, respectively ,and by Knight in 1921 in Risk, Uncertainty and Profit ,that argued convincingly that uncertainty was a range that extended from complete ignorance to complete knowledge, economists are completely divided over what uncertainty means and its relevance. Orthodox economists place emphasis on using the extreme outcome of complete knowledge ,since this allows them to assume that all decision makers know the probability distributions, while heterodox economists place emphasis on using the other extreme outcome of complete ignorance, since this allows them to assume that decision makers do not know the probability distributions. Greenspan’s continuum specifies that the entire range or continuum between complete ignorance and complete knowledge is important to consider, not just the extremes. The current polarization of the economics profession could only benefit from agreeing to use Greenspan’s continuum as a planning tool for economic analysis. There are very significant difficulties with the concept of rational expectations as developed by Muth in 1960 regarding the interpretation of probability he is using. Was it subjective or objective? It can't be both.
{"title":"How Using Greenspan’s Continuum Can Bridge the Huge Abyss That Exists Between Orthodox and Heterodox Economists Who Are Dealing With the Concept of Uncertainty","authors":"M. E. Brady","doi":"10.2139/ssrn.3233428","DOIUrl":"https://doi.org/10.2139/ssrn.3233428","url":null,"abstract":"In spite of the detailed work, done by Keynes in 1908 ,1921,and 1936 in his second Fellowship dissertation for Cambridge University, A Treatise on Probability, and the General Theory, respectively ,and by Knight in 1921 in Risk, Uncertainty and Profit ,that argued convincingly that uncertainty was a range that extended from complete ignorance to complete knowledge, economists are completely divided over what uncertainty means and its relevance. Orthodox economists place emphasis on using the extreme outcome of complete knowledge ,since this allows them to assume that all decision makers know the probability distributions, while heterodox economists place emphasis on using the other extreme outcome of complete ignorance, since this allows them to assume that decision makers do not know the probability distributions. Greenspan’s continuum specifies that the entire range or continuum between complete ignorance and complete knowledge is important to consider, not just the extremes. The current polarization of the economics profession could only benefit from agreeing to use Greenspan’s continuum as a planning tool for economic analysis. There are very significant difficulties with the concept of rational expectations as developed by Muth in 1960 regarding the interpretation of probability he is using. Was it subjective or objective? It can't be both.","PeriodicalId":226815,"journal":{"name":"Philosophy & Methodology of Economics eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-08-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123408239","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
J M Keynes’s General Theory (1936) represented the culmination of his anti-Marshallian approach to both economic methodology and formal economic modeling in macroeconomics. Keynes rejected, at the marco economic level, the Marshallians’ emphasis on ceteris paribus analysis that concentrated on using an approach to analysis that relied on analyzing only one independent variable at a time. The Marshallians would then supplemented their one independent variable analysis by a prose or literary discussion, in which other variables, that had been held fixed, were discussed, but not analyzed in a rigorous, technical, mathematical manner. This type of analysis was published by Dennis Robertson, Ralph Hawtrey, A C Pigou, Hubert Henderson, and Roy Harrod in the early and mid 1930’s. This type of Marshallian, partial equilibrium, approach to analysis is on display in the correspondence of Robertson, Hawtrey, Henderson, and Harrod with Keynes over the General Theory as contained in Volumes 13,14, and 29 of the CWJMK. This kind of Marshallian approach reached its highest level, in the opinion of J M Keynes, in Pigou’s 1933 The Theory of Unemployment. All of Pigou’s technical analysis in Part II of The Theory of Unemployment is based on an analysis where only one independent variable is specified mathematically in his macro economic model, which is based directly on the underlying micro model, both of which were functions of only one single variable, the real wage.Pigou supplemented his Part II analysis with a verbal, prose, literary discussion that attempted to discuss other factors that would impact the macro economy. Unfortunately, Pigou had no multiplier function, consumption function, or Liquidity Preference function that would allow him to analyze total output or employment accurately. Neither did Hawtrey, Robertson, or Henderson. Harrod’s Marshallian defense of the neoclassical theory of the rate of interest, made in his August-September, 1935 exchanges with Keynes over Keynes’s new IS-LP(LM) theory, based on a system containing three simultaneous, mathematical equations, which Keynes explicitly specified in sections four of both chapters 15 and 21 of the General Theory, in Volume 13 of the CWJMK, makes no sense because his sets of shifting savings and investment functions can only specify a set of downward sloping IS curves. No Marshallian, especially Robertson, ever grasped that Keynes’s IS-LP(LM) model of chapters 15 and 21 of the General Theory has absolutely nothing to do with Keynes’s initial, introductory discussion using Keynes’s simplified, liquidity preference function in chapter 13 of the General Theory on page 167, where the demand and supply of money alone determined the interest rate. Keynes’s complete, simultaneous, three equation IS-LP(LM) model is provided on pages 298-299 of the General Theory. Keynes’s IS-LP(LM) is superior to the simultaneous three equation models of Hicks (1937), Harrod (1937), and Meade (1937), which have no D-Z mo
凯恩斯的《通论》(1936)代表了他在宏观经济学方法论和正式经济建模方面的反马歇尔主义方法的巅峰。在宏观经济层面上，凯恩斯反对马绍尔学派强调其他条件相同的分析方法，这种分析方法集中于每次只分析一个自变量。然后，马绍尔人会通过散文或文学讨论来补充他们的一个自变量分析，在这些讨论中，其他变量，被认为是固定的，被讨论，但不是以严格的，技术的，数学的方式来分析。这种类型的分析是由Dennis Robertson, Ralph Hawtrey, A C Pigou, Hubert Henderson和Roy Harrod在20世纪30年代早期和中期发表的。这种马绍尔式的、部分均衡的分析方法在罗伯逊、霍特里、亨德森和哈罗德与凯恩斯关于《通论》的通信中得到了展示，这些通信包含在CWJMK的第13、14和29卷中。在凯恩斯看来，这种马绍尔式的方法在庇古1933年的《失业理论》中达到了最高水平。庇古在《失业理论》第二部分中所有的技术分析都是基于这样一种分析，即在他的宏观经济模型中只有一个数学上指定的自变量，而这个模型直接基于底层的微观模型，这两个模型都只有一个变量的函数，即实际工资。庇古补充了他的第二部分的分析，以口头，散文，文学的讨论，试图讨论其他因素，将影响宏观经济。不幸的是，庇古没有乘数函数、消费函数或流动性偏好函数，这些都不能让他准确地分析总产值或就业。霍特里、罗伯逊和亨德森也没有。哈罗德对新古典主义利率理论的马歇尔式辩护，是他在1935年8月至9月与凯恩斯就凯恩斯的新IS-LP(LM)理论进行的交流中提出的，该理论基于一个包含三个联立数学方程的系统，凯恩斯在CWJMK第13卷的《通论》第15章和第21章的第四节中明确指出了这一点。没有任何意义，因为他的移动储蓄和投资函数集只能指定一组向下倾斜的IS曲线。没有一个马歇尔主义者，尤其是罗伯逊，能够理解凯恩斯在《通论》第15章和21章中的IS-LP(LM)模型与凯恩斯在《通论》第167页第13章中使用凯恩斯简化的流动性偏好函数进行的最初的介绍性讨论完全没有关系，在那里，货币的需求和供给单独决定了利率。凯恩斯完整的，同时的，三方程is - lp (LM)模型在通论的298-299页提供。凯恩斯的is - lp (LM)优于Hicks(1937)、Harrod(1937)和Meade(1937)的联立三方程模型，后者没有包含预期和不确定性的D-Z模型支持。罗伯逊和霍特雷都完全忽视了凯恩斯在《通论》第207-208页提供的关于LP(LM)曲线的垂直和水平范围的清晰描述。凯恩斯的理论不是部分均衡，不是马绍尔理论。
{"title":"J M Keynes's General, Multiple, Macro Equilibria Approach in 1936 Against the Marshallians (Harrod, Hawtrey, Henderson, Pigou, and Robertson) Ceteris Paribus, Partial Equilibrium, Approach to Macro","authors":"M. E. Brady","doi":"10.2139/ssrn.3231627","DOIUrl":"https://doi.org/10.2139/ssrn.3231627","url":null,"abstract":"J M Keynes’s General Theory (1936) represented the culmination of his anti-Marshallian approach to both economic methodology and formal economic modeling in macroeconomics. Keynes rejected, at the marco economic level, the Marshallians’ emphasis on ceteris paribus analysis that concentrated on using an approach to analysis that relied on analyzing only one independent variable at a time. The Marshallians would then supplemented their one independent variable analysis by a prose or literary discussion, in which other variables, that had been held fixed, were discussed, but not analyzed in a rigorous, technical, mathematical manner. This type of analysis was published by Dennis Robertson, Ralph Hawtrey, A C Pigou, Hubert Henderson, and Roy Harrod in the early and mid 1930’s. This type of Marshallian, partial equilibrium, approach to analysis is on display in the correspondence of Robertson, Hawtrey, Henderson, and Harrod with Keynes over the General Theory as contained in Volumes 13,14, and 29 of the CWJMK. This kind of Marshallian approach reached its highest level, in the opinion of J M Keynes, in Pigou’s 1933 The Theory of Unemployment. All of Pigou’s technical analysis in Part II of The Theory of Unemployment is based on an analysis where only one independent variable is specified mathematically in his macro economic model, which is based directly on the underlying micro model, both of which were functions of only one single variable, the real wage.Pigou supplemented his Part II analysis with a verbal, prose, literary discussion that attempted to discuss other factors that would impact the macro economy. Unfortunately, Pigou had no multiplier function, consumption function, or Liquidity Preference function that would allow him to analyze total output or employment accurately. Neither did Hawtrey, Robertson, or Henderson. Harrod’s Marshallian defense of the neoclassical theory of the rate of interest, made in his August-September, 1935 exchanges with Keynes over Keynes’s new IS-LP(LM) theory, based on a system containing three simultaneous, mathematical equations, which Keynes explicitly specified in sections four of both chapters 15 and 21 of the General Theory, in Volume 13 of the CWJMK, makes no sense because his sets of shifting savings and investment functions can only specify a set of downward sloping IS curves. No Marshallian, especially Robertson, ever grasped that Keynes’s IS-LP(LM) model of chapters 15 and 21 of the General Theory has absolutely nothing to do with Keynes’s initial, introductory discussion using Keynes’s simplified, liquidity preference function in chapter 13 of the General Theory on page 167, where the demand and supply of money alone determined the interest rate. Keynes’s complete, simultaneous, three equation IS-LP(LM) model is provided on pages 298-299 of the General Theory. Keynes’s IS-LP(LM) is superior to the simultaneous three equation models of Hicks (1937), Harrod (1937), and Meade (1937), which have no D-Z mo","PeriodicalId":226815,"journal":{"name":"Philosophy & Methodology of Economics eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-08-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126179663","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper is intended to investigate the basis for legitimate profit in Islamic law and compare it to the theories held by modern conventional economics regarding the cause of profit. This study shall use the theoretical framework of the Hanafi concept of dam�?n (guarantee) and apply it to the cases of fixed revenue and profit. Finally, this paper aims at exposing how the Hanafi formulation of dam�?n, along with capital and labor, can be useful in explaining and determining the basis for a legitimate profit in Islamic law.
{"title":"The Basis for Legitimate Entitlement to Profit in Islamic Law","authors":"Necmeddin Guney","doi":"10.2139/ssrn.3263473","DOIUrl":"https://doi.org/10.2139/ssrn.3263473","url":null,"abstract":"This paper is intended to investigate the basis for legitimate profit in Islamic law and compare it to the theories held by modern conventional economics regarding the cause of profit. This study shall use the theoretical framework of the Hanafi concept of dam�?n (guarantee) and apply it to the cases of fixed revenue and profit. Finally, this paper aims at exposing how the Hanafi formulation of dam�?n, along with capital and labor, can be useful in explaining and determining the basis for a legitimate profit in Islamic law.","PeriodicalId":226815,"journal":{"name":"Philosophy & Methodology of Economics eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-08-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122416355","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Jim Buchanan kept pictures of Knut Wicksell and Frank H. Knight on his office wall. Yet a careful look at Buchanan’s work indicates that it ran counter to that of Frank H. Knight. Knight and Buchanan disagreed on the methodological, economic, ethical, and political assumptions that drove their work. Knight rejected methodological individualism, the underlying methodological commitment of Buchanan’s research program. While Knight remained within the standard constrained maximization framework of neoclassical economics, Buchanan adopted a catallactic perspective. Ethically, Knight argued that all ethical judgments must remain open to debate, and also rejected the de gustibus non est disputandum assumption that went hand-in-hand among economists with methodological individualism. And philosophically, Knight’s theory of democratic politics was centered on “democracy as discussion” rather than choice, contract, and constitution. Why, then, did Buchanan keep that picture of Knight on his wall? After a survey of his published criticisms of Knight, the conclusion emerges that engagement with Knight pushed Buchanan toward a more open-ended political economy.
吉姆·布坎南把克努特·威克塞尔和弗兰克·h·奈特的照片挂在办公室的墙上。然而，仔细研究布坎南的工作就会发现，它与弗兰克·h·奈特(Frank H. Knight)的工作背道而驰。奈特和布坎南在推动他们工作的方法论、经济、伦理和政治假设上存在分歧。奈特拒绝了方法论上的个人主义，这是布坎南研究计划中潜在的方法论承诺。当奈特仍然停留在新古典经济学的标准约束最大化框架中时，布坎南采用了一种催化的视角。从伦理上讲，奈特认为所有的伦理判断都必须保持开放的辩论，他还拒绝了经济学家与方法论个人主义携手并进的“事实并非争议”假设。在哲学上，奈特的民主政治理论以“作为讨论的民主”为中心，而不是选择、契约和宪法。那么，布坎南为什么要把奈特的照片挂在墙上呢?在对布坎南发表的对奈特的批评进行调查后，得出的结论是，与奈特的接触将布坎南推向了一个更开放的政治经济学。
{"title":"Why James Buchanan Kept Frank Knight's Picture on His Wall Despite Fundamental Disagreements on Economics, Ethics, and Politics","authors":"Ross B. Emmett","doi":"10.2139/ssrn.3225242","DOIUrl":"https://doi.org/10.2139/ssrn.3225242","url":null,"abstract":"Jim Buchanan kept pictures of Knut Wicksell and Frank H. Knight on his office wall. Yet a careful look at Buchanan’s work indicates that it ran counter to that of Frank H. Knight. Knight and Buchanan disagreed on the methodological, economic, ethical, and political assumptions that drove their work. Knight rejected methodological individualism, the underlying methodological commitment of Buchanan’s research program. While Knight remained within the standard constrained maximization framework of neoclassical economics, Buchanan adopted a catallactic perspective. Ethically, Knight argued that all ethical judgments must remain open to debate, and also rejected the de gustibus non est disputandum assumption that went hand-in-hand among economists with methodological individualism. And philosophically, Knight’s theory of democratic politics was centered on “democracy as discussion” rather than choice, contract, and constitution. Why, then, did Buchanan keep that picture of Knight on his wall? After a survey of his published criticisms of Knight, the conclusion emerges that engagement with Knight pushed Buchanan toward a more open-ended political economy.","PeriodicalId":226815,"journal":{"name":"Philosophy & Methodology of Economics eJournal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-08-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115664247","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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