The ‘New’ Keynes Scholarship
During the 1980s there was a growth of interest in the early Keynes in order to
better understand the later Keynes of the General Theory. There is an increasing
recognition and acceptance that Keynes’s philosophical and methodological
framework had a significant influence upon his economic analysis as well as
his politics. Whilst much has been written about the alleged content of Keynes’s
economics, very little has dealt with Keynes’s method and philosophy. Littleboy
and Mehta (1983) argue that ‘The great stimulus to macroeconomic theory
provided by Keynes is well recognised but much less is said about his views on
scientific methodology’, and Lawson and Pesaran (1985, p. 1) concede that
‘Keynes’s methodological contribution has been neglected generally’. The only
major exception to the charge, until the contributions of, for example, Carabelli
(1988), Fitzgibbons (1988) and O’Donnell (1989), was the latter’s earlier study,
(O’Donnell, 1982) which endeavoured to provide a serious extended analysis
of the connection between Keynes’s philosophy and his economics. The more
recent attempts to explore the methodological and philosophical foundations of
Keynes’s political economy have been termed ‘the new Keynes scholarship’ by
Skidelsky (1992, pp. 82–9).
The main aim of the new scholarship is to highlight the need to recognize
that Keynes’s economics has a strong philosophical base and to provide a
detailed examination of Keynes’s rich and elaborate treatment of uncertainty,
knowledge, ignorance and probability. The new scholarship also gives prime
importance to Keynes’s lifelong fascination with the problem of decision
making under conditions of uncertainty. Carabelli (1988) has argued that the
general epistemological premises of Keynes’s method have been generally
overlooked, even though they were systematically presented, albeit in a very
refined state, in his A Treatise on Probability (1921). Fitzgibbons (1988)
maintains that economists have been guilty of suppressing Keynes’s philosophy
because of its lack of systematization and anti-modernist stance. For
Fitzgibbons, Keynes provided a radical alternative to long-run thinking firmly
based on the temporary nature of the short run. It is argued that the General
Theory is centred upon a radical economics of uncertainty organized around
‘animal spirits’ and creative impulses, alongside the constant threat of economic
breakdown: within such a world, money has a rationale and impact on
the real side of the economy. Keynes is seen to be concerned with the
problems of economic indeterminacy and the abandonment of equilibrium.
Likewise Carabelli has placed stress on Keynes’s focus on the close relation
between time and change and the need to analyse and attend to the problems
of the short period. O’Donnell (1982, pp. 222–9) attempted to reconcile the
long-period and short-period interpretations of Keynes by acknowledging
Keynes’s interest in both periods, but with greater emphasis being placed on
the latter. In O’Donnell’s interpretation of Keynes, a universal role for uncertainty
and expectations regardless of the period dimension has to be granted.
Although the new scholarship has increased awareness of the linkages between
Keynes’s philosophy and his economics, it can be argued that, in locating
the core of Keynes’s method in A Treatise on Probability, a work which largely
pre-dates much of his serious and scholarly economic writing, authors such as
Carabelli fail to consider adequately the reciprocal influence of the economic
upon the philosophical and their interaction and continued development. Nevertheless
the new scholarship does add weight to the ‘fundamentalist’ Keynesian
position that Keynes’s ideas on uncertainty were central to his vision (see
Shackle, 1974; Davidson, 1978, 1994; and Chapter 8).
However, throughout this book we take the view that, more than anything
else, it was the experience of the Great Depression that drove Keynes to write
his most important book on economic theory, The General Theory of Employment,
Interest and Money. Within that book Keynes placed a great deal of
emphasis on the role of expectations and uncertainty in his explanation of
aggregate instability (see section 2.8 above).
During the 1980s there was a growth of interest in the early Keynes in order to
better understand the later Keynes of the General Theory. There is an increasing
recognition and acceptance that Keynes’s philosophical and methodological
framework had a significant influence upon his economic analysis as well as
his politics. Whilst much has been written about the alleged content of Keynes’s
economics, very little has dealt with Keynes’s method and philosophy. Littleboy
and Mehta (1983) argue that ‘The great stimulus to macroeconomic theory
provided by Keynes is well recognised but much less is said about his views on
scientific methodology’, and Lawson and Pesaran (1985, p. 1) concede that
‘Keynes’s methodological contribution has been neglected generally’. The only
major exception to the charge, until the contributions of, for example, Carabelli
(1988), Fitzgibbons (1988) and O’Donnell (1989), was the latter’s earlier study,
(O’Donnell, 1982) which endeavoured to provide a serious extended analysis
of the connection between Keynes’s philosophy and his economics. The more
recent attempts to explore the methodological and philosophical foundations of
Keynes’s political economy have been termed ‘the new Keynes scholarship’ by
Skidelsky (1992, pp. 82–9).
The main aim of the new scholarship is to highlight the need to recognize
that Keynes’s economics has a strong philosophical base and to provide a
detailed examination of Keynes’s rich and elaborate treatment of uncertainty,
knowledge, ignorance and probability. The new scholarship also gives prime
importance to Keynes’s lifelong fascination with the problem of decision
making under conditions of uncertainty. Carabelli (1988) has argued that the
general epistemological premises of Keynes’s method have been generally
overlooked, even though they were systematically presented, albeit in a very
refined state, in his A Treatise on Probability (1921). Fitzgibbons (1988)
maintains that economists have been guilty of suppressing Keynes’s philosophy
because of its lack of systematization and anti-modernist stance. For
Fitzgibbons, Keynes provided a radical alternative to long-run thinking firmly
based on the temporary nature of the short run. It is argued that the General
Theory is centred upon a radical economics of uncertainty organized around
‘animal spirits’ and creative impulses, alongside the constant threat of economic
breakdown: within such a world, money has a rationale and impact on
the real side of the economy. Keynes is seen to be concerned with the
problems of economic indeterminacy and the abandonment of equilibrium.
Likewise Carabelli has placed stress on Keynes’s focus on the close relation
between time and change and the need to analyse and attend to the problems
of the short period. O’Donnell (1982, pp. 222–9) attempted to reconcile the
long-period and short-period interpretations of Keynes by acknowledging
Keynes’s interest in both periods, but with greater emphasis being placed on
the latter. In O’Donnell’s interpretation of Keynes, a universal role for uncertainty
and expectations regardless of the period dimension has to be granted.
Although the new scholarship has increased awareness of the linkages between
Keynes’s philosophy and his economics, it can be argued that, in locating
the core of Keynes’s method in A Treatise on Probability, a work which largely
pre-dates much of his serious and scholarly economic writing, authors such as
Carabelli fail to consider adequately the reciprocal influence of the economic
upon the philosophical and their interaction and continued development. Nevertheless
the new scholarship does add weight to the ‘fundamentalist’ Keynesian
position that Keynes’s ideas on uncertainty were central to his vision (see
Shackle, 1974; Davidson, 1978, 1994; and Chapter 8).
However, throughout this book we take the view that, more than anything
else, it was the experience of the Great Depression that drove Keynes to write
his most important book on economic theory, The General Theory of Employment,
Interest and Money. Within that book Keynes placed a great deal of
emphasis on the role of expectations and uncertainty in his explanation of
aggregate instability (see section 2.8 above).
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