Re: Objective vs Subjective: Two approaches to money value.

["Harry Veeder" <veed0001@xxxxxxxxxxxxxxxx>]

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>From: "Alan G. Isaac" <aisaac@xxxxxxxxxxxx>
>To: POST-KEYNESIAN THOUGHT <pkt@xxxxxxxxxxxxxxxx>
>Subject: Re: Objective vs Subjective: Two approaches to money value.
>Date: Thu, Apr 15, 1999, 2:19 pm
>

>First of all, they have "shown" no such thing.
>They have simply claimed it.
>And for the record, the claim is in Mises
>and is fully developed in Shackle.

You'll have to clarify what you mean by "show". Keynes and Davidson have
done more than simply state a claim. They provide a metaphysical argument to
support their claim. Unfortunately I haven't had the opportunity to read
Mises and I haven't heard of Shackle.

>Second of all, the claim is circumscribed.
>For example, Davidson has no problem with
>the idea that you can have rational expectations
>when playing craps or roulette.
>In fact, if I understand correctly, he allows in
>addition a rational basis for expectations in a
>wide variety of "routine" decisions.


I was probably being extreme when I said "... expectations can have no
rational basis whatsoever...". (An expectation with a rational basis is the
ability to calculate the future by reducing fundamental uncertainty to
actuarial centainty.) However, we are exploring the nature of *economic*
expectations and *these* can have no rational basis whatsoever.
Or in other words, it is appropriate to define economic decisions as
decisions made in the face of fundamental uncertainty. This definition
delimits the study economics without limiting economics to the study of
monetary transactions. Under this definition, money functions primarily
as a specialized means for making such decisions and secondarliy
as liquidity.

>Thirdly, the claim that fundamental uncertainty
>removes any basis for "rational" decision making
>requires a thorough explication of the underlying
>notion of rationality.

That is what I am trying to do.

>What is true is that NC economists
>have given us no indication of what rational behavior
>in the face of fundamental uncertainty would look like,
>but NC economists work with a very odd notion of
>rationality. And in any case, others have explored this.

The problem, as I see it, is that rationalility tends to be equated with an
ability to calculate/estimate probablities and act on such information.
Such a notion of rationalility breaks down in the face of fundamental
uncertainy.  A "deeper" notion of rationality is required. I feel it needs
to include psychological and ethical considerations WITHOUT sliding into the
dogmatism of a religion.

Harry Veeder
 
> 
>
>Harry Veeder wrote:
>
>> As Keynes and Davidson have shown expectations can have no rational basis
>> whatsoever since the future is fundamentally uncertain.
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