I think it’s fair to say that for
Keynes, investors are irrational *because* the world is nonergodic.
Rational
actions require adequate epistemological foundations. If these
foundations are
absent, rational action is impossible. (All this in *Keynes*
opinion. My
opinions are irrelevant here.) Thus, if people act when the
epistemological
foundations for actions are too weak to sustain rational action, they
are by
definition acting irrationally. The “nonergodicity” of the social
world often
leaves us bereft of epistemological foundations for action. It’s
either
irrational action or no action.
Uncertainty in this sense has implications for rational action. These
are
set out by Keynes in a number of texts e.g. A Treatise on Probability
p. 32,
the correspondence with Townshend (XXIX, p. 294 ), Essays in
Persuasion, p.
xviii, and the passage I recently quoted from the end of "The Balance of
Payments of the US." Rational action in the face of such uncertainty
is,
within the limits set by the rational "optimistic hypothesis," "to allow
caprice to determine us." (VIII, p. 32)
"No one can be certain of anything in this age of flux and change.
Decaying standards of life at a time when our command over the
production of
material satisfactions is the greatest ever, and a diminishing scope for
individual decision and choice at a time when more than before we
should be
able to afford these satisfactions, are sufficient to indicate an
underlying
contradiction in every department of our economy. No plans will work
for
certain in such an epoch. But if they palpably fail, then, of course,
we
and everyone else will try something different.
"Meanwhile for us the best policy is to act on the optimistic
hypothesis
until it has been proved wrong. We shall do well not to fear the
future too
much. Preserving all due caution in our own activities, the job for us
is
to get through the next five years in conditions which are favourable
and
not unfavourable to the restoration of our full productive efficiency
and
strength of purpose, of our prestige with others and of our confidence
in
ourselves. We shall run more risk of jeopardising the future if we are
influenced by indefinite fears based on trying to look ahead further
than
any one can." (XXVII, pp. 445-6)
Notice the explicit association here of "uncertainty" with "flux and
change." This is consistent with the explanation of uncertainty in
terms of
the ontological hypothesis of "organic unity" - "internal relations."
So the problem comes not from the "uncertainty" itself but from the
irrational psychological reaction to it. Irrationally influenced by
unconscious phantasy, individuals "try to look ahead further than any
one
can" and fall victim, under the same influence, to irrational
"indefinite
fears." If they can't succeed in "hiding from themselves how little
they
foresee," they become irrationally pessimistic and "fear the future too
much." "Animal spirits" dim, "enterprise" falters and, for a reason - an
irrational "conventional or instinctive" "feeling about money" - itself
rooted in unconscious phantasy, the "propensity to hoard" intensifies.