Re: RATIONAL EXPECTATIONS

["Esteban Perez" <eperez@xxxxxxxxxxxx>]

rom Paul Davidson.
All of this is analyzed in great detail in my last two books -- FINANCIAL
MARKETS, MONEY AND THEREAL WORLD and POST KEYNESIAN MACROECONOMIC THEORY.
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The analysis in Financial Markets, money and the real world (2002) does not mention the issue of regime change that I was alluding to. See, The chapter on uncertainty pp.39-69. It does state,  that the three necessary additional classical postulates underlying Say s Law are: 1. Neutral money, 2. The gross substitution axiom and 3. the ergodic axiom . P.43. You have also mention this (Besides Post Keynesian Macro Theory) in Full Employment in a global economy in note 2 to page 160 in Commitment to Full Employment, Edited by Werner, Forstater and Rosen. I found very interesting the discussion of Shackle s concept of crucial choice pp.57-59 (in Financial Markets, 2002) which you also discuss in your article Rational Expectations: A fallacious Foundation pp.192-193 JPKE Winter 1982-1983, Vol V. No2.. When I referred earlier to what kind of decisions are replicable, this is what I had in mind. You have mentioned on some ocassion in this list that there are decisions that can be analysed with classical axioms such as for example going to the supermarket to buy apples. Now the fact that Keynes as he mentioned (in 1939) had not discussed the process of capital formation in the GT account for the fact that he really emphasized uncertainty when he became aware of this omission?.
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You write:

This is exactly why for the last (almost) three decades I have been arguing
that what separates Keynes from orthodoxy is his overthrowing three classical
axioms -- the neutral money axiom, the ergodic axiom , and the gross
substitution axiom. [See page 16 of Keynes's GT where he argues that
economists requires the overthrow of classical axioms -- similar to the axiom
of parallell in Euclidean geometry to work out a "non-Euclidean " economics
for our world.]

If some of you people on the pktnet would understand this distincytion then
much of the wasteful argument could be avoided and we can get on with the
business of building on Keynes's foundation an economic system for a global
economy with international movement of goods, services and finance.
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I can t speak for the rest but I certainly understand the distinction. The explanation was in response to a question. Does the fact that one understands what separates Keynes from orthodoxy precludes one from discussing rational expectations?.

Esteban Perez