The last page of Keynes's General Theory provide insight on some of our policy problems, "Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the salves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back."
An interesting twist on the same theme comes from another old economist.
"The conventional wisdom having been made more or less identical with sound scholarship, its position is virtually impregnable. The skeptic is disqualified by his very tendency to go brashly from the old to the new. Were he a sound scholar... he would remain with the conventional wisdom."- John Kenneth Galbraith The Affluent Society
The current environment is still plagued by uncertainty.
"Our existing knowledge does not provide a sufficient basis for a calculated mathematical expectation. We have as a rule only the vaguest idea of any but the most direct consequences of our acts. By 'uncertain knowledge' ... I do not mean merely to distinguish what is know n for certain from what is only probable ... The sense in which I am using the term is that in which the prospect of a European war is uncertain, or the price of copper and the rate of interest twenty years hence or the obsolescence of a new invention, or the position of private wealth holders in the social system in 1970. About these matters, there is no scientific basis on which to form any calculable probability whatsoever, We simply do not know." - Keynes
Keynes on speculation.
"They are concerned not with what an investment is really worth to a man who buys it "for keeps" but with what the market will value it at, under the influence of mass psychology, three months or a year hence."
Adam Smith the behavioral economist.
The chance of gain is by every man more or less over-valued, and the chance of loss is by most men undervalued." -Adam Smith
An interesting twist on the same theme comes from another old economist.
"The conventional wisdom having been made more or less identical with sound scholarship, its position is virtually impregnable. The skeptic is disqualified by his very tendency to go brashly from the old to the new. Were he a sound scholar... he would remain with the conventional wisdom."- John Kenneth Galbraith The Affluent Society
The current environment is still plagued by uncertainty.
"Our existing knowledge does not provide a sufficient basis for a calculated mathematical expectation. We have as a rule only the vaguest idea of any but the most direct consequences of our acts. By 'uncertain knowledge' ... I do not mean merely to distinguish what is know n for certain from what is only probable ... The sense in which I am using the term is that in which the prospect of a European war is uncertain, or the price of copper and the rate of interest twenty years hence or the obsolescence of a new invention, or the position of private wealth holders in the social system in 1970. About these matters, there is no scientific basis on which to form any calculable probability whatsoever, We simply do not know." - Keynes
Keynes on speculation.
"They are concerned not with what an investment is really worth to a man who buys it "for keeps" but with what the market will value it at, under the influence of mass psychology, three months or a year hence."
Adam Smith the behavioral economist.
The chance of gain is by every man more or less over-valued, and the chance of loss is by most men undervalued." -Adam Smith
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