PKSG June 7, 2011 Robinson College University of Cambridge

1. PKSGJune 7, 2011Robinson CollegeUniversity of Cambridge GLS Shackle: Can We Reconcile the Irreconcilable? Bruce Littleboy St Edmund’s Shackle Studentship Easter Term, 2011 b.littleboy@uq.edu.au 1

2. A matter of breeding may be fitter • Bastard progeny (Joan Robinson) • Legitimacy • 50-50 • “A joke is a very serious thing.” Winston Churchillhttp://www.brainyquote.com • Hybrid vigour vs purity • Breeding impurity out of …JMK True Keynes, ultra Keynes beyond Keynes… Where does GLSS fit? A ‘fundamentalist’? 2

3. Church of St. Peter and St. Paul, Aldeburgh, Suffolk Thank GodforGeorgeLennox SharmanSHACKLE1903-1992Economist, PhilosopherWriterO Lord I beseech TheeShape my thought to beauty. Malcolm RutherfordDepartment of Economics University of Victoria 3 http://web.uvic.ca/~rutherfo/shackle.html

4. Shackle’s Mysticism • Does his sense of the beautiful lead him astray? • Does he rely too much on the purity of an initial arresting insight? “… the lens becomes more like a mirror”. Roger Garrison (1995) 4

5. The Co-Penetration of Style and Substance Shackle , JPKE (1983-84): [Coddington] was exceedingly careful and even fastidious in expression. His cast of mind was “classical” in the general cultural sense, in contrast with the “romantic” urge of some writers on economics. (p. 241) Keynes in this classification was a romantic… [The General Theory is a] book that arises from a vision, like a mountain appearing fitfully amongst its clouds… [It] presents a wild and craggy scene, compared with the clear placid surface of the “classical” lake. (p. 242) In terms of painting, Keynes was a Turner, not a Canaletto. 5

6. J.M.W. Turner [1775-1851] Canaletto [1697-1768] 6

7. But styles can meld 1817 A View from the Fondamenta Nuove Looking Towards Murano, c.1722/23Dallas Museum of Art, Texas, USA William Wordsworth (1770 –1850) 7

8. Shackle on Keynes • What is the one main aspect of the GT that Shackle criticises? • The human condition, uncertainty and crucial choice • In life expectations are restless and volatile. • In the model they change, but are then are held constant and a new equilibrium is obtained. • Why is Shackle critical? • Intellectual and aesthetic grounds • Is Shackle himself open to criticism? • On both intellectual and aesthetic grounds 8

9. Shackle on the Keynes Problem • Keynes had two unresolved styles in the GT • “an arresting contrast between the method and the meaning of Keynes’s book” (p. 44) • Tableaux vivant: focusing on a contrived moment of equilibrium 9

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11. Shackle vs Smith’s order Shackle (1972, p. 125): • In … the kaleidic view of the business world and of economic society, all endeavours can still be supposed to be directed by reason (deliberative or intuitive) … basing itself on a flow of suggestions rather than on well-jointed information, a flow which occasionally achieves coherence … and leads to a state of affairs which has some public air of being generally coordinated. • This twist on Hayek permits a link to Keynes, but even Keynes presumably thought more of micro-coordination. • Shackle viewed processes as like waterfalls and pools, landslides etc.; famous kaleidoscope metaphor 11

12. Maybe Keynes meant it • Shackle rejects the substance of Keynes’ own reconciliation as well as the style • Keynes gave conventions too much power to stabilise (QJE, 1937, techniques 1-3) • “Those [unknown] events, however dimly apprehended and however elaborately shrugged off…” (SET, p. 186) • Shackle insisted on restless fragility • Keynes entertained order of a socially perverse kind • Lingering slump (secular stagnation); a heavier hand of history and institutions • But institutions could confidently be re-shaped beneficially 12

13. Shackle on the Keynes Problem • Keynes had two unresolved styles in the GT • “the unsuitability of the equilibrium conception to a study of the consequences of uncertainty, is more acute than it need have been” (p. 48) • Instead using the dynamic multiplier (and rolling adaptive changes in ex ante expectations for next production decision in the C sector in the light of ex post results) “would have better suited his purpose” (p. 49) 13

14. Heuristics Illustrative, explaining a simple (toy) model Ceteris paribus What if…? (Ch. 19) “The” model is difficult to identify and exposit GLSS re the missing process maybe is an improvement … Epistemics A truth claim about the world Properties essential to include in a model Defending Keynes 14

15. Shackle’s A Scheme of Economic Theory • Resolving disharmony • All the great approaches have their beauty • Time is an organising principle • Closed and open systems re time • One artist and one style in one picture: Many artists, many styles, many paintings but one beautiful collection. 15

16. A Scheme of Economic Theory (1965) If we cannot have a general model, can we not have a general scheme, showing how theories stand in relation to each other and what differences in their respective assumptions account for their different directions of attack (SET, p. x) 16

17. A Scheme, not a Model We cannot build up a general, omni-competent model by fitting together our special models, because it happens in many cases that one of these special models depends on assumptions incompatible with those required by another. Instead we have to strive for an insight which fuses informally and, if you like, non-logically, a number of strands which, in their formal aspects, mutually repel each other (SET, p. 2) 17

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20. Scheme of ET • “Needless to say, the ordering of theories according to their degree of involvement in this or that conception of time has nothing whatever to do with any question of the value or power of such theories.” (SCE, p. 194, n) • But this ordering illuminates relevant differences and invites you to choose… 20

21. Transcendent or eternal properties of fact or truth. See Merriam-Webster’s Dictionary of Synonyms, under “truth”. Shackle’s Mysticism Insight into the thing in beingof which we form a part, whether we attend chiefly to its non-human or its human aspect, cannot consist in a knowledge of its nature or meaning in any ultimate, absolute sense. All we can seek is consistency, coherence, order. YHT, p.286 21

22. The question for the scientist is what thought-scheme will best provide him with a sense of that order…, a sense even of that oneness and simplicity which, if he can assure himself of its presence, will carry consistency and order to their highest expression. YHT, p.286 22

23. Religion, science and art have all of them this aim in common. The difference between them lies in the different emphases in their modes of search, the stress upon the promptings of inborn longing and intuitive or inspired conviction, upon reason and experience, or upon imagination of beauty. YHT, p.286 23

24. For a choice in this sense, the sense which gives to the human individual the dignity of responsibility, cannot be foreknown. (1982, p. 224) Strictly, in every sense, the totally pre-reconciled world is a world without hope. We can conceive of the telescoping of actions and even of plans, but not of hope. (p. 225) Is Shackle the only economist (social scientist) who has used hope an analytical concept? 24

25. In “A Student’s Pilgrimage” (1983) we find: Elizabeth Bowen in one of her novels has a sentence that can be a wonderful solvent of regret: ‘Chance is better than choice, it is more lordly. Chance is God, choice is man.’ (p. 107) Chance, (Elisabeth Bowen saves us so much argument) brought me into a live university milieu for the first time on the first day in 1931… Chance brought me to the London School of Economics … Thus by a blessing of chance [lower case this time] … (pp. 112-3) Intensive research on Elizabeth Bowen reveals her focus on ‘the innocence of orderly life, and in the eventual, irrepressible forces that transform experience’. <http://en.wikipedia.org/wiki/Elizabeth_Bowen> 25

26. “Expectation is imagination, the originative gift, a gift which burns, if with a more dazzling light, in the thoughts of the poet, the symphonist, the mathematician.” (1983, p. 115) Teresa of Ávila by François Gérard(1770−1837) 26

27. Shackle, a nihilist?! And this from his friends! John Pheby: Spot the most nihilistic quote in Epistemics and Economics. Catherine Shackle, at the Memorial Conference said that “George felt quite comfortable in his belief of the indeterminacy inherent in Keynes’s mature writings. However he would get extremely irritated when accused of supporting a position that considered Keynes to be a nihilist.” Roy Rotheim (1993, ROPE, p. 197, n1) Coddington (1979) described Keynes’s theory of speculative demand for money “as an essay in the economics of pure chaos”. 27

28. “Shackle’s view leads only to total despair…” Boulding (1973, p. 1374) Shackle: “un-knowledge does not mean un-hope” In Christianity, doesn’t un-knowledge require faith? And faith contradicts neither hope nor doubt. The three are co-determined. 28

29. “If man proposes and God disposes, the record suggests that God is not altogether arbitrary and unpredictable.” (Boulding, 1973, p. 1374)[Proverbs 16:9] Sir Edwin Landseer (1877) 29

30. Mark Perlman: As I see it, Shackle’s free choice is similar to Augustine’s free will, which in Shackle’s view contains cultural and experiential elements. At its core the essential freedom of that choice is the teaser that God gives to man, individually. (1980, p. 117) I would guess that what separates the Shackle and Boulding perceptions is a curious inversion of “Jacob’s capacity to wrestle with the Angel”. Shackle is profoundly aware of man’s ability to handle uncertainty and is consciously less afraid of Destiny’s possible cruel grip on man. (p. 118) 30

31. Shackle on the couch • Seemingly the opposite in life from the man of action he portrayed, but he was also talking about his crucial personal choices … • He admired those unlike himself • applied business people who reconcile by the very decision to act • applied economists (he did an early stint) 31

32. Shackle on the couch • He wanted the irreconcilable to be reconciled in aesthetic appreciation • Keynes and the Austrians blended (e.g., Greg Hill, 2004) • Prices and Production “uno stato di eccitazione”; “seducente ad enigmatico” • Eros in the pursuit of knowledge • Single-minded pursuit of his core mystical (?) insight • Agatha Christie… 1937 germination of “potential surprise” • (Moneta e Credito, 1984, no. 146) [Thanks to Gabriele Pastrello] • He wanted the beautiful maths to emerge from the poetry one day, not just to persuade orthodoxy but to confirm his Platonism (which distrusts poetry not in the service of Truth) 32

33. Summary Keynes’s General Theory explains why expectations are inherently unruly, yet the formal model assumes them constant. George Shackle regards this as a scientific and aesthetic failing. Shackle has been widely and wrongly accused of nihilism. But Shackle does not really offer a superior alternative and may have missed Keynes’s rationale. Shackle’s unease may stem from his own conception of the nature of coherence that flows through his life’s work. In A Scheme of Economic Theory he seeks to resolve differences in modes of high-level theorising, but his scheme depends on his Christian neo-Platonism that places too much weight on beauty and harmony as scientific criteria. 33