Keynesian Pragmatism : The Human Logic of Uncertainty

This paper offers a re-interpretation of the relationship between Keynes’s A Treatise on Probability and the General Theory. Keynes’s thought on philosophy, probability and economics is viewed as a process of contextual evolution in which his thought evolved as its context changed, displaying elements of both continuity and change. It is argued that A Treatise on Probability was originally developed by Keynes in the context of Cambridge analytic philosophy. But Keynes’s thinking on probability and uncertainty evolved significantly after the publication of A Treatise on Probability influenced by Ramsey’s pragmatist critique and also Keynes’s practical experience in the financial markets as an investor. This contextual evolution of Keynes’s thought during the interwar years culminated in his exposition of the state of long-term expectations in chapter 12 of the General Theory, the summary of his key arguments in the QJE 1937 paper, and his 1938 correspondence with Townshend on risk and liquidity premia. The extent of Ramsey’s move towards a pragmatist philosophy has been underestimated and the crucial role of his pragmatist influence on Keynes neglected or dismissed. The need to reassess Ramsey’s philosophical influence on Keynes builds on the important contributions of Coates and Misak