At the risk of introducing yet more non-certainty, if not true
uncertainty, I will add two further comments (and now it looks like
Cantillon may well have been ahead of all of them, which would not be
the first time).
Regarding Keynes and Knight on entrepreneurship, which Cantillon and
others tie to "uncertainty," however defined, I would say that Keynes
leaves many parts of it out. He does not discuss such matters as
organizing and founding a firm, hiring workers and motivating them,
or how one gets a new idea for a product or a process, much less the
details of how one raises financing, although he was himself involved
in such matters in practice. Where his view of uncertainty links
with Knight and entrepreneurship is in his theory of animal spirits,
which many Austrians do not like for reasons that remain mysterious
to me. In the face of non-measurable non-certainty, whether it is
for epistemological reasons for risk or true ontological uncertainty
(no probability distribution to find), the entrepreneur must
ultimately make a decision to act, and at that point something beyond
rational logic must be involved, which Keynes invokes as "animal
spirits," although others will simply label "willingness to bear
risk," which does not quite capture it, since "risk" is supposedly
measurable, whereas uncertainty (or not-easily measured forms of
risk) are not. Again, while many think about Keynes's use of the
term in terms of financial markets and speculation, he also clearly
uses it in relation to real capital investments, and making those
needed to start an enterprise are a crucial aspect of entrepreneurship.
Regarding the the matter of Bayesianism versus classical frequentism,
there is a curious overlapping of the views of Keynes with some
Austrians. In his later periods Keynes criticized Tinbergeniann
econometrics partly on grounds of the limits of classical
frequentism, as well the existence of phenomena for which there may
exist no probability distribution to discover at all (true
uncertainty). One of the limits is that for much of economic reality
it is difficult, if not impossible, to carry out repeated
"experiments" to have that wonderful asymptotic convergence to the
"true" underlying probability distribution, as may be done if one is
flipping a fair coin. Most practicing econometricians simply assume
underlying distributions to hold and proceed accordingly, applying
measures and theorems without really knowing that they hold (such
matters have been more on many peoples' minds since the recent events
in financial markets have reminded us about fat tails and black swans
and so on).
One finds a similar critique in Ludwig von Mises (not Richard), who
was the mentor of that great student of entrepreneurship, Israel
Kirzner. At one point in Human Action, von Mises criticizes
political pundits who post odds about the outcomes of forthcoming
elections, reasonably pointing out that each election is different
and that therefore there is no basis for invoking classical
frequentism in the assigning of such odds (not precisely his
language, but that was the point). He clearly saw this extending
well beyond forecasting electoral outcomes.
BTW, regarding those fair coins, even there one can encounter a
difficult epistemological problem. If we start tossing a coin, how
do we know that it is "fair"? Sure, we can physically examine it for
imbalances or filing or whatever, but what if it starts simply
showing one outcome all the time? This is the case in the fabled
philosophical discussion of probability theory that occurs in the
opening sequence of Tom Stoppard's breakout play, Rosencrantz and
Guildenstern Are Dead, when one of them starts tossing a coin that
keeps coming up the same way (forget, but it might have been
tails). No way to know for sure.
Barkley Rosser
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