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cover M Rothbard's many errors about Keynes and probability

A guide by Michael Emmett Brady "mandmbrady" (Bellflower, California ,United States)

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An examination of Murray Rothbard's comments on Keynes's logical approach to probability reveals that Rothbard was either a master of deceit and deception or an ignorant fool.Either case is good grounds for eliminating M Rothbard from serious consideration as an economist or philospher.M Rothbard was a pamphleteer.Consider his following claims:

"In a notable contribution, Skidelsky demonstrates that Keynes's first important scholarly book, A Treatise on Probability (1921), was not unrelated to the rest of his concerns. It grew out of his attempt to copper rivet his rejection of Moore's proposed general rules of morality. The beginnings of the Treatise came in a paper, which Keynes read to the Apostles in January 1904, on Moore's spurned chapter, "Ethics in Relation to Conduct." Refuting Moore on probability occupied Keynes's scholarly thoughts from the beginning of 1904 until 1914, when the manuscript of the Treatise was completed.

He concluded that Moore was able to impose general rules upon concrete actions by employing an empirical or "frequentist" theory of probability, that is, through observation of empirical frequencies we could have certain knowledge of the probabilities of classes of events. To destroy any possibility of applying general rules to particular cases, Keynes's Treatise championed the classical a priori theory of probability, where probability fractions are deduced purely by logic and have nothing to do with empirical reality. Skidelsky makes the point well:

Keynes's argument, then, can be interpreted as an attempt to free the individual to pursue the good … by means of egotistic actions, since he is not required to have certain knowledge of the probable consequences of his actions in order to act rationally. It is part, in other words, of his continuing campaign against Christian morality. This would have been appreciated by his audience, although the connection is not obvious to the modern reader. More generally, Keynes links rationality to expediency. The circumstances of an action become the most important consideration in judgments of probable rightness.… By limiting the possibility of certain knowledge Keynes increased the scope for intuitive judgment. (Skidelsky 1983: 153–54)

We cannot get into the intricacies of probability theory here. Suffice it to say that Keynes's a priori theory was demolished by Richard von Mises (1951) in his 1920s work, Probability, Statistics, and Truth. Mises demonstrated that the probability fraction can be meaningfully used only when it embodies an empirically derived law of entities which are homogeneous, random, and indefinitely repeatable.

This means, of course, that probability theory can only be applied to events which, in human life, are confined to those like the lottery or the roulette wheel. (For a comparison of Keynes and Richard von Mises, see D.A. Gillies [1973: pp. 1–34].) Incidentally, Richard von Mises's probability theory was adopted by his brother Ludwig, although they agreed on little else (L. von Mises [1949] 1966: pp. 106–15).Originally published in Dissent on Keynes: A Critical Appraisal of Keynesian Economics, edited by Mark Skousen. New York: Praeger (1992). Pp. 171–198.

Rothbard has made at least 10 errors in the space of 5 short paragraphs.The first 4 errors occur in Rothbard's claim that " Keynes's Treatise championed the classical a priori theory of probability, where probability fractions are deduced purely by logic and have nothing to do with empirical reality."
First,Keynes's logical theory of probabiity is based on George Boole's 1854 The Laws of Thought.It has nothing to do with the Classical theory of Laplace,whose Principle of Non Sufficient Reason Keynes decimated in the A Treatise on Probability in chapter 4.Second ,all of Keynes's probabilities are conditional .Third,the hypothesis,h, is always related to empirical evidence,e.Thus , a probability is always of the form P(h/e).Fourth,the claim that the " probability fractions are deduced purely by logic and have nothing to do with empirical reality." is simply bizarre as Keynes's probabilitiies ,in general, are intervals and are not sharp or point probabilities(fractions)except in the limiting case where the weight of the evidence,w,= or approaches 1.The condition that w=1 or approaches 1 only occurs in the physical and biological sciences.Fifth,the probability relation is not deduced.It is perceived by the decision maker based on intuition ,analogy and pattern recognition.Sixth,it is not true that Keynes's approach to probability was part " ... of his continuing campaign against Christian morality ".It was part of Keynes's campaign against the hypocrisy of Victorian Morality,which was a far cry from being Christian.Seventh,Keynes never linked "... rationality to expediency. The circumstances of an action become the most important consideration in judgments of probable rightness ". Keynes argued that all of the evidence,not merely statistical frequencies, had to be considered.This would mean that unique and infrequent circumstances would have to be taken into account in making a judgment of the probable amount of goodness.Eighth,the claim that ",,, Keynes's a priori theory was demolished by Richard von Mises (1951) in his 1920s work, Probability, Statistics, and Truth." is a bad joke .Richard von Mises incorrectly identifies Keynes as a subjectivist and committed the fatal error of overlooking
Keynes's requirement that all probabilities require that w > 0.Richard von Mises claim that Keynes specified probabilities for the case where w=0 means that he
never read the book he claimed to be discussing.Nineth,Rothbard's claim that "
Mises demonstrated that the probability fraction can be meaningfully used only when it embodies an empirically derived law of entities which are homogeneous, random, and indefinitely repeatable." had already been done by Keynes in chapters 8 and 33 of the TP.Keynes would have added the terms uniform and stable as he did in his debate
with Tinbergen in 1939-40 in the Economic Journal.Nineth,the claim that "
probability theory can only be applied to events which, in human life, are confined to those like the lottery or the roulette wheel." is only correct if one is using mathematical probability.Keynes includes interval probability as the main way in which people use probability.Tenth,"For a comparison of Keynes and Richard von Mises, see D.A. Gillies [1973: pp. 1–34]... " makes no sense because Gillies never discusses Keynes 's interval estimate approach to probability.
Rothbard's scholarship can only be characterized as pathetic <product no longer available> A Treatise On Probability - UnabridgedA Treatise on Probability: -1921An Investigation of the Laws of ThoughtJ.M. Keynes' Theory of Decision Making, Induction, and Analogy: The Role of Interval Valued Probability in His Approach

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4.  J.M. Keynes' Theory of Decision Making, Induction, and Analogy: The Role of Interval Valued Probability in His Approach  by Michael Emmett Brady
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Customer Discussions about products in this guide
Discussion Replies Latest Post
background needed to understand this book 1 Feb 2, 2010
How anyone who can follow Keynes's easy directions can specify an index to measure w,the weight of the evidence 2 Apr 18, 2009
Where did all of the nonnumerical probabilities nonsense about Keynes start from ? 2 Mar 21, 2009
Why did F Ramsey claim to have reviewed Keynes's A Treatise on Probability(1921) when he had only read two chapters of the book he claimed to be reviewing ? 2 Mar 21, 2009
How anyone who can follow Keynes's easy instructions can set up an index,w,tomeasure weight of evidence 0 Nov 17, 2007
Keynesian probabilities are primarily intervals. 0 Apr 5, 2006
 
   

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Author

Michael Emmett Brady "mandmbrady" (Bellflower, California ,United States)
Qualifications: PH.D. ,economics-44 refereed journal articles/notes-(co)auth
Last updated: 2/5/12
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