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Quotation of the Day…

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… is from page 247 of G.L.S. Shackle’s 1967 The Years of High Theory [2]; Shackle – who was sympathetic to J.M. Keynes’s work – here offers his summary assessment of Keynes’s understanding of modern market economies (original emphasis):

The interest-rate in a money economy.  This was the enigma that led Keynes to the nihilism of his final position, made explicit by him in the Quarterly Journal of Economics, and by his interpreter Mr Hugh Townshend in the Economic Journal, virtually at the same moment.  The interest-rate depends on expectations of its own future.  It is expectational, subjective, psychic, indeterminate.  And so is the rest of the economic system.  The stability of the system, while it lasts, rests upon a convention: the tacit general agreement to suppose it stable.  This stability, once doubted, is destroyed, and cascading disorder must intervene before the landslide grounds in a new fortuitous position.  But Keynes had shown governments how to prolong the suspension of doubt.

Whenever I recall this assessment of Keynes by Shackle, I can’t help but think of Keynes as having been something of an economic creationist in much the same way that many theologically religious people are biological creationists.  For Keynes, the steady and conscious intervention of a benevolent higher power is required to create and to maintain economic order.  Keynes’s economic-creationist belief is far more sophisticated than is the economic-creationist belief that is held by the great majority of people – but it is, at bottom, an economic-creationist belief.