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Quotation of the Day…

… is from pages 70-71 of the 1978 edition of the late Ludwig Lachmann‘s excellent 1956 book Capital and Its Structure; here, Lachmann is discussing J.M. Keynes’s cramped and inadequate understanding of the role of capital markets, including the role of stock exchanges and futures markets (footnote omitted; Lachmann’s Keynes quotations are from pages 155 and 156 of The General Theory):

The Keynesian world is a world in which there are two distinct classes of actors: the skilled investor, ‘who, unperturbed by the prevailing pastime, continues to purchase investments on the best genuine long-term expectations he can frame’, and, on the other hand, the ignorant ‘game-player’.  It does not seem to have occurred to Keynes that either of these two may learn from the other, and that, in particular, company directors and even the managers of investment trusts may be the wiser for learning from the market what it thinks about their actions.  In this Keynesian world the managers and directors already know all about the future and have little to gain by devoting their attention to the misera plebs of the market.  In fact, Keynes strongly feels that they should not!  This pseudo-Platonic view of the world of high finance forms, we feel, an essential part of what Schumpeter called the ‘Keynesian vision’.  This view ignores progress through exchange of knowledge because the ones know all there is to be known whilst the others never learn anything.