John Maynard Keynes figures the odds

In his 1979 book The Hitchhiker’s Guide to the Galaxy, Douglas Adams introduced the concept of the Infinite Improbability Drive, “a wonderful new method of crossing vast interstellar distances in a mere nothingth of a second without all that tedious mucking about in hyperspace”.

Adams described the drive in operation:

They plunged through heavy walls of sound, mountains of archaic thought, valleys of mood music, bad shoe sessions and footling bats, and suddenly heard a girl’s voice.

It sounded quite a sensible voice, but it just said, “Two to the power of one hundred thousand to one against and falling,” and that was all.

Ford skidded down a beam of light and spun round trying to find a source for the voice but could see nothing he could seriously believe in.

“What was that voice?” shouted Arthur.

“I don’t know,” yelled Ford, “I don’t know. It sounded like a measurement of probability.”

“Probability? What do you mean?”

“Probability. You know, like two to one, three to one, five to four against. It said two to the power of one hundred thousand to one against. That’s pretty improbable, you know.”

A million-gallon vat of custard upended itself over them without warning.

“But what does it mean?” cried Arthur.

“What, the custard?”

“No, the measurement of probability!”

“I don’t know. I don’t know at all. I think we’re on some kind of spaceship.”

“I can only assume,” said Arthur, “that this is not the first-class compartment.”

Although the philosopher turned economist John Maynard Keynes did not invent the Infinite Improbability Drive, his work a century ago on its inverse theme, probability, may have influenced its creation.

He was “the most influential and controversial economist of the 20th century”, and “the leading founder of modern macroeconomics”, according to The Elgar Companion to John Maynard Keynes, published in 2019.

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John Maynard Keynes. Credit: Getty Images.

He was also “a philosopher before also becoming an economist”, it says. “His 1908 Fellowship dissertation (equivalent to a PhD), after many interruptions, was published as his philosophical magnum opus, A Treatise on Probability, in 1921.”

With this publication, it says, Keynes “advanced the logical theory of probability to replace its main contemporary rivals, the classical theory and frequency theory. In Keynes’ treatment, probability is the general theory of logic covering all situations, regardless of whether the available information is sufficient or insufficient to deliver certainty. Probability thus arises in the context of arguments from premises to conclusions, and expresses the degree of rational belief one is entitled to have in the conclusion, given the premises.”

In the opening paragraphs to his treatise, Keynes writes:

1. Part of our knowledge we obtain direct; and part by argument. The Theory of Probability is concerned with that part which we obtain by argument, and it treats of the different degrees in which the results so obtained are conclusive or inconclusive.

In most branches of academic logic, such as the theory of the syllogism or the geometry of ideal space, all the arguments aim at demonstrable certainty. They claim to be conclusive. But many other arguments are rational and claim some weight without pretending to be certain. In Metaphysics, in Science, and in Conduct, most of the arguments, upon which we habitually base our rational beliefs, are admitted to be inconclusive in a greater or less degree. Thus for a philosophical treatment of these branches of knowledge, the study of probability is required.

Keynes, who achieved international renown as the originator of Keynesian economics, was born on 5 June 1883 in Cambridge, England.

The International Monetary Fund in 2014 published an article titled “What Is Keynesian Economics?”

“The central tenet of this school of thought is that government intervention can stabilise the economy,” the IMF says.

It says Keynes “spearheaded a revolution in economic thinking that overturned the then-prevailing idea that free markets would automatically provide full employment – that is, that everyone who wanted a job would have one as long as workers were flexible in their wage demands. The main plank of Keynes’ theory, which has come to bear his name, is the assertion that aggregate demand – measured as the sum of spending by households, businesses, and the government – is the most important driving force in an economy. Keynes further asserted that free markets have no self-balancing mechanisms that lead to full employment. Keynesian economists justify government intervention through public policies that aim to achieve full employment and price stability.”

The IMF says there are three principal tenets in the Keynesian description of how an economy works:

“Aggregate demand is influenced by many economic decisions – public and private.

“Prices, and especially wages, respond slowly to changes in supply and demand, resulting in periodic shortages and surpluses, especially of labour.

“Changes in aggregate demand, whether anticipated or unanticipated, have their greatest short-run effect on real output and employment, not on prices.”

A biography of Keynes published by the BBC says he “excelled academically at Eton as well as Cambridge University, where he studied mathematics”.

Following the outbreak of World War I, he went to work for the British Treasury. At war’s end he was assigned to represent the Treasury at the Paris Peace Conference drafting the Treaty of Versailles.

But he resigned his position and then published the book The Economic Consequences of the Peace, in which, the BBC says, “he criticised the exorbitant war reparations demanded from a defeated Germany and prophetically predicted that it would foster a desire for revenge among Germans”.

The New York Times in its obituary says the book “created a storm of controversy but was so widely in demand that it ran five editions the first year and was translated into 11 languages”.

In 1936 Keynes published what the BBC says is his “best-known work”, The General Theory of Employment, Interest and Money, which “became a benchmark for future economic thought. It also secured his position as Britain’s most influential economist.”

In that role, Keynes served as the chief British negotiator at the Bretton Woods Conference, officially known as the United Nations Monetary and Financial Conference, which the US Department of State describes as “a gathering of delegates from 44 nations that met from 1 July to 22 July 1944 in Bretton Woods, New Hampshire, to agree upon a series of new rules for the post-World War II international monetary system. The two major accomplishments of the conference were the creation of the International Monetary Fund and the International Bank for Reconstruction and Development.”

He became Lord Keynes in 1942 when he was formally recognised with publication of the King’s Birthday Honours naming him first Baron of Tilton.

He died of a heart attack in Tilton, East Sussex, England, on 21 April 1946. He was 62.

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