Keynes QOTD: Non-Euclidean Economics

I’m finally reading John Maynard Keynes’ magnum opus, The General Theory of Employment, Interest and Money. I’m enjoying it, though not the pace at which I need to finish it (e.g. large chunks by tomorrow morning). One quote I wasn’t already familiar with stood out to me and I felt the need to share. As you may know, Keynes trained as a mathematician before turning to economics. Some of his early work was on probability theory (resulting in a A Treatise on Probability). The General Theory is not especially laden with mathematics, but the title itself is a clear reference to Einstein’s general relativity and a few other hints of Keynes’ outside interests shine through. In particular, in chapter 2 on the postulates of the classical economists, Keynes asserts:

The classical theorists resemble Euclidean geometers in a non-Euclidean world who, discovering that in experience straight lines apparently parallel often meet, rebuke the lines for not keeping straight – as the only remedy for the unfortunate collisions which are occurring. Yet, in truth, there is no remedy except to throw over the axiom of parallels and to work a non-Euclidean geometry. Something similar is required to-day in economics. (16)

Two thoughts: it’s interesting that Keynes hitches his rhetorical wagon to both the triumph of early 20th century physics and the finding in 19th century mathematics that geometries were more varied than we had previously thought and we could not get rid of the pesky parallel postulate. Also, it suggests that Keynes and H.P. Lovecraft might have gotten along swimmingly.

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3 Comments

  1. JeffL

     /  June 15, 2011

    This is a very cool quote… one (of many you’ve found) I’ll keep in my back pocket.

  2. Connecting Keyne’s Theory, Cthullu and non-Euclidean geometry? I sense a Nerd of the Week award coming up!

    On a more serious note, I think Keynes got the lesson of Euclidean geometry wrong. Euclidean geometry works just fine in daily life. “Extreme science” like non-Euclidan geometry and quantum mechanism are only useful as descriptions at extremely large or small scales. The corresponding lesson is that, maybe in some cases, we should over turn classical/neo-classical economics. But most of the time, old science works fine.

    • I think Keynes might have agreed with that sentiment, Fabio. He was a Marshallian, and really held closely to that. “The General Theory” was a conscious ref to Einstein, and the idea was that *most* of the time, Marshall works fine. But sometimes – Great Depression, liquidity trap, zero lower bound, all that – you need other measures because the regular equilibria stop working. Keynes thought the theory was “moderately conservative in its implications” (although he was possibly comparing it to socialism or communism or the like). The late Keynesian “tinkering” schemes of the mid-20th century were not what Keynes was pushing for in the GT I think, and in some sense it was an analysis that left the major parts of the system intact – all that happens is under certain special circumstances, the usual routines breakdown for the same reasons they usually work (hence one theory), and require very different policies. One of the reasons Keynes proper, as opposed to Samuelson or Hicks or whoever, has been coming up so much is that the conditions that prompted the GT are more like what we have now than anything in the past 70 years, and thus the full force of his arguments makes the most sense.