Wisdom begins in wonder. . .
. . .
. . Socrates
Economics
[Economics is] the science
which studies human behavior as a relationship between scarce means which have
alternative uses.
Lionel Robbins, 1932
Essay on the Nature and Significance of Economic Science
[Economics is] “…the dismal science…
Thomas Carlyle
Economics is the science of thinking in terms of models joined
to the art of choosing models which are relevant to the contemporary world.
John Maynard Keynes
The theory of economics does not furnish a body of settled conclusions immediately applicable to policy. It is a method rather than a doctrine, an apparatus of the mind, a technique of thinking, which helps its possessors to draw correct conclusions.
John Maynard Keynes
Economy is the art of making the most of life.
George Bernard Shaw
Economics is a study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with the attainment and with the use of the material requisites of wellbeing.
Alfred Marshall (1920)
Principles of
Economics Eighth Edition
[The study of economics is the province of] … “the overeducated in pursuit of the unknowable”.
Robert Solow
Thousands of habits of behavior and of enforced laws had to be developed over millennia to establish the nature and the minutiae of property rights before we could have buying and selling, instead of each man just taking what he wanted if only he was strong enough. ... Each set of rights begins as a conflict about what somebody is doing or wants to do which affects others... An economic transaction is a solved political problem. Economics has gained the title of queen of the social sciences by choosing solved political problems as its domain.
Abba Lerner
The Economics and Politics of Consumer Sovereignty
The social enthusiasm which revolts from the sordidness of mean streets and the joylessness of withered lives . . . is the beginning of economic science.
Arthur Cecil Pigou
The combined assumptions of maximizing behavior, market equilibrium, and stable preferences, used relentlessly and unflinchingly, form the heart of the economic approach.
Gary Becker
Price Theory
p. 4 (1976)
… economics itself [as a discipline] has always been partly a vehicle for the ruling ideology of each period as well as partly a method of scientific investigation.
Joan Robinson(1962
Economic Philosophy)
Economics is the study of money and why it is good.
Woody
Allen
Economics is what economists do.
Jacob Viner
Too large a proportion of recent “mathematical” economics are mere concoctions, as imprecise as the initial assumptions they rest on, which allow the author to lose sight of the complexities and interdependencies of the real world in a maze of pretentious and unhelpful symbols.
John Maynard Keynes
General Theory
NY: Harcourt, Brace, 1936, p. 298.
Classic economic theory, based as it is on an inadequate theory
of human motivation, could be revolutionized by accepting the reality of higher
human needs, including the impulse to self-actualization and the love for the
highest values.
Abraham Maslow
Economics is extremely useful as a form of employment for economists.
John Kenneth Galbraith
Economists
An economist is a man with an irrational passion for
dispassionate rationality.
John Maurice Clark
[T]he age of chivalry is gone. That of sophisters, economists; and calculators has succeeded; and the glory of Europe is extinguished forever.
Edmund Burke
Reflections on the Revolution in France (1790)
To the economists--who are the trustees, not of civilization, but of the possibility of civilization.
John Maynard Keynes
The master economist must possess a rare combination of gifts. He must be a mathematician, historian, statesman, philosopher--in some degree. He must understand symbols and speak in words. He must contemplate the particular in terms of the general, and touch abstract and concrete in the same flight of thought. He must study the present in the light of the past for the purposes of the future. No part of man's nature or institutions must lie entirely outside his regard. He must be purposeful and disinterested in a simultaneous mood; as aloof and incorruptible as an artist, yet sometimes as near the earth as a politician.
John Maynard Keynes (1924)
It's easy to train economists. Just teach a parrot to say ‘Supply and Demand’.
Thomas Carlyle
If you laid all the economists in the country end to end, they’d never reach a conclusion.
George Bernard Shaw
An economist is a
man who knows a hundred ways of making love but doesn’t know any women.
Art Buchwald
If economists could
manage to get themselves thought of as humble, competent people on a level with
dentists, that would be splendid.
John Maynard Keynes
Political Economy
Every recovery is hailed by an incumbent president as the result
of his own wise policies, while every recession is condemned by him as the
result of the mistaken policies of his predecessor.
Gardner
Ackley
Markets
If the market does
indeed embody the sum of all human wishes, then the secret ones are just as important
as the ones that are openly displayed.
Eric Schlosser
The Invisible Hand
Every individual necessarily labors to render the annual revenue
of the society as great as he can. He generally indeed neither intends to
promote the public interest, nor knows how much he is promoting it. He intends
only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which
was no part of his intention. By pursuing his own interest he frequently
promotes that of the society more effectually than when he really intends to
promote it. I have never known much good done by those who affected to trade
for the public good.
Adam Smith
The Wealth of Nations
Maybe the invisible hand is invisible because it doesn’t exist.
Joseph Stiglitz
American Economics Association
Lunch Honoring Nobel Laureates
Washington DC
January 4, 2003
Monopoly
A monopoly granted either to an individual or to a trading
company has the same effect as a secret in trade or manufactures. The monopolists,
by keeping the market constantly understocked, by
never fully supplying the effectual demand, sell their commodities much above
the natural price, and raise their emoluments, whether they consist in wages or
profit, greatly above their natural rate.
Adam Smith
The Wealth of Nations, (vol. I, bk. I, ch. 7.
People of the same trade seldom meet together, even for
merriment and diversion, but the conversation ends in a conspiracy against the
public, or in some contrivance to raise prices. It is impossible indeed to
prevent such meetings by any law which either could be executed, or would be
consistent with liberty and justice.
Adam Smith
The Wealth of Nations, (vol.
I, bk. I, ch.
10.)
Human Nature
Pleasure is our first and kindred good. It is the starting-point
of every choice and of every aversion, and to it we come back, inasmuch as we
make feeling the rule by which to judge of every good thing.
Epicurus (341–270 BC)
Greek philosopher
Letter to Menoeceus
The “greatest happiness for the greatest number”.
Helvetius
Nature has placed mankind under the governance of two sovereign masters, pain and pleasure. It is for them alone to point out what we ought to do as well as to determine what we shall do. On the one hand, the standard of right and wrong, on the other the chain of causes and effects, are fastened to their throne.
Jeremy Bentham
An Introduction to the Principles of Morals and Legislation, x, § 4, 1780
The dictates of utility are neither more nor less than the dictates of the most extensive and enlightened (that is, well-advised) benevolence.
Jeremy Bentham
An Introduction to the Principles of Morals and Legislation, x, § 4, 1780
The father of English innovation, both in doctrines and in
institutions, is Bentham: he is the great subversive, or, in the language of
continental philosophers, the great critical, thinker of his age and country.
Good and evil, reward and punishment, are the only motives to a
rational creature: these are the spur and reins whereby all mankind are set on
work, and guided.
John Locke
Avarice [is the] the spur of industry.
David Hume
Political
Discourses
How selfish man may be supposed, there are evidently some
principles in his nature, which interest him in fortune of others, and render their
happiness necessary to him, though he derives nothing from it except the
pleasure of seeing it.
Adam Smith
Theory
of Moral Sentiments
(first sentence)
What so great happiness as to be beloved, and to know that
we deserve to be beloved? What so great
misery as to be hated, and to know that we deserve to
be hated?
Adam Smith
Theory
of Moral Sentiments
Chapter 1
. . . loss of a little finger would keep
the average European from sleeping through the night, but, provided he never
saw them, he would snore most profoundly over the loss of millions of his
brethren, and the destruction of that immense multitude seems plainly an object
less interesting to him than this paltry misfortune of his own.
Adam Smith, The Theory of Moral
Sentiments, 1758
(contemplating
reactions to human tragedies in faraway lands)
It is not from the benevolence of the butcher, the brewer, or
the baker, that we expect our dinner, but from their regard to their own
interest... This division of labor...is not originally the effect of any human
wisdom, which foresees and intends that general opulence to which it gives
occasion. It is the necessary, though very slow and gradual, consequence
of a certain propensity to truck, barter, and exchange one thing for
another.
Adam Smith
The Wealth of Nations
The propensity to truck, barter and exchange one thing for
another is common to all men, and to be found in no other race of animals.
Adam Smith
The Wealth of Nations
Capitalism is based on the extraordinary belief that the nastiest of men for the nastiest of reasons will somehow work together for the benefit of us all.
John Maynard Keynes
The hedonistic conception of man is that of a lightning calculator of pleasures and pains, who oscillates like a homogeneous globule of desire ... under the impulse of stimuli that shift him about the area but leave him intact ... He is an isolated, definitive human datum, in stable equilibrium except for the buffets of the impinging forces that displace him in one direction or another ... When the force of the impact is spent, he comes to rest, a self-contained globule of desire as before.
Thorstein Veblen
The Theory of
the Leisure Class (1899)
On Writing
I don't really start until I get my proofs back from the
printer. Then I can begin serious writing.
John Maynard Keynes
John Kenneth Galbraith
… [N]ever … assume that your first draft is right. The first
draft, when you're writing, involves the terrible problem of thought combined
with the terrible problem of composition. And it is only in the second and
third and fourth drafts that you really escape that original pain and have the
opportunity to get it right.
… (T)here are no propositions in economics that can't be stated in clear, plain language.
One extraordinary part of good writing is to avoid excess, which many writers do not understand. The next thing, which of course is obvious, is to be aware of the music, the symphony of words, and to make written expression acceptable to the ear.
John Kenneth Galbraith
Intellectual Journey, (speech)
UC-Berkeley, 1986
There is certainly
no absolute standard of beauty. That precisely is what makes its pursuit so
interesting.
John Kenneth Galbraith
The Bezzle
At any moment in time there exists an inventory of undiscovered
embezzlement. … This inventory – it should perhaps be called the bezzle – amounts at any moment to
millions [billions?] of dollars. … In
good times people are relaxed, trusting and money is plentiful, but there are
always many people who need more.
Under these circumstances [prosperity] the rate of embezzlement grows, the rate of discovery falls off, and bezzle increases rapidly. In depression all this is reversed. Money is watched with a narrow suspicious eye. The man who handles it is assumed to be dishonest until he proves himself otherwise. Audits are penetrating and meticulous. Commercial morality is greatly improved. The bezzle shrinks.
John Kenneth Galbraith
The Great Crash of 1929
[1955]
John Maynard Keynes
On Speculation
Professional investment may be likened to those newspaper competitions in which the competitors have to pick out the six prettiest faces from a hundred photographs, the prize being awarded to the competitor whose choice most nearly corresponds to the average preferences of the competitors as a whole; so that each competitor has to pick, not the faces which he himself finds the prettiest, but those which he thinks likeliest to catch the fancy of the other competitors, all of whom are looking at the problem from the same point of view. … It is not a case of choosing those which, to the best of one's judgment, are really the prettiest, nor even those which average opinion genuinely thinks the prettiest. We have reached the third degree when we devote our intelligences to anticipating what average opinion expects the average opinion to be. And there are some, I believe, who practise the fourth, fifth and higher degrees.
John Maynard Keynes (1936)
The General Theory of
Employment, Interest and Money, (p. 156
Throwaway
Lines
· Obviousness is always the enemy of correctness.
· I change my mind when the facts change. What do you do? (Quoted by Joan Robinson in Economic Philosophy London, 1962.)
· The real difficulty in changing any enterprise lies not in developing new ideas, but in escaping from the old ones.
· I do not understand how universal bankruptcy can do any good or bring us nearer to prosperity.
· The Individualistic Capitalism of today, precisely because it entrusts saving to the individual investor and production to the individual employer, presumes a stable measuring-rod of value, and cannot be efficient--perhaps cannot survive--without one.
· I do not know which makes a man more conservative--to know nothing but the present, or nothing but the past.
The
Keynesian Revolution
I believe myself to be writing a book on economic theory which
will largely revolutionize -- not, I suppose, at once, but in the course of the
next ten years -- the way the world thinks about economic problems.
Keynes, January 1, 1935
Letter to G.B. Shaw
Those, who are strongly wedded to what I shall call “the classical theory”, will fluctuate, I expect, between a belief that I am quite wrong and a belief that I am saying nothing new. It is for others to determine if either of these or the third alternative is right.
The General Theory, p.v, 1936
There are also, I should admit, forces which one might fairly well call automatic which operate under any normal monetary system in the direction of restoring a long-run equilibrium between saving and investment. The point which I cast into doubt - though the contrary is generally believed - is whether these `automatic' forces will... tend to bring about not only an equilibrium between saving and investment but also an optimum level of production.
Collected Writings, Vol. 13, p.395, 1973
After the war, Keynes's theory was accepted as a new orthodoxy without the old one being rethought. In modern text-books, the pendulum still swings, tending toward its equilibrium point. Market forces allocate given factors of production between different uses, investment is a sacrifice of present consumption, and the rate of interest measures society's discount of the future. All the slogans are repeated unchanged. How has this trick been worked?
Collected Economic Papers, Vol. V, 1979, p.172
Joan Robinson, 1979
The “Keynesian Revolution” went off at half-cock...The equilibrists, therefore, did not know they were beaten; or rather...they did not know that they had been challenged. They thought that what Keynes had said could be absorbed into their equilibrium systems; all that was needed was that the scope of their equilibrium systems should be extended. As we know, there has been a lot of extension, a vast amount of extension; what I am saying is that it has never quite got to the point....I must say that that diagram [IS-LM] is now much less popular with me than I think it still is with many other people. It reduces the General Theory to equilibrium economics; it is not really in time. That, of course, is why it has done so well.
Sir John Hicks
“Time in Economics”
Evolution, Welfare and Time in Economics
p. 289-90, 1976
The impression of Keynes that one gains [from the Keynesians] is that of a Delphic oracle, half-hidden in billowing fumes, mouthing earth-shattering profundities whilst in a senseless trance -- an oracle revered for his powers, to be sure, but not worthy of the same respect as that accorded to the High Priests whose function it is to interpret the revelations.
Axel Leijonhufvud (1968)
On Keynesian Economics and the Economics of
Keynes
Capitalism, Self Interest, and the Common
Purpose
In our present confusion of aims is there enough clear-sighted
public spirit left to preserve the balanced and complicated organization by
which we live? Communism is discredited by events; socialism, in its
old-fashioned interpretation, no longer interests the world; capitalism has
lost its self-confidence. Unless men are united by a common aim or moved by
objective principles, each one’s hand will be against the rest and the
unregulated pursuit of individual advantage may soon destroy the whole. There has
been no common purpose lately between nations or between classes, except for
war…
John
Maynard Keynes
Government and Government Spending
Whatsoever therefore is consequent to a time of war, where every man is enemy to every man, the same consequent to the time wherein men live without other security than what their own strength and their own invention shall furnish them withal. In such condition there is no place for industry, because the fruit thereof is uncertain: and consequently no culture of the earth; no navigation, nor use of the commodities that may be imported by sea; no commodious building; no instruments of moving and removing such things as require much force; no knowledge of the face of the earth; no account of time; no arts; no letters; no society; and which is worst of all, continual fear, and danger of violent death; and the life of man, solitary, poor, nasty, brutish, and short.
Thomas Hobbes
Leviathan,
i. xiv. 67
A billion here and a billion there and pretty soon you're
talking big money.
Senator
Everett Dirksen
Money is thrown amongst many, to be enjoyed by them that catch
it.
Thomas Hobbes
Leviathan
(Life in a state of nature is) nasty, brutish, and short.
Thomas Hobbes
Leviathan (1651)
The Limits of Property Rights:
There is a respectable and influential body of opinion which…
fulminates alike against devaluations and levies, on the ground that they
infringe the untouchable sacredness of contract…. Yet such persons, by overlooking
one of the greatest of all social principles, namely the fundamental
distinction between the right of the individual to repudiate contract and the
right of the State to control vested interest, are the worst enemies of what
they seek to preserve. For nothing can preserve the integrity of contract
between individuals except a discretionary authority in the State to revise
what has become intolerable. The powers of uninterrupted usury are great. If
the accretions of vested interest were to grow without mitigation for many
generations, half the population would be no better than slaves to the other
half…. The absolutists of contract… are the real parents of revolution … .
John
Maynard Keynes
RTB Note:
Keynes’ views on property rights echo those of Thomas Hobbes (1651, Leviathan) or Hugo Grotius.
The things [production] once there, mankind, individually or
collectively, can do with them as they please. They can place them at the
disposal of whomsoever they please, and on whatever terms. … Even what a person
has produced by his individual toil, unaided by anyone, he cannot keep, unless
by permission of society. Not only can society take it from him, but
individuals could and would take it from him if society … did not … employ and
pay people for the purpose of preventing him from being disturbed in [his]
possession. The distribution of wealth, therefore,
depends on the laws and customs of society. The rules by which it is determined are what the opinions and
feelings of the ruling portion of the community make them, and are very
different in different ages and countries, and might be still more different,
if mankind so chose. … [emphasis added]
John Stuart Mill
Principles of Political
Economy
(quoted by Robert Heilbronner, The Worldly Philosophers, p. 128-129, 7th ed.
RTB Note:
Mill believed his thoughts to be original, but in fact, his musings on
property rights echo the views of Thomas Hobbes (1651, Leviathan), and even moreso, the perspectives on property rights of
Hugo Grotius. Note also that Mill’s view assumes that production and income
reflect historical activities [sunk costs?], so that in his implicit
endorsement of redistribution, Mill ignores the disincentives for effort
associated with redistribution – a position he later partially qualified.
The Importance of Ideas
The ideas of economists and political philosophers, both when
they are right and when they are wrong, are more powerful than is commonly
understood. Indeed, the world is ruled by little else. Practical men, who
believe themselves to be quite exempt from any
intellectual influences, are usually the slaves of some defunct economist.
Madmen in authority, who hear voices in the air, are distilling their frenzy
from some academic scribbler of a few years back. I am sure that the power of
vested interests is vastly exaggerated compared with the gradual encroachment
of ideas…. But, soon or late, it is ideas, not vested interests, which are
dangerous for good or evil…
John Maynard Keynes
Labor
Everything in the world is purchased by labour, and our passions
are the only causes of labour.
David Hume
Political Discourses
Law
Sometimes justice cannot be had without money.
Thomas Hobbes
Leviathan, ii. xxii. 122
Excessive severity in the laws is apt to beget great relaxation
in their execution.
David Hume
Political Discourses
Little else is requisite to carry a state to the highest degree
of opulence from the lowest barbarism but peace, easy taxes, and a tolerable
administration of justice: all the rest being brought about by the natural
course of things.
Adam Smith
Wealth of Nations
1776
Freedom and Liberty
The law in its majestic equality forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to
steal bread.
Anatole France
Man is born free; and everywhere he is in chains.
Jean Jacques Rousseau
Contrat Social
Liberte, Egalite, Fraternite [“Liberty, Equality, Fraternity”]
Revolutionary slogan
France, 1789
If all mankind minus one were of one opinion, and only one
person were of the contrary opinion, mankind would be no more justified in
silencing that one person than he, if he had the power, would be justified in
silencing mankind.
John Stuart Mill
On Liberty, ch. 2.
The killing and torture of political dissenters is a marvelous
victory of the Forces of Good.
Attributed to Iosif
Djugashvili
(aka Joseph Stalin)
[facetiously?]
by Nan Keohane, Chancellor,
Duke University, in a letter
to celebrate the
2001 launching of a conservative student magazine.
The Long Run
It would follow... that an arbitrary doubling of [the money stock], since this in itself is assumed not to affect [the velocity of money or the real volume of transactions] ... must have the effect of raising [the price level] to double what it would have been otherwise. The Quantity Theory is often stated in this, or a similar, form.
Now “in the long run” this is probably true. If, after the American Civil War, the American dollar had been stabilized ... ten per cent below its present value ... [the money stock] and [the price level] would now be just ten per cent greater than they actually are.... But this long run is a misleading guide to current affairs. In the long run we are all dead. [emphasis added] Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again.
In actual experience, a change in [the money stock] is liable to have a reaction both on [the velocity of money] and on [the real volume of transactions]...
John Maynard Keynes
A Tract on Monetary Reform, (1923), Chapter 3
How long
is the short run? How long is the long
run?
In the short run, which may be as long as three to ten years,
monetary changes affect primarily output. Over decades, on the other hand, the
rate of monetary growth affects primarily prices.
Milton Friedman
Monetary Mischief: Episodes in Monetary History
NY: Harcourt Brace Jovanovich, 1992, p.478
Population
…population increases in a geometric ratio, while the means of
subsistence increases in an arithmetic ratio.
Thomas Malthus
Essay on the Principle
of Population (1898)
Science and Progress
Everything should be made as simple as possible, but not moreso.
Albert Einstein
Imagination is more
important than knowledge.
Albert Einstein
News Reporter: “What is your key to success?”
Albert Einstein: “I’m just curious.”
----------------------------------------------------------------------
If a phenomenon admits of a complete mechanical explanation it will admit of any infinity of others which will account equally well for all of the peculiarities disclosed by the experiment.
Henri Poincaré
The Foundations of Science
Paris 1892.
Science is the great
antidote to the poison of enthusiasm and superstition.
Adam Smith
The Wealth of Nations.
The despotism of custom is everywhere the standing hindrance to
human advancement.
John Stuart Mill
If, instead of welcoming inquiry and criticism, the admirers of a great author accept his writings as authoritative, both in their excellences and in their defects, the most serious injury is done to truth. In matters of philosophy and science, authority has ever been the great opponent of truth. A despotic calm is usually the triumph of error. In the republic of the sciences, sedition and even anarchy are beneficial in the long run to the greatest happiness of the greatest number.
William Stanley Jevons
Theory of Political Economy, 1871: p.275-6
[Individuals who break through by inventing a new paradigm are] almost always...either very young or very new to the field whose paradigm they change....These are the men who, being little committed by prior practice to the traditional rules of normal science, are particularly likely to see that those rules no longer define a playable game and to conceive another set that can replace them.
Thomas S. Kuhn
The Structure of Scientific Revolutions.
... the study of social phenomena receives much impetus from a strong moral and reforming zeal, so that many ostensibly “objective” analyses in the social sciences are in fact disguised recommendations of social policy.
Ernest Nagel
The Structure of Science: Problems in the Logic of Scientific Explanation
Harcourt, Brace and World, Inc. NY NY 1961.
Get the facts first,
and then you can distort them as much as you please.
Mark Twain
Mathematics in Economics
Marshall’s dictum ... should be exactly reversed. The laborious literary
working over of essential similar mathematical concepts such as is
characteristics of much of modern economic theory is not only unrewarding from
the standpoint of advancing the science, but involves as well mental gymnastics
of a peculiarly depraved type.
Paul Samuelson [1946]
Foundations of Economic Analysis
p. 6
Financial Markets
The market can remain irrational longer than you can remain
solvent.
Unknown
Taxes
Taxes are the price we pay for civilization.
Justice
Oliver Wendell Holmes
The only sure things in life are death and taxes.
Benjamin Franklin
Poor Richard’s Almanac
The best taxes are such as are levied upon Consumptions,
especially those of luxury.
David Hume
Essays and Treatises
National debts cause a mighty confluence of people and riches to
the capital.
David Hume
Political Discourses
Taxes when carried too far, destroy
industry, by engendering despair.
David Hume
Political Discourses
The avoidance of taxes is the only intellectual pursuit that
carries any reward.
John Maynard Keynes
Value
The greatest happiness for the greatest
number.
Claude
Adrien Helvetius
(1715-1771)
The value of all things contracted for, is measured by the
Appetite of the Contractors.
Thomas Hobbes
(Leviathan, i. xv. 75.)
Note: Hobbes’ observation contains the seeds of Carl Menger’s
Austrian theory of value.
The conclusion to which I am ever more clearly coming is that the only hope of attaining a true system of Economics is to fling aside, once and for ever, the mazy and preposterous assumptions of the Ricardian School. Our English Economists have been living in a fool's paradise. The truth is with the French School, and the sooner we recognize this fact, the better it will be for the world.
William Stanley Jevons, 1871
Theory of Political Economy,: p..xliv-xlv)
Note: Jevons was disparaging the English tradition’s reliance on explaining price as a function of supply alone, a tradition based originally in John Locke’s “labor theory of value”.
A cynic is a man who knows the price of everything and the value of nothing.
Oscar Wilde
Optimization
I did the best I could with what I had.
Supreme Court Justice Thurgood Marshall
1908-1993
Money
I measure everything I do by the size of a silver dollar. If it don't come up to that standard then I know it's no good.
Thomas A. Edison
The love of money as a possession – as distinguished from the love of money as a means to the enjoyment of the realities of life – will be recognized for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease.
John Maynard Keynes
Money . . . lulls our disquietude.
John Maynard Keynes
Money is a contract with parties unknown for the future delivery of pleasures undecided upon.
David Bazelon
The Paper Economy (1965)
Money makes the world go around.
Unknown
Money is an elastic yardstick.
Unknown
[In a monetary economy] …"money is traded for goods, and goods are traded for money, but goods are not traded for goods."
Robert Clower
Economic Assumptions:
Unlike physics, for example, such parts of the bare bones of economic theory as are expressible in mathematical form are extremely easy compared with the economic interpretation of the complex and incompletely known facts of experience, and lead one a very little way towards establishing useful results.
John Maynard Keynes
Page after page of professional economic journals are filled with mathematical formulas leading the reader from sets of more or less plausible but entirely arbitrary assumptions to precisely stated but irrelevant theoretical conclusions.
Wassily Leontieff
...the real world is not as rational and dynamically optimal as economists would like to believe.
Robert Pindyck
It is however always important to remember that the ability to see things in their correct perspective may be, and often is, divorced from the ability to reason correctly and vice versa. That is why a man may be a very good theorist and yet talk absolute nonsense.
Joseph A. Schumpeter
It is universally appreciated, I think, that theorists are able to tweak their assumptions in order to reach any conclusion they wish. The believability of the conclusion depends not only on the fact that it was reached but on how hard the theorist had to tweak the model to get there.
David M. Kreps
I would rather be vaguely right, than precisely wrong.
John Maynard Keynes
Efficient Markets
Investing in a market in which people believe in efficiency is like playing poker against those who believe it does not pay to look at cards.
Warren Buffett
Academia
The reason that faculty politics is so vicious is because so little is at stake.
Henry Kissinger
There is no idea so stupid that some professor won't believe it.
H.L. Mencken
All mathematicians live in two different worlds. They live in a crystalline world of perfect platonic forms. An ice palace. But they also live in the common world where things are transient, ambiguous, subject to vicissitudes. Mathematicians go backward and forward from one world to another. They’re adults in the crystalline world, infants in the real one.
Sylvain Cappell
Courant Institute of Mathematics
To introduce sharp distinctions which do not exist in the real world in order to make a subject susceptible to mathematical treatment is not to make it more scientific but rather less so.
Friedrich von Hayek
The Denationalization of Money
Unlike physics, for example, such parts of the bare bones of economic theory as are expressible in mathematical form are extremely easy compared with the economic interpretation of the complex and incompletely known facts of experience, and lead one a very little way towards establishing useful results."
John Maynard Keynes
Behavioral Economics
Economics is a human science; its foundations are laid in the
principles of human behavior, and consequently we must begin with some
observations on the psychology of human conduct which controls economic life. …
. It assumes that men’s acts are ruled by conscious motives; that, as it is
more ordinarily expressed, they are directed toward the “satisfaction of
wants.” At the very outset the science is thus subjected to notable
restrictions, since it is only to a limited extent that our behavior, even our economic behavior, [emphasis added] is of
this character. Much of it is more or less impulsive and capricious. The
conclusions of economic theory must in general be admitted subject to the
qualification, in so far as men's economic activities are rational or planned.
Frank Knight (1921)
Risk, Uncertainty, and
Profit, Part II, Chapter III
Overconfidence
… the overweening confidence which the greater part of men have of their own abilities .. [and] … their absurd presumption of their own good fortune.
Adam Smith
Bounded
Rationality
If people were as rational and forward-looking as economists assume, every chess match would yield the same result, which might be a stalemate, or perhaps white would win, or black might win. None of us is smart enough to know with certainty what that ending would be. Numerous paths might lead to the monotonously predictable ending of each game, but every counter to every possible move by an opponent would generate countermoves yielding the same inevitable result. Chess would be no more intellectually challenging than doodling or tic-tac-toe.
Ralph Byrns (2004)
State Lotteries
When the capital development of a country becomes the by-product of a casino, the job is likely to be ill-done.
John Maynard Keynes
Intellectual History
Some of the more egotistical of the great minds of each generation immodestly describe their discoveries and insights as timeless and universal truths. But time passes and these ultimate truths are eventually exposed as the husks of more profound truths that overlay deeper truths, previously beyond the minds eye.
Ralph Byrns [2005]
[Newton was humble about the significance of his understanding of the world. Asked one day how he had come to make his remarkable discoveries, he simply replied: "By always thinking about them."
"I do not know what I may appear to the world, "but to myself I seem to have been only like a boy playing on the seashore, and diverting myself in now and then finding a smoother pebble or a prettier shell than ordinary, whilst the great ocean of truth lay all undiscovered before me."
Memoirs
Isaac Newton [1642-1727]
The known is finite, the unknown infinite; intellectually we stand on an islet in the midst of a limitless ocean beyond comprehension. Our business in every generation is to reclaim a little more land.
Thomas H. Huxley [1887]