Collective and individual rationality: Maynard Keynes' methodological standpoint and policy prescription

Abstract

Some advocates of laissez-faire, including Smith and Hayek, have proposed various ‘invisible hand’ mechanisms to ensure that self-seeking behaviour at the micro-level leads spontaneously to desirable social outcomes at the macro-level. Keynes shares their holistic approach, but rejects their invisible hand mechanisms. He analyses the pathology of capitalism as rooted in a multi-player prisoners' dilemma. Keynes assigns a critical role to his own class, the ‘educated bourgeoisie’ in the reform process required to resolve that dilemma. The paper highlights the distinction and intimate connection between micro-level individualism, and the macro-level planning required to preserve it, in Keynes' policy standpoint.

Citation

Denis, A. (2002), "Collective and individual rationality: Maynard Keynes' methodological standpoint and policy prescription", Zarembka, P. (Ed.) Confronting 9-11, Ideologies of Race, and Eminent Economists (Research in Political Economy, Vol. 20), Emerald Group Publishing Limited, Leeds, pp. 187-215. https://doi.org/10.1016/S0161-7230(02)20006-1