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Sraffa’s Conceptualization of Own Rates Is Based only on Probabilistic Price Expectations because Sraffa Accepted Ramsey’s Definition that Confidence Is Measured by Subjective Probability Alone: Keynes’s Liquidity Preference Function in the General Theory Has Nothing to Do with Probability, but Is An Inverse Function of the Evidential Weight of the Argument, Where Uncertainty Is also Defined as An Inverse Function of the Evidential Weight of the Argument

Authors: Michael Emmett Brady;

Sraffa’s Conceptualization of Own Rates Is Based only on Probabilistic Price Expectations because Sraffa Accepted Ramsey’s Definition that Confidence Is Measured by Subjective Probability Alone: Keynes’s Liquidity Preference Function in the General Theory Has Nothing to Do with Probability, but Is An Inverse Function of the Evidential Weight of the Argument, Where Uncertainty Is also Defined as An Inverse Function of the Evidential Weight of the Argument

Abstract

Sraffa made a number of margin notes in chapter 17 in his copy of the General Theory .Contrary to Joan Robinson’s 1978 claim ,that Sraffa had uncovered logical and mathematical errors in Keynes’s liquidity preference theory of the rate of interest when he generalized his theory in chapter 17,the margin notes made by Sraffa are all erroneous . Sraffa’s margin notes hold only in the very special case where the evidential weight of the evidence,V(a/h) =w ,0≤w≤1,equals 1,so that the evidential weight of the evidence is complete. Sraffa accepted F P Ramsey’s subjectivist theory of probability where Ramsey conflates degree of belief with degree of confidence, since for Ramsey the subjective probability estimate is the degree of confidence. There is no uncertainty in Ramsey’s theory because all probability estimates are additive and linear.This means that there is no vagueness or ambiguity ,so that there is no need for a second decision variable called the evidential weight of the argument .Sraffa is unable to deal with uncertainty in his original own rate construction.Sraffa is dealing only with risk . However, Keynes’s analysis in chapter 17 is based on the existence of uncertainty and lack of confidence in future price and profit expectations .It was simply impossible for Sraffa to grasp the fact that Keynes had generalized Sraffa’s approach by specifically linking the demand for money to uncertainty about the future rate of interest . Sraffa’s critique assumes that there is no uncertainty about future expectations concerning prices or profits.In this very special case ,there is no impact on the demand for money and M2 balances are equal to 0.Keynes’s liquidity premium ,l, drops out of the analysis in chapter 17 completely. One is then left with Sraffa’s original results concerning the ratio of present to future prices. Sraffa’s generally erroneous comments concerning Keynes’s analysis follow from his own ignorance of the theory of the evidential weight of the argument that was contained in chapters 6 and 26 of the A Treatise on Probability ,as well as his refusal to accept Keynes’s definition of uncertainty on page 148 of the General Theory in footnote one defining uncertainty as an inverse function of the evidential weight of the argument,a variable that can’t exist in Ramsey’s subjectivist theory due to his acceptance that all probabilities are additive ,so that the mathematical probability calculus is always applicable .

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popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
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influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
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This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
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