William James and John Maynard Keynes on Deciding Better

I’m indebted to Glen Alleman for pointing out that John Maynard Keynes wrote a book on probability, A Treatise on Probability which starts with the Bayesian view of probability as belief and moves on to explain how Frequentist concepts fit into the Bayesian world view.

Herding Cats: Books for Project Managers: “Each paragraph in the book provides insight like this. Two paragraphs later is the core of the current ‘black swan’ of probabilistic management. There is a distinction between part of our rational belief which is certain and that part which is only probable. The key here is there are degrees of rational belief and if we fail to understand, and more  important, fail to ‘plan’ in the presence of these degrees, then were are taking on more risk and not knowing it. This is a core issue in the financial crisis and managing projects in the presence of uncertainty. “

This relationship between belief and probability is an important basis for decision making, forming the bedrock of what I see as the American philosophy of Pragmatism, Its a bottom up point of view that is rooted in experience and practicality. William James, who codified this point of view as “Pragmatism” famously said, “Truth is what works”.

Exploring a bit of this Keynes book already and knowing that Keynes was influenced by his Cambridge associations with G.E. Moore who similarly took this bottom up, individual belief based approach most famously in Principia Ethica. So perhaps this Cambridge-Bloomsbury connection makes this really Anglo-American philosophy.

There was a time when our search for truth as a culture led us into periods of severe doubt and Continental philosophies like Existentialism and Deconstructionism. These were times of great shifts in values and cultural upheaval. Arguments from first principles were swept aside by feelings of being without roots in a world without intrinsic meaning.

For James, Moore and Keynes, there’s a grounding in the pragmatic idea that there is a real world out there that we can know and predict however imperfectly. Decisions based on our beliefs have consequences so we had better work on refining those beliefs and improve our decision making.

Perhaps we’re ready for a return to a more practical Anglo-American philosophy based on experience, culture, belief and the scientific approach to finding meaning in the world. At least I know I am.

1 Comment

  1. James,

    Thanks for the mention. The Keynes book was a great find. It is mentioned in another important book “Against the Gods, The Remarkable Story of Risk, Peter L. Bernstein.

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