Entrepreneurship, knowledge and employment

Keynes on the relation between entrepreneurship, knowledge and employment

Winslow Ted, York University

Keynes defines "enterprise" as "the activity of forecasting the prospective yield of assets over their whole life." (VII 158) It is the activity of "entrepreneurs" characterized as "strenuous purposive money-makers." (IX 328) This characterization derives from Keynes's idea of "the essential characteristic of capitalism" as "the dependence upon an intense appeal to the money-making and money-loving instincts of individuals as the main motive force of the economic machine." (IX 293) The entrepreneur is "purposive" in the sense of "trying to secure a spurious and delusive immortality for his acts by pushing his interest in them forward into time." (IX 330) The accumulation of wealth is a psychological method of denying the certain fact that, "In the long run we are all dead." (IV 65) The prospective yield at issue is unknowable ("uncertain") in the sense that there is normally insufficient relevant evidence on which to base its rational forecasting. (XIV 113-4) "Peace and comfort of mind" require, however, that entrepreneurs "hide from [themselves] how little [they] foresee." (XIV 124) The uncertainty involved arouses "the thought of ultimate loss" and so must be "put aside as the healthy [i.e. the rational] man puts aside the expectation of death." (VII 162) To do this enterprise substitutes "conventional" forecasting practices "for the knowledge which is unattainable." (XIV 124) These provide a "spurious and delusive" "certainty and security." (XIV 114) The irrational psychology underpinning the practices gives the resulting expectations characteristics that, primarily through their effect on productive investment expenditure, determine the level of employment and its variation. For example, the expectations are subject to periodic "waves of irrationality" (VII 162) producing corresponding waves in investment expenditure and, via the multiplier, waves in output and employment. The paper will elaborate the textual evidence supporting these interpretive claims.

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Keywords: Keynes irrationality entrepreneurship purposiveness knowledge uncertainty conventions investment employment

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