\documentclass[12pt]{article}

\begin{document}


\noindent{\bf John Maynard KEYNES}\\
b. 5 June 1883 -  d. 21 April 1946
\vspace{.5 cm}

\noindent{\bf Summary.} Keynes was a philosopher-economist whose abiding
interest in logical argument, probability and statistics, and his fertility
and originality in economic theory and policy, made him one of the most 
influential figures of the 20th century.
\vspace{.5cm}


	Born in Cambridge, England, to a middle class family, Keynes was 
educated at Eton 
and King's College, Cambridge.  He later achieved greatest fame as 
an economist, but 
he never took an economics degree.  Although his undergraduate studies 
were in mathematics, his intellectual passion at that time was 
philosophy, the primary influence here being G.E.  Moore, the noted 
ethical 
philosopher.  Grappling with Moore's arguments about morality, in fact,
led Keynes to formulate 
the germ of his ideas on probability in 1904.  It was only after completing 
his mathematics degree that he began the concentrated study of economics, his 
main mentor 
being Alfred Marshall.  During his first period of employment in the British 
Civil 
Service at the India Office where he worked on economics and statistics, he 
submitted 
a fellowship dissertation on `The Principles of Probability'.  A revised 
version in 1908 
won him a fellowship at King's College in 1909.  Eventually published in 1921 
as a {\it Treatise 
on Probability}, it had a significant impact on the philosophy of probability 
at the time, but its influence has since waned considerably.  Nevertheless it 
remains central to understanding 
his thinking on logic, probability, rationality, and statistical inference.  
In 1908, 
while re-working his dissertation, he even envisaged his future field of 
academic expertise 
to be Logic and Statistical Theory.  Marshall had other ideas, however, and 
offered an 
Economics lectureship which Keynes accepted because it provided a means of 
returning to Cambridge from London.  During World War I, he worked in 
the British Treasury and was a delegate to 
the Versailles Conference in 1919.  Finding the reparations conditions 
imposed on Germany 
economically and morally outrageous, he resigned and wrote {\it The Economic 
Consequences of 
the Peace}, the first book that made him world-famous.

	For the rest of his life Keynes was mainly engaged with economics, 
though other 
interests also absorbed his attention such as politics and the arts.  In 
economics, 
where his output was enormous and influential, he focused on theoretical 
and practical 
issues as well as individual countries and the world economy.  Inflation 
and exchange 
rate instability were early concerns in the 1920s, followed by unemployment 
during the 
1930s Great Depression, and inflation again during the 1940s war years.  
His magnum 
opus in economics was {\it The General Theory of Employment, Interest 
and Money} of 1936, 
a pioneering work that established modern macroeconomics, created Keynesian 
economics 
as a serious alternative to Neoclassical economics, and stimulated the 
development of 
National Accounting statistics.  During World War II, he again assisted the 
British 
war effort in the Treasury.  In his final years, he played a key role in 
the negotiations 
that shaped the institutions which dominated the post-war international 
economy - the 
Bretton Woods system, the IMF, and the International Bank for Reconstruction 
and Development.  In 1925 he married the Russian ballerina, Lydia Lopokova, 
but there were 
no children.  He died of a heart attack in 1946, brought on by over-work.

	It was as a young man that Keynes did the bulk of his work on 
probability and statistics.
The years 1908-12 saw nine contributions to the {\it Journal of the Royal 
Statistical 
Society (JRSS)} and several on statistical subjects to the {\it Economic 
Journal (EJ)}.  
These were concerned with index numbers, a critique of Elderton and Pearson 
(q.v.) (see below), reviews of seven European works on probability and statistics 
(by Borel (q.v.), Czuber, Poincar\'{e}, Bachelier (q.v.), Carvello, 
Markov (q.v.) and Horrowicz), 
and the 
theory of averages where Keynes argued that popular preference for the 
arithmetic 
mean was misplaced since it did not always provide the most probable value.  
In 1909 
he wrote a long, prize-winning essay on Index Numbers. 

	In the philosophy of probability, Keynes is best known as a founder 
of the 
logical theory of probability, a rival to the relative frequency and subjective 
theories.  His ideas are set out in his philosophical magnum opus, the 
{\it Treatise on 
Probability}.  This is not a mathematical work on the probability calculus, 
but a 
philosophical work concerned with logic and rationality.  Keynes argued that 
probability is {\it the general logic of rational but non-conclusive 
argument}, within 
which deductive logic is the special case of complete certainty or unit 
probabilities.  
This view conceives of probability as a logical relation between a 
conclusion, $a$, 
and premisses or data, $h$, which give partial support to $a$.  Keynes's symbol 
for 
probability is $a/h$, which emphasises the data-dependence of probabilities.  
Probabilities 
express degrees of partial inference (the degree to which $a$ may be inferred 
from $h$), and 
degrees of rational belief (the degree to which it is rational to believe $a$, 
given $h$).  
Such probabilities may be numerical (the smaller class) or non-numerical 
(the larger class), 
and may be known or unknown.  The means by which we obtain knowledge of 
probabilities is 
logical insight or intuition into the realm of (objective) logical 
relations between 
pairs of propositions.  On these foundations, Keynes derived the probability 
calculus, 
developed a theory of induction, explored objective chance and randomness, 
and outlined 
a theory of rational conduct.  He also investigated statistical inference, his 
object being 
to analyse `the logical basis of statistical modes of argument', and to 
engage in the {\it dual task} of discrediting invalid inferences and 
analysing valid ones.  He traversed 
the law of large numbers, the theorems of Bernoulli (q.v.), Poisson (q.v.)
and Chebychev (q.v.), 
Laplace's (q.v.) 
rule of succession and the methods of Lexis (q.v.), and sketched the outline of a 
constructive 
theory.  The following passages illustrate his dual task and his preference 
for logic over algebra:
\begin{quote}
		Such is the famous theorem of Bernoulli which some have 
believed to have 
a universal validity and to be applicable to {\it all} 'properly calculated' 
probabilities.  
Yet the theorem exhibits algebraical rather than logical insight.  And ... 
it is only 
true of a special class of cases and requires conditions, before it can be 
legitimately 
applied, of which the fulfilment is rather the exception than the rule.

		I conclude ... that the application of the mathematical 
methods, discussed in the preceding chapter
[the inversion of Bernoulli's theorem and Laplace's rule of succession], 
to the general problem of statistical inference 
is invalid.  
... To apply these methods to material, unanalysed in respect of the 
circumstances of its 
origin, and without reference to our general body of knowledge, merely on 
the basis of 
arithmetic and of those of the characteristics of our material with which 
the methods of 
descriptive statistics are competent to deal, can only lead to error and 
to delusion.
		But I go further than this in my opposition to them.  Not 
only are they 
the children of loose thinking, and the parents of charlatanry.  Even when 
they are 
employed by wise and competent hands, I doubt whether they represent the 
most fruitful 
form in which to apply technical and mathematical methods to statistical 
problems, 
except in a limited class of special cases.  The methods associated with 
the names of 
Lexis, Von Bortkiewicz, and Tschuprow ... seem to me to be much more 
clearly consonant 
with the principles of sound induction.
\end{quote}

	Studying the history of thought, to Keynes, was a `necessary 
preliminary to 
the emancipation of the mind'.  He was extremely well read in the history 
of probability 
and statistics, and made his own contributions through biographical essays.  
In 1936, 
he delivered an invited paper to the Royal Statistical Society celebrating 
the centenary 
of the birth of W.S. Jevons (q.v.).  Published in the {\it JRSS}, the paper explored 
Jevons's contributions 
to economics and statistics, noting his `fertility and originality of mind' 
in relation to 
index numbers and the importance of his inductive studies.  Other thinkers 
were commemorated 
through obituaries, mainly in the {\it EJ}- W. Lexis (1914), who developed new 
statistical concepts 
of `the utmost importance';  F.Y. Edgeworth (q.v.) (1926), who ranged over 
economics, psychology, 
probability, statistics and index numbers;  A. Chuprov (q.v.) (1926), `one of 
the most important 
writers' on the boundary between statistical theory and probability;  
C.P. Sanger (1930), 
`at one time a leading authority on mathematical and statistical 
economics';  F.P. Ramsey 
(1930), a critic of Keynes in probability, a founder of the modern 
subjective theory and 
`one of the brightest minds of our generation';  and G. Broomhall (1938), 
who was `perhaps 
the greatest practical statistician of our age'.

	All his life Keynes strongly advocated the collection and analysis 
of statistical 
information by government agencies.  Such information was crucial to rational 
decision 
making in both the public and private sectors.  Government had a `natural 
duty' in this 
area, where its activities were to be guided by the general principles of 
completeness, 
openness and timeliness.  `There ought', he stated in 1943, `to be very 
little indeed 
within the knowledge of Government departments which should not also be 
made more widely 
available'.  In the absence of such official statistics, he was 
instrumental, with A.L. 
Bowley (q.v.), W. Beveridge and others, in establishing the London and Cambridge 
Economic Service 
in 1923, the purpose of which was to publish monthly bulletins of economic 
statistics to 
inform business about current facts and trends, and to provide them with 
various indices, 
charts and memoranda.  In the 1930s he supported the establishment of the 
National Institute 
for Economic and Social Research, an independent research organisation 
with a strong interest 
in statistical information, and served on its Council.  Charles Madge and 
Mass Observation 
received his encouragement in the 1940s, Keynes praising one of Madge's 
projects as 
`an enquiry of first class importance'.  Also receiving his firm backing 
in the 1930s and 
40s was the founding and development of the Department of Applied 
Economics at Cambridge University.

	Keynes was involved in two statistical controversies in his 
life-time.  The first, 
in 1910-11, concerned a study by Ethel Elderton and Karl Pearson of the 
influence of parental 
alcoholism on children;  this concluded that parental drinking had no 
harmful effects on 
offspring.  Keynes attacked the study on methodological grounds in the 
{\it JRSS}:  `It is a 
question, not of facts, but of the nature of valid argument which is in 
dispute'.  In his 
view, the study was `misleading', `almost valueless', and an example of 
the application 
of `a needlessly complex mathematical apparatus' to data which were 
`unsuited to the problem 
in hand'.  The controversy, which embraced the press, 
other Cambridge economists and the medical profession, had a significant 
impact on Keynes, for it motivated 
him to expand his 
initially modest discussion of statistics in his dissertations into a 
section on `The 
Foundations of Statistical Inference' in the {\it Treatise on Probability}.

	The second controversy occurred in 1938-40 when Keynes wrote a 
critical review of 
Jan Tinbergen's statistical study of the determinants of investment which 
had been commissioned 
by the League of Nations.  His wide-ranging critique again centred on 
methodology - the logic 
of applying multiple correlation analysis to material which varied over 
time, and the 
difficulties of drawing inductive conclusions.  The strength of Keynes's 
remarks, including 
the use of terms such as `statistical alchemy', `black magic' and 
`charlatanism', led many 
to the view that he was hostile to the whole econometrics enterprise, but 
this view is mistaken.  
As he made quite clear in two final letters to Pigou and Lange, he 
was {\it not } disputing `the validity 
of any conceivable statistical method' but only `Tinbergen's very special 
method of analysis'.
	
	Keynes also made notable contributions to professional societies.  
Apart from his 
unparalleled service to the Royal Economic Society and the {\it EJ}, he was a 
long-term member of 
the Royal Statistical Society, and served on its Council for three periods 
(1915-19, 1933-37, 1941-45).  
In the Econometric 
Society, he played an equally constructive role.  One of its 
founding fellows, he served on its Council from 1934 to 1946 
and was elected president in 1944 and 1945. In 1945, 
he supported 
Tinbergen as a candidate for Vice-President, there being no-one `for 
whose work one could 
be more anxious to give every possible scope and opportunity'.

Keynes's deep interest in statistics grew out of his trin loves of
philosophy and economics. He held statistical information in high regard
as a necessary input of rational thought and policy-making, and he
also supported statistical inference, albeit more circumspectly. His prime
concern here, as with formalism generally, was methodological - the
appropriateness of the application of statistical techniques to the material
under investigation. This made him a severe and hostile critic of
{\it inappropriate} applications of formal methods, whether in
mathematics, statistics or econometrics, and it was his attacks on such
`pseudo-science' which gave rise to the superficial and mistaken view
that he was generally antipathetic to the use of formal methods in the
social sciences. 
The dominant characteristic of Keynes's approach to statistics, 
as with formal 
methods generally, was an insistance on philosophical and logical integrity 
in their 
application.  It was always his view that logical and conceptual reasoning 
took precedence 
over mathematical virtuosity and technical sophistication.  His motto, if 
he had had one 
in this area, would have been something like {\it ratio ante computationem }
(reason before calculation).
\vspace{.5cm}

\begin{thebibliography}{3}
\bibitem{1}  Keynes, J.M. (1971-89). {\it The Collected Writings of John Maynard 
Keynes}, 30 Vols, Macmillan.
	Of particular interest in the present context are the following:
	(i)   Vol. VIII: {\it Treatise on Probability}.
	(ii)  Vol. XI:	the Index Number essay, his early statistical 
			contributions to the {\it JRSS} and {\it EJ}, and book 
reviews.
	(iii) Vol. X:	the {\it JRSS} paper on W.S. Jevons, and obituaries of 
				Edgeworth, Lexis, Tschuprow (Chuprov), Sanger, 
Broomhall and Ramsey.
		(iv) Vol. XIV:	the Tinbergen episode (excluding Keynes's 
final letters, on which see O'Donnell 1997).

\bibitem{2}  Moggridge, D.E. (1992). {\it Maynard Keynes, An Economist's 
Biography}, Routledge.

\bibitem{3}  O'Donnell, R.M. (1989). {\it Keynes:  Philosophy, Economics and 
Politics}, Macmillan.

\bibitem{4}  O'Donnell, R.M. (1997). Keynes on Formalism. In G.C. Harcourt 
and P.A. Riach (eds) {\it A `Second Edition' of the General Theory}, 
Routledge.

\bibitem{5}  Skidelsky, R. (1983). {\it John Maynard Keynes}, Vol. 1, {\it Hopes 
Betrayed  1883-1920}, Macmillan.

\bibitem{6}  Skidelsky, R. (1992). {\it John Maynard Keynes}, Vol. 2: {\it The 
Economist as Saviour 1920-1937}, Macmillan.

\bibitem{7}  Stigler, S.M. (1999). {\it Statistics on the Table}, Harvard
University Press.
\vspace{1 cm}

\hfill{Rod O'Donnell}


\end{thebibliography}

\end{document}

