Keynes, the Keynesians and the Classics: A Suggested Interpretation.

Mainstream interpretations of John Maynard Keynes's General Theory are surveyed. An alternative postclassical interpretation is proposed. Keynes is interpreted as treating classical theory as the valid theory of allocation but this type of theory is of limited relevance for macroanalysis. The productive sector is characterized by the utilization mode of activity regulated by the nonallocative multiplier process. However, the financial sector is allocative and Keynes proposed the allocative theory of liquidity preference. It is argued that this dual conception of the macroeconomy is suggestive of the need for a more realistic method in macroeconomics. Copyright 1995 by Royal Economic Society.

Beyond Rational Expectations: A Constructive Interpretation of Keynes's Analysis of Behaviour under Uncertainty.

This paper suggests that behavior under uncertainty depends not only on rational expectations but also the agent's evaluation of the adequacy of the available evidence on which the expectations are based. It is argued that behavioral functions need to be augmented by a credence variable. This proposition is derived from Keynes's argument in the 'General Theory' that investment depends on both the most probable forecast and the state of confidence, reflecting the distinction between probability and weight in his 'A Treatise on Probability.' The research implications of the proposed model are indicated. Copyright 1994 by Royal Economic Society.