Three Discourses on Uncertainty

While Knight remains highly significant to economics, this work shows that Knight remains largely misunderstood, largely because Knight has not been placed within a larger philosophical context. Crucially, it can be asserted that the debate over uncertainty is at least as old as the philosophy of Aristotle. Drawing upon this prolonged dispute within philosophy, this work proposes three discourses on uncertainty in economics. Discourse One initiates discussion by observing that uncertainty was a key debate, from the work of Machiavelli through to Locke and Hegel.

Discourse Two focuses on the narrow philosophical base of Knight, within the wider philosophical horizon, as sketched in Discourse One. In particular, Discourse Two proposes that by better understanding the philosophy that underpins the work of Knight, one might be able to better understand the implications of uncertainty. It is based on this detailed examination of the philosophical axioms of economics, that one can better understand how, and why, Knight proposes that the bearing of uncertainty explains the existence of profit, and why the firm exists. However, Discourse Three then breaks away from the guardrails of the narrow philosophical base that is used by Knight, as promised in Discourse One. Specifically, orthodox economics still remains a prisoner of Historicism, as largely described by Hegel, and as slavishly followed by Marshall. Knight began to break out of this prison by using a new form of philosophy, known as Pragmatism. Discourse Three then sketches how this break, as initiated by Knight, might be developed, with reference to the philosophy of Nietzsche or Aristotle. Nietzsche, for example, asserts that non-trivial qualitative differences exist between men, which can underpin the existence of uncertainty. Such philosophy remains contrary to Locke, and the Historicist approach of Marshall, which has enslaved orthodox economics for over a century.