Shackle’s potential surprise function and the formation of expectations in a monetary economy

Abstract:

G.L.S. Shackle’s potential surprise function attacks the determinism that is central to neoclassical economics. He builds a model of creative individual choice that is nondeterministic and fits well with Keynes’s macroanalysis of monetary economies. Shackle provides a language and a method that allows a translation of originative thoughts into observable actions that can be represented and measured in scalar monetary terms. This provides a bridge between the subjective individual and a nondeterministic macroeconomic outcome. Shackle’s method dovetails with a conventional-evolutionistic approach that is able to explain social context and history under conditions of fundamental uncertainty.

Key Words::

• economic methodology
• evolutionary
• surprise
• uncertainty
• belief
• expectations
• animal spirit
• money
• investment decisions
• innovation

Additional information

Notes on contributors

Andres F. Cantillo

Andres F. Cantillo is a Ph.D. student at the University of Missouri, Kansas City. The author expresses his gratitude to the anonymous reviewer, and to professors Luis Lorente Sanchez-Bravo, Alvaro Martin Moreno Rivas, Geoffrey C. Harcourt, Jan Kregel, Geoffrey M. Hodgson, and John F. Henry for their invaluable suggestions and encouragement. I also thank the G.L.S. Shackle Studentship at St. Edmund’s College, the Economics Departments at the University of Missouri–Kansas City and at the Universidad Nacional de Colombia, La Clinica de Ojos-Bogota, my parents (Ligia Sandino and Luis Ernesto) and the rest of my family for their support. The usual disclaimer applies.