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27 views127 pages

(Ebook) A Treatise On Probability by Keynes, John Maynard ISBN 9781139524247, 1139524240 Full Chapters Instanly

Complete syllabus material: (Ebook) A Treatise on Probability by Keynes, John Maynard ISBN 9781139524247, 1139524240Available now. Covers essential areas of study with clarity, detail, and educational integrity.

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the collected writings of
J O H N M AY NA R D K E Y N E S
Managing Editors:
Professor Austin Robinson and Professor Donald Moggridge

John Maynard Keynes (1883–1946) was without doubt one of the most influ-
ential thinkers of the twentieth century. His work revolutionised the theory
and practice of modern economics. It has had a profound impact on the
way economics is taught and written, and on economic policy, around the
world. The Collected Writings of John Maynard Keynes, published in full in
electronic and paperback format for the first time, makes available in thirty
volumes all of Keynes’s published books and articles. This includes writings
from his time in the India Office and Treasury, correspondence in which he
developed his ideas in discussion with fellow economists and correspondence
relating to public affairs. Arguments about Keynes’s work have continued
long beyond his lifetime, but his ideas remain central to any understanding of
modern economics, and a point of departure from which each new generation
of economists draws inspiration.

Originally written as a Fellowship Dissertation for King’s College,


Cambridge, between 1906 and 1909, Keynes’s Treatise represents his
earliest large-scale writing. Rewritten for publication during 1909–12 and
1920–1, it was the first systematic work in English on the logical founda-
tions of probability for 55 years. As it filled an obvious gap in the existing
theory of knowledge, it received an enthusiastic reception from contem-
poraries on publication. Even today amongst philosophers, the essence of
Keynes’s approach to probability is established. This edition reprints, with
Keynes’s own corrections, the first edition of the Treatise. An introduction
by Professor Richard Braithwaite, formerly Knightbridge Professor of Moral
Philosophy at Cambridge and a close friend of Keynes from the time he was
finishing this book, sets Keynes’s ideas in perspective.

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THE COLLECTED WRITINGS OF
JOHN MAYNARD KEYNES

VO LU M E V I I I

A TREATISE ON
PROBABILITY

CAMBRIDGE UNIVERSITY PRESS


for the
ROYAL ECONOMIC SOCIETY

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© The Royal Economic Society 1973, 2013

All rights reserved. No part of this publication


may be reproduced or transmitted, in any
form or by any means, without permission

First edition 1921


Reprinted 1951, 1952
Second edition 1973
Reprinted 1988, 1996

This edition published 2013

Published for the Royal Economic Society


throughout the world by
cambridge university press
Cambridge, New York, Melbourne, Madrid, Cape Town,
Singapore, São Paulo, Delhi, Mexico City
Cambridge University Press
The Edinburgh Building, Cambridge cb2 8ru, UK

Published in the United States of America by


Cambridge University Press, New York

www.cambridge.org
Information on this title: www.cambridge.org/9781107658066

This publication is in copyright. Subject to statutory exception


and to the provisions of relevant collective licensing agreements,
no reproduction of any part may take place without the written
permission of Cambridge University Press.

Printed and bound in the United Kingdom


by the MPG Books Group

A catalogue record for this publication is available from the British Library

isbn 978-1-107-65806-6 Paperback


30-volume set isbn 978-1-107-67772-2

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CONTENTS
General Introduction page be
Editorial Foreword by R. B. Braithwaite xv
Editorial Note rxiii
Preface to the First Edition xxv

I FUNDAMENTAL IDEAS
1 THE MEANING OF PROBABILITY 3

2 PROBABILITY IN RELATION TO THE THEORY

OF KNOWLEDGE 10

3 THE MEASUREMENT OF PROBABILITIES 21

4 THE PRINCIPLE OF INDIFFERENCE 44

5 OTHER METHODS OF DETERMINING

PROBABILITIES 70

6 THE WEIGHT OF ARGUMENTS 77

7 HISTORICAL RETROSPECT 86

8 THE FREQUENCY THEORY OF PROBABILITY 100

9 THE CONSTRUCTIVE THEORY OF PART I


SUMMARISED 121

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CONTENTS

II FUNDAMENTAL THEOREMS
10 INTRODUCTORY page 125
11 THE THEORY OF GROUPS, WITH SPECIAL
REFERENCE TO LOGICAL CONSISTENCE,
INFERENCE, AND LOGICAL PRIORITY 133
12 THE DEFINITIONS AND AXIOMS OF INFERENCE
AND PROBABILITY I44
13 THE FUNDAMENTAL THEOREMS OF NECESSARY
INFERENCE 151
14 THE FUNDAMENTAL THEOREMS OF PROBABLE
INFERENCE 158
15 NUMERICAL MEASUREMENT AND APPROXIMA-
TION OF PROBABILITIES I74
16 OBSERVATIONS ON THE THEOREMS OF
CHAPTER 14 AND THEIR DEVELOPMENTS,
INCLUDING TESTIMONY l8l
17 SOME PROBLEMS IN INVERSE PROBABILITY,
INCLUDING AVERAGES 206

III INDUCTION AND ANALOGY


18 INTRODUCTION 24I
19 THE NATURE OF ARGUMENT BY ANALOGY 247
20 THE VALUE OF MULTIPLICATION OF
INSTANCES, OR PURE INDUCTION 259

21 THE NATURE OF INDUCTIVE ARGUMENT


CONTINUED 269
22 THE JUSTIFICATION OF THESE METHODS 279
23 SOME HISTORICAL NOTES ON INDUCTION 295
NOTES ON PART III 305
vi

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CONTENTS

IV SOME PHILOSOPHICAL APPLICATIONS


OF PROBABILITY
24 THE MEANINGS OF OBJECTIVE CHANCE, AND
OF RANDOMNESS page $11
25 SOME PROBLEMS ARISING OUT OF THE
DISCUSSION OF CHANCE 324
26 THE APPLICATION OF PROBABILITY TO
CONDUCT 339

V THE FOUNDATIONS OF
STATISTICAL INFERENCE
27 THE NATURE OF STATISTICAL INFERENCE 359
28 THE LAW OF GREAT NUMBERS 364
29 THE USE OF A PRIORI PROBABILITIES FOR THE
PREDICTION OF STATISTICAL FREQUENCY—
THE THEOREMS OF BERNOULLI, POISSON,
AND TCHEBYCHEFF 369
30 THE MATHEMATICAL USE OF STATISTICAL
FREQUENCIES FOR THE DETERMINATION OF
PROBABILITY A POSTERIORI—THE METHODS
OF LAPLACE 400
31 THE INVERSION OF BERNOULLI'S THEOREM 419
32 THE INDUCTIVE USE OF STATISTICAL FRE-
QUENCIES FOR THE DETERMINATION OF
PROBABILITY A POSTERIORI—THE. METHODS
OF LEXIS 427
33 OUTLINE OF A CONSTRUCTIVE THEORY 444
Bibliography 471
Index 507
vii

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GENERAL INTRODUCTION
This new standard edition of The Collected Writings of John
Maynard Keynes forms the memorial to him of the Royal
Economic Society. He devoted a very large share of his busy life
to the Society. In 1911, at the age of twenty-eight, he became
editor of the Economic Journal in succession to Edgeworth; two
years later he was made secretary as well. He held these offices
without intermittence until almost the end of his life. Edgeworth,
it is true, returned to help him with the editorship from 1919
to 1925; MacGregor took Edgeworth's place until 1934, when
Austin Robinson succeeded him and continued to assist Keynes
down to 1945. But through all these years Keynes himself carried
the major responsibility and made the principal decisions about
the articles that were to appear in the Economic Journal, without
any break save for one or two issues when he was seriously ill in
1937. It was only a few months before his death at Easter 1946
that he was elected president and handed over his editorship to
Roy Harrod and the secretaryship to Austin Robinson.
In his dual capacity of editor and secretary Keynes played a
major part in framing the policies of the Royal Economic
Society. It was very largely due to him that some of the major
publishing activities of the Society—Sraffa's edition of Ricardo,
Stark's edition of the economic writings of Bentham, and
Guillebaud's edition of Marshall, as well as a number of earlier
publications in the 1930s—were initiated.
When Keynes died in 1946 it was natural that the Royal
Economic Society should wish to commemorate him. It was
perhaps equally natural that the Society chose to commemorate
him by producing an edition of his collected works. Keynes
himself had always taken a joy in fine printing, and the Society,
with the help of Messrs Macmillan as publishers and the Cam-
bridge University Press as printers, has been anxious to give
Keynes's writings a permanent form that is wholly worthy of him.

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GENERAL INTRODUCTION
The present edition will publish as much as is possible of his
work in the field of economics. It will not include any private
and personal correspondence or publish letters in the possession
of his family. The edition is concerned, that is to say, with
Keynes as an economist.
Keynes's writings fall into five broad categories. First, there
are the books which he wrote and published as books. Second,
there are collections of articles and pamphlets which he himself
made during his lifetime (Essays in Persuasion and Essays in
Biography). Third, there is a very considerable volume of
published but uncollected writings—articles written for news-
papers, letters to newspapers, articles in journals that have not
been included in his two volumes of collections, and various
pamphlets. Fourth, there are a few hitherto unpublished writings.
Fifth, there is correspondence with economists and others
concerned with economics or public affairs.
This series will attempt to publish a complete record of
Keynes's serious writing as an economist. It is the intention to
publish almost completely the whole of the first four categories
listed above. The only exceptions are a few syndicated articles
where Keynes wrote almost the same material for publication in
different newspapers or in different countries, with minor and
unimportant variations. In these cases, this series will publish
one only of the variations, choosing the most interesting.
The publication of Keynes's economic correspondence must
inevitably be selective. In the day of the typewriter and the filing
cabinet and particularly in the case of so active and busy a man,
to publish every scrap of paper that he may have dictated about
some unimportant or ephemeral matter is impossible. We are
aiming to collect and publish as much as possible, however, of
the correspondence in which Keynes developed his own ideas in
argument with his fellow economists, as well as the more signi-
ficant correspondence at times when Keynes was in the middle
of public affairs.
Apart from his published books, the main sources available to

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GENERAL INTRODUCTION
those preparing this series have been two. First, Keynes in his
will made Richard Kahn his executor and responsible for his
economic papers. They have been placed in the Marshall Library
of the University of Cambridge and have been available for this
edition. Until 1914 Keynes did not have a secretary and his
earliest papers are in the main limited to drafts of important
letters that he made in his own handwriting and retained. At
that stage most of the correspondence that we possess is repre-
sented by what he received rather than by what he wrote. During
the years 1914-18 and 1940-6 Keynes was serving in the
Treasury. With the recent opening of the records under the
thirty-year rule, many of the papers that he wrote then have be-
come available. From 1919 onwards, throughout the rest of his
life, Keynes had the help of a secretary—for many years Mrs
Stevens. Thus for the last twenty-five years of his working life
we have in most cases the carbon copies of his own letters as well
as the originals of the letters that he received.
There were, of course, occasions during this period on which
Keynes wrote himself in his own handwriting. In some of these
cases, with the help of his correspondents, we have been able to
collect the whole of both sides of some important interchange
and we have been anxious, in justice to both correspondents, to
see that both sides of the correspondence are published in full.
The second main source of information has been a group of
scrapbooks kept over a very long period of years by Keynes's
mother, Florence Keynes, wife of Neville Keynes. From 1919
onwards these scrapbooks contain almost the whole of Maynard
Keynes's more ephemeral writing, his letters to newspapers and
a great deal of material which enables one to see not only what he
wrote, but the reaction of others to his writing. Without these
very carefully kept scrapbooks the task of any editor or bio-
grapher of Keynes would have been immensely more difficult.
The plan of the edition, as at present intended, is this. It
will total twenty-five volumes. Of these, the first eight will be
Keynes's published books from Indian Currency and Finance, in
xi

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GENERAL INTRODUCTION
1913, to the General Theory in 1936, with the addition of his
Treatise on Probability. There will next follow, as vols. IX and X,
Essays in Persuasion and Essays in Biography, representing
Keynes's own collections of articles. Essays in Persuasion will
differ from the original printing in two respects; it will contain
the full texts of the articles or pamphlets included in it and not
(as in the original printing) abbreviated versions of these articles,
and it will have added one or two later articles which are of
exactly the same character as those included by Keynes in his
original collection. In the case of Essays in Biography, we shall
add several other biographical studies that Keynes wrote both
before and after 1933.
There will follow four volumes, xi to xiv, of economic articles
and correspondence, and one volume of social, political, and
literary writings. We shall include in these volumes such part of
Keynes's economic correspondence as is closely associated with
the articles that are printed in them.
The further nine volumes, as we estimate at present, will deal
with Keynes's Activities during the years from the beginning of
his public life in 1905 until his death. In each of the periods into
which we propose to divide this material, the volume concerned
will publish his more ephemeral writings, all of it hitherto un-
collected, his correspondence relating to these activities, and
such other material and correspondence as is necessary to the
understanding of Keynes's activities. These volumes are being
edited by Elizabeth Johnson and Donald Moggridge, and it is
their task to trace and interpret Keynes's activities sufficiently to
make the material fully intelligible to a later generation. Until
this work has progressed further, it is not possible to say with
exactitude whether this material will be distributed, as we now
think, over nine volumes, or whether it will need to be spread
over a further volume or volumes. There will be afinalvolume of
bibliography and index.
Those responsible for this edition have been: Lord Kahn, both
as Lord Keynes's executor and as a long and intimate friend of
xii

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GENERAL INTRODUCTION
Lord Keynes, able to help in the interpreting of much that would
otherwise be misunderstood; Sir Roy Harrod as the author of
his biography; Austin Robinson as Keynes's co-editor on the
Economic Journal and successor as secretary of the Royal
Economic Society. The initial editorial tasks were carried by
Elizabeth Johnson. More recently she has been joined in this
responsibility by Donald Moggridge. They have been assisted at
different times by Jane Thistlethwaite; Mrs McDonald, who was
originally responsible for the systematic ordering of the files of
the Keynes papers; Judith Masterman, who for many years
worked with Mrs Johnson on the papers; and more recently by
Susan Wilsher, Margaret Butler and Barbara Lowe.

xm

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EDITORIAL FOREWORD
This essay will attempt first to indicate the philosophical setting
of 1921 in which Keynes's Treatise on Probability appeared, and
then to estimate its importance in the development of the philo-
sophy of probability during the following half-century. Since this
philosophy is almost as controversial now as it was when Keynes
wrote, my estimate will necessarily be a personal one.
The story of the writing of the Treatise has been fully told in
R. F. Harrod's biography of Keynes. Keynes started work on
probability in 1906 when he was in the India Office, and devoted
most of his intellectual energy to it for the next five years until
the book was nearly completed. After 1911 Keynes undertook
commitments which delayed his completing the book; but wide
publicity was given to some of his ideas in Bertrand Russell's
The Problems of Philosophy (1912) in the Home University
Library series. Although much of the Treatise was set up in type
by August 1914, it was not published until August 1921 after
Keynes had spent much of 1920 in his final revision.
As Keynes says (p. 473), his Treatise was the first systematic
work in English on the logical foundations of probability for
55 years (and in fact there had only been one comparable work in
another language between 1866 and 1915). Moreover the Treatise
appeared at a time when philosophers in the empiricist tradition,
then reviving in Britain and the U.S.A., were very interested in
how (to use Russell's terms) 'derivative knowledge' could be
based upon 'intuitive knowledge' by a logical relationship be-
tween them. Keynes, by extending the notion of logical relation
to include probability relations, enabled a similar account to be
given of how intuitive knowledge could form the basis for
rational belief which fell short of knowledge. The enthusiastic
welcome which Keynes's book received from English-speaking
philosophers was in great part due to his account of probability
filling an obvious gap in the current theory of knowledge.

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EDITORIAL FOREWORD
Keynes's thesis is that a probability statement expresses a
logical relationship (i.e. the holding of a logical relation) be-
tween a proposition^ and a proposition h (h is usually a conjunc-
tion of propositions). A man who knows h and perceives the
logical relationship between p and h is justified in believing p
with a degree of belief which corresponds to that of the logical
relationship. If this logical relationship is that of p being a
logical consequence of h, he is justified in being certain of the
truth of p\ if the logical relationship is that of the falsity of p
being a logical consequence of h, he is justified in being certain
of the falsity oip; if neither of these is the case, he is justified in
having a degree of partial belief inp intermediate between certain
belief and certain disbelief.
The originality of Keynes's approach lay in his insistence that
probability, in its fundamental sense, is a logical relation holding
between propositions which is similar to, although weaker than,
that of logical consequence. The way in which the creators of the
mathematical theory of probability (Bernoulli, Bayes, Laplace,
etc.) used the concept suggests that, like Keynes, they thought
of it as concerned with justified degree of belief; but (except
for an article by Dorothy Wrinch and Harold Jeffreys in 1919,
which Keynes had not seen) the Treatise contains the first publi-
cation of the view that a partial belief is to be justified by know-
ledge of a logical probability-relationship, and that these logical
relationships form the subject-matter of probability theory.
The authoritative article on Probability by Max Black in the
recent (1967) Encyclopedia of Philosophy describes this thesis as
the logical interpretation of the term 'probability', and speaks of
Keynes's 'eloquent defence of the logical approach against its
rivals' as being 'largely responsible for its present vogue'. It is
the essence of Keynes's theory that is alive today: the detailed
way in which he worked it out has not survived. Keynes wrote
the Treatise at a time when mathematicians were discovering the
conditions required for an axiom system in any field to be
formally satisfactory; and the axiomatic development (in Part II
xvi

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