On Speculation: A Footnote to Keynes

Abstract

The purpose of this paper is to suggest that speculation is a generally unrecognized factor of great importance in our present economic malaise, that the usual definition of speculation is not meaningful for economics, and that as a result many measures intended to cure our troubles have only made them worse. In ordinary speech, speculation tends to be defined somewhere between gambling and enterprise on a scale of relative riskiness. But betting on dice (which everyone would classify as gambling) is liable to risks that may be closely anticipated, while launching a new product (the quintessential example of productive enterprise) is likely to be very risky indeed. In the publishing business, most new books lose money, though this is not the deliberate intent of either authors or publishers. If no one takes risks of the latter sort, nothing is done; there is no economy to analyze. Riskiness is a tangle, not a continuum.

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