HOW JUDGE POSNER BECAME A KEYNESIAN.

HOW JUDGE POSNER BECAME A KEYNESIAN. Judge Richard Posner is an intellectual giant for many reasons, including his work in a field he helped to create—the economic analysis of law. He has been considered an important figure in the Chicago School of Economics. Thus, his article “How I became a Keynesian” is noteworthy—a member of the Chicago School announcing that he is now a Keynesian. Judge Posner says that he read Keynes’s THE GENERAL THEORY OF EMPLOYMENT, INTEREST AND MONEY for the first time in September and concluded that it is “the best guide we have to the crisis.” Posner says: “The dominant conception of economics today, and one that has guided my own academic work in the economics of law, is that economics is the study of rational choice. People are assumed to make rational decisions … by employing a form (usually truncated and informal) of cost-benefit analysis.” (This is the approach that Professor Krugman was referring to here when he asserted that “the central cause of the profession’s failure was the desire for an all-encompassing, intellectually elegant approach.”) Kids, Judge Posner’s exposition of the argument of a difficult book is very helpful. One thing he stresses is the role of uncertainty in the investment decisions of businessmen, how they lack “‘strong roots of conviction’” even in the best of times. Put another way, rational decision makers have to confront the radical uncertainty of a world where there are Black Swans.