Knight’s uncertainty concept has an epistemological founding and Keynes’ definitely an ontological founding. Of course, this also has repercussions on the issue of ergodicity in a strict methodological and mathematical-statistical sense. I think Keynes’ view is the most warranted of the two.
The most interesting and far-reaching difference between the epistemological and the ontological view is that if one subscribes to the former, Knightian view – as Taleb, Haldane & Nelson and “black swan” theorists basically do – you open up for the mistaken belief that with better information and greater computer-power we somehow should always be able to calculate probabilities and describe the world as an ergodic universe. As Keynes convincingly argued, that is ontologically just not possible....The difference between unknown unknowns and unknowable unknowns.
To Keynes, the source of uncertainty was in the nature of the real — nonergodic — world. It had to do, not only — or primarily — with the epistemological fact of us not knowing the things that today are unknown, but rather with the much deeper and far-reaching ontological fact that there often is no firm basis on which we can form quantifiable probabilities and expectations at all....
Some unknown unknowns are knowable in principle and this may point toward the need for research. But, Keynes claimed, some are not. The trick is distinguishing them.
Research pursues unknown unknowns, but must avoid pursuing the unknowable as wasteful. How to distinguish them?
Lars P. Syll’s Blog
Sometimes we do not know because we cannot know
Lars P. Syll | Professor, Malmo University
