Title: Three Discourses on Uncertainty
Subject Classification:  Business Economics, Philosophy  
BIC Classification: KC, HP
BISAC Classification: BUS023000, PHI041000, BUS069030
Binding: Hardback, eBook
Publication date: 02 Oct 2025
ISBN (Hardback): 978-1-83711-397-2
ISBN (eBook): 978-1-83711-398-9

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Description

While Knight remains highly significant to economics, this work shows that Knight remains largely misunderstood, largely because Knight has not been placed within a larger philosophical context. Crucially, it can be asserted that the debate over uncertainty is at least as old as the philosophy of Aristotle. Drawing upon this prolonged dispute within philosophy, this work proposes three discourses on uncertainty in economics. Discourse One initiates discussion by observing that uncertainty was a key debate, from the work of Machiavelli through to Locke and Hegel.

Discourse Two focuses on the narrow philosophical base of Knight, within the wider philosophical horizon, as sketched in Discourse One. In particular, Discourse Two proposes that by better understanding the philosophy that underpins the work of Knight, one might be able to better understand the implications of uncertainty. It is based on this detailed examination of the philosophical axioms of economics, that one can better understand how, and why, Knight proposes that the bearing of uncertainty explains the existence of profit, and why the firm exists. However, Discourse Three then breaks away from the guardrails of the narrow philosophical base that is used by Knight, as promised in Discourse One. Specifically, orthodox economics still remains a prisoner of Historicism, as largely described by Hegel, and as slavishly followed by Marshall. Knight began to break out of this prison by using a new form of philosophy, known as Pragmatism. Discourse Three then sketches how this break, as initiated by Knight, might be developed, with reference to the philosophy of Nietzsche or Aristotle. Nietzsche, for example, asserts that non-trivial qualitative differences exist between men, which can underpin the existence of uncertainty. Such philosophy remains contrary to Locke, and the Historicist approach of Marshall, which has enslaved orthodox economics for over a century.

Biography

Author(s):  Dr Stephen Nash is a Research Director, Chief Investment Officer and economist, who has published extensively on philosophy, economics, and the economics of Frank Knight, as it relates to the idea of uncertainty. Dr Liza Rybak is an academic at Macquarie University Law School. They are both based in Sydney, Australia.

Reviews

"Frank Knight is one of the most important economists of the twentieth century. He charted a distinctive theoretical path for economics. By focusing on the central Knightian concept of uncertainty, Stephen Nash argues that Knight has been misunderstood and offers a distinctive reinterpretation of his contribution. In a complex and dynamic world, understanding uncertainty is vital – and that is why this book is very important."
- Geoffrey M. Hodgson, Emeritus Professor, Loughborough University London.

"In his manuscript Dr. Stephen J. Nash addresses a fundamental problem in economics that is usually disregarded. Economics is a science of results that are predictions of future events. It seeks to remove uncertainty in economic life. Yet two facts obvious to all show that economics occasionally or even often fails. First, it fails to predict ordinary changes accurately and misses major changes entirely. Second, economics seems to have room for two parties, liberal and conservative, rather than unanimity as a science. Dr. Nash addresses this problem of uncertainty (or chance) through economics itself, in this study of the economics of Frank Knight, an economist of a preceding generation known to all but ignored by most. Knight wanted to distinguish risk, which is predictable, from uncertainty, which is not. His work is important and suggestive in regard to this fundamental problem of uncertainty in human life. But he lacked philosophy. He was a victim of what Dr. Nash calls historicism, the belief that the only philosophy is the philosophy of today. He shows that Aristotle and Machiavelli, to name only two philosophers of the distant past, are relevant to the problem and thus to today. But he does this, not so much through philosophers themselves as by a careful and engaging Discourse 2 on economists and their varying reactions to the work of Knight and the problem of uncertainty. Dr. Nash’s work is concise; he does not use many words but speaks simply and tellingly. His work is economics at its depth; he points out that economics is more important and less truthful than it knows. I highly recommend his bold and acute study."
- Harvey C. Mansfield, Kenan Research Professor of Government, Harvard University