The Economics of “What for?

Lyndon Nelson, in his review of “Keynes for Our Times”, by Robert Skidelsky, points out that the book provides a timely reminder of the fact that, even with all the computing power and data conceivable, uncertainties remain and these cannot be captured in a risk curve – which is why economics is about moral choices and financial innovation is not always useful or desirable. This article first appeared in Financial World’s May 2026 Edition. It went free to view in June

Among the more arresting passages in Robert Skidelsky's last book is one in which Keynes is asked, by proxy, what he would have made of the current enthusiasm for artificial intelligence. The answer, channelled by his great biographer, is bracing. The dream that AI will at last "dissolve uncertainties into probabilities, probabilities into frequencies" is a category mistake. Perfect hindsight, Skidelsky writes, does not guarantee perfect foresight; the hubris of humans playing at being God ends, as ever, in nemesis.

Lord Skidelsky died on 15 April 2026. Keynes for Our Times — short, sharp, distilled from four lectures given in Pisa — is therefore both his latest reflection on the subject he made his life's work, and his last. That this is also unmistakably late work, written with the freedom of a man no longer needing to prove anything, gives it a quiet authority quite apart from the merits of its argument.

And there is an argument. This is not a primer; a reader without some Keynes already in them will find the chapters on monetary theory tough-going. It is, rather, a connected reflection on what the discipline lost when it decided to imitate physics, and on why a certain kind of statesman-economist, comfortable with uncertainty and unembarrassed by plain language, may be more useful in 2026 than at any time since the 1940s.

Risk and uncertainty

The argument begins where Keynes himself began: with philosophy. In his 1921 Treatise on Probability, which Skidelsky’s first chapter walks the reader through briskly, Keynes distinguished between numerical probabilities, non-numerical probabilities, and cases in which no rational ranking of probabilities is available at all. That distinction later became central to his economics of uncertainty. Investment is governed by ‘animal spirits’ precisely because the future of a long-lived asset is uncertain in this strong sense, not merely risky.

The lesson, Skidelsky argues, has been quietly mislaid. Modern finance, modern economics, and now modern artificial intelligence proceed on the assumption that with enough data, enough computing power, and enough cleverness in the choice of model, uncertainty can be reduced to risk and risk to a manageable distribution. Skidelsky's reply, phrased in Keynes's own terms, is that the assumption is false. AI's apostles, he writes, dream of computers that will reduce all uncertainty to ordinary statistics. The dream is appealing and entirely mistaken.

Anyone who has watched a model break in real conditions will recognise Skidelsky’s argument. The 2008 risk models did not fail merely because of a bug; they failed in part because they had been trained to treat uncertainty as risk. The same instinct shows up in many contractual triggers written into instruments designed to absorb losses in a crisis the model could not see coming, and in stress testing, whose purpose is not to assign neat probabilities but to ask what would happen if the standard apparatus proves unequal to the world.

Economics as a moral science

If the standard apparatus cannot reach everything that matters, what is left for economics to do? Skidelsky answers that the discipline was always meant to be something other than physics, and that pretending otherwise has cost it dearly. Keynes called economics a moral science: a discipline involving introspection, motives, expectations and values, and therefore one that could not avoid the distinction between what is desired and what is desirable — a distinction he thought Bentham and his utilitarian heirs had wantonly collapsed.

This is the philosophical hub from which the rest of the book turns. Skidelsky shows, with the patience of long acquaintance, that almost every distinctive Keynesian move, from the rejection of mathematical formalism, to the insistence that money matters in itself, to the famous remark that in the long run we are all dead, proceeds from the same conviction. Economics is for living well. Means and ends must not be confused.

The application to the present is not laboured, but it is unmistakable. Skidelsky observes, sharply, that the argument that because something is technically possible it should therefore be done, that because more advanced AI is achievable we must continue to pursue it, and, by extension, that because more financial innovation is possible we must permit it, is a textbook example of what Keynes would have called the naturalistic fallacy. He would have wanted to know, as the book repeatedly insists, what it was for.

This will read to some economists as a quaint complaint, the kind of thing regulators are paid to worry about. But the deeper point is that the question "what is it for?" is not soft; it is the only question that gives the technical apparatus its bearings. Without it, the cleverness of the means becomes its own end, a familiar pathology to anyone who has watched a market lose its sense of purpose. 

Words as deeds

A whole chapter is given over to Keynes the persuader. Few economists today, Skidelsky writes, try to express their ideas in commonsense language. They prefer to demonstrate them in mathematics. Keynes, who could do the mathematics when it suited him, preferred prose because he believed economics was a kind of statesmanship, and because words for him were not descriptions but actions, devices for moving both thought and feeling.

The argument is not nostalgic. It bears directly on a problem that has occupied central banks for the last fifteen years: how to make policy effective when its transmission depends on belief. Forward guidance, "whatever it takes”, "lower for longer”, and the great pieces of central-bank communication of the modern era are all in this Keynesian register. They are arguments dressed as analysis, instruments rather than descriptions. That a central banker’s or regulator's words can move a bond market by twenty basis points is a daily reminder that economics is not the science it sometimes claims to be.

Skidelsky's chapter is not a defence of vague language. He is precise about Keynes's precision. The point is that the right register for a discipline is the register that does the work, and that mathematical formalism, however elegant, has often hidden rather than clarified what the argument actually is. There is a warning in this, gently delivered. The replacement of plain prose with technical apparatus has not always made economics more rigorous; it has often made it less able to argue with the public it serves. I suspect this is a warning that many central banks and regulators have been taking notice of, especially since the political shocks of 2016 and the inflation surprises of the early 2020s. The recent moves by the Bank of England in how it communicates uncertainty around its inflation forecast are very much in this spirit.

Paradise postponed

The book’s most surprising chapter is on Keynes’s 1930 essay “Economic Possibilities for Our Grandchildren”. The famous prediction was that by now, Keynes's grandchildren (us), would be working a fifteen-hour week, the economic problems essentially solved, and free at last to confront what he called the permanent problem of how to live wisely, agreeably and well.

The arithmetic was almost right. Income per head in rich countries has grown roughly fivefold in real terms since 1930, much in line with Keynes's expectation. But the working week has fallen by only about a third. We are five times wealthier, and we still work far more than Keynes expected. The additional wealth, Skidelsky observes, has gone into goods rather than into time, a choice shaped, he is at pains to add, by relentless advertising, by the concentration of productivity gains in too few hands, and by an idea of sufficiency that recedes as it is approached. Keynes's grandchildren, it seems, preferred the goods.

This is the book's quietest and most powerful note. Skidelsky asks, on Keynes's behalf, what economic growth is for in countries that have long since solved the problem of material want. It is a question that financial professionals are well placed to think about, having been close to the centre of the machine that has produced both the wealth and the dissatisfaction. The book offers no neat answer. Keynes did not have one either. The question is the point.

A late book

Keynes for Our Times is not the great Skidelsky biography in compressed form; it is something more interesting than that. It is a late, opinionated reading by a writer who knew his subject better than anyone, made all the more pointed by the freedom of being work done at the end of a long life. The contemporary chapter, on tariffs, trade imbalances and what Skidelsky calls military Keynesianism, is the book's most rushed; one suspects he meant to write more on it. He will not now, and that is the loss this review can only register. As a beacon, the book illuminates. As a warning, it is uncomfortably timely. Both are deserved.