That economic decisions are made without certain knowledge of the consequences is pretty self-evident. But, although many economists were aware of this elementary fact, there was no systematic analysis of economic uncertainty until about 1950.
Interpretation
Economic decisions often occur without complete information about their outcomes.
Kenneth Arrow highlights the inherent uncertainty in economic decision-making. Despite the obvious nature of this uncertainty, it was not until the mid-20th century that economists began to systematically analyze its effects, suggesting a gap in the understanding of economic theory during earlier periods.
In practice
During a keynote speech on financial literacy, one might quote Arrow to emphasize the importance of understanding risk in investments.
It is a [disputed] question, whether the circulation of paper, rather than of specie [gold and silver coin], is a good or an evil I believe it to be one of those cases where mercantile clamor will bear down reason, until it is corrected by ruin.
All social rules and all relations between individuals are eroded by a cash economy, avarice drags Pluto himself out of the bowels of the earth.
China adopted a capitalist system in the 1980s, and they went from a 60% poverty rate to 10%.
For it is an essential difference between capitalist and socialist production that under capitalism men provide for themselves, while under Socialism they are provided for.
If I care about poverty, I have to care a lot about investments in the private sector. The private sector creates the vast majority of jobs in the world, and social protection only goes so far.
There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.
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