WE ARE ENORMOUSLY grateful to Peter Dougherty of Princeton University Press for encouraging us to write this book. His guidance inspired us to rethink and extend an article on how placing imperfect knowledge at the center of macroeconomics and finance theory could help us to better understand the issues posed by the financial crisis that began in 2007. His unstinting belief that the technical findings from Imperfect Knowledge Economics: Exchange Rates and Risk (Princeton University Press, 2007) could, if presented in nonspecialist language, contribute to the public debate was the crucial catalyst for this book.
We have benefited tremendously from illuminating discussions about modern macroeconomics, stretching over decades, with Edmund Phelps. We have likewise been stimulated and sustained over the years by George Soros’s ideas about the role of imperfect knowledge and reflexivity in the workings of financial markets and historical change.
Robert Skidelsky and Michael Woodford read most of the chapters in this book in draft form. Their penetrating insights on Keynes’s thought as well as contemporary macroeconomic theory led us to important revisions of our ideas. Anatole Kaletsky took an early interest in our work and its broader implications for understanding the relative role of the market and the state in modern economies. Anatole’s intellectual breadth has inspired our work.
Many discussions over the years at the Center on Capitalism and Society at Columbia University have nurtured us in our pursuit of an approach that recognizes the crucial importance of