On R. Kahn's Attempt at Hiding Keynes's General Theory IS-LP (LM) Model from the Economics Profession: How Hicks's SI-LL (Hansen's IS-LM) Model Was Substituted for Keynes's IS-LP (LM) in the General Theory
34 Pages Posted: 30 Oct 2017
Date Written: October 28, 2017
A careful reading of Kahn’s 1978 Journal of Economic Literature article and his 1984 book, The Making of Keynes’s General Theory, demonstrate that he is trying to deceive his readers by hiding the fact that Keynes was the inventor and originator of the first IS-LM model, which Keynes would have designated as IS-LP, where LP stands for Liquidity Preference Function. Kahn was well aware of the fact that Keynes had introduced the IS-LP (LM) model in December 4th,1933 in a student lecture. He had read the 1934 draft copy of the General Theory where the model is present. He also read chapter 21 of the General Theory, especially pp.297-306. It is quite impossible for Kahn not to have covered Keynes’s explicit IS-LP (LM) analysis on pp.298-303 of the GT, given that he cites pages 297-298 and p.305 of the General Theory. Kahn deliberately attempts to mislead and deceive his readers about Keynes’s mathematical analysis on pp.304-306. This deception, duplicity and dishonesty on Kahn’s part was first explicitly noticed by Hutchison in 1977, although Hutchison barely scratches the surface of Kahn’s deceit and duplicity.
The results of Kahn’s deception, along with the similar deceptions of Joan Robinson, was to create immense confusion. This confusion was instrumental in the creation of the myth that the General Theory was a vague and ambiguous book because Keynes, as a Marshallian methodologist, had refused to provide any formal, mathematical model of his theory in the General Theory because of the supposed radical uncertainty of the future. This then led to the “What did Keynes really mean in the General Theory” view of Keynes’s theory. The result was that Hicks’s inferior version of Keynes’s IS-LM was accepted as what Keynes had to have meant because at least it was clear, had some math in it, plus some graphs that economists could understand. The result was that Keynes’s original superior analysis and work was lost.
The near unanimous belief among economists that Keynes’s GT is composed only of Keynes’s elegant, literary prose, and that he never provided any formal, mathematical model of his theory in the GT, is the result of their acceptance of a myth concocted by the Robinsons and R. Kahn. R. Kahn’s deliberate misrepresentation of Keynes’s mathematical analysis in chapter 21 on pp.304-306, as being composed of mere identities without any behavioral content, was aimed at misleading potential readers of that chapter so that pages 298-306 would be skipped over. Unfortunately, the Robinsons and Kahn have succeeded. It is now up to the historians of economic thought to correct this catastrophic, egregious error.
Keywords: Harrod, Hicks, IS-LM, Liquidity preference, Patinkin, chapter 15, pp.180-182 of GT, chapter 15, chapter 21
JEL Classification: B10, B12, B14, B16, B20, B22
Suggested Citation: Suggested Citation