J M Keynes, Not R Kahn, Created and Developed the Logical Theory of the Multiplier in the General Theory in 1936 Based on His a Treatise on Probability Exposition in 1921: Kahn’s Contribution in the General Theory Was an Applied One, Not a Theoretical One
19 Pages Posted: 19 Dec 2018
Date Written: November 29, 2018
J M Keynes had already completely developed the technical, mathematical and logical framework of analysis for the concept of the multiplier in his A Treatise on Probability in 1921 long before Richard Kahn came to Cambridge in 1927 at the age of 22. However, Keynes did not have the time or inclination to actually publish a full-blown academic article giving a completely worked out application of the theory of the multiplier in the EJ. Keynes delegated this task to Kahn. Kent (2007) demonstrated that in May 1929, Keynes had applied his logical theory of the multiplier in preparation for a speech in which he would take on all comers who questioned the concept of the multiplier. Kent showed that Keynes had made an arithmetic error in his application of the mathematical theory of the multiplier.
Keynes privately showed Kahn sometime between May 1929 and June 1931 that every application of the multiplier involved the mathematical theory that he had first applied in 1908 in his second Fellowship dissertation at Cambridge in 1908 and in the A Treatise on Probability in 1921. Kahn’s multiplier analysis on p.183 of his June 1931 EJ article is identical, except for notation, to Keynes’s example from the A Treatise on Probability. One need only substitute Kahn’s k on page 183 for Keynes’s q on p. 315 to get the exact same answer.
Kahn’s employment multiplier, k, is not a basic or major theoretical contribution to the General Theory. Keynes’s discussion of the logical theory of the multiplier on pp.122-123 of the General Theory is a summary that is based on Keynes’s p.315 analysis in the A Treatise on Probability from 1921. Therefore, Schumpeter’s assessment that “… Mr. R. F. Kahn, whose share in the historic achievement cannot have fallen very short of co-authorship!” (Schumpeter 1954, p. 1172), has no support.
Keywords: Multiplier, Kahn, Keynes, Schumpeter, Use of Limit Formulas Applied to Series, Logical Theory of the Multiplier
JEL Classification: B10, B12, B14, B16, B20, B22
Suggested Citation: Suggested Citation