On the Failure of Economists to Grasp the Difference between the Calculus (Instantaneous Change) Model Used by Keynes in the General Theory to Define the Mathematical Theory of the Multiplier in His Model and the Actual Dynamic or Process Multiplier that Occurs in Historical Time That Was Not in His Model
27 Pages Posted: 4 Sep 2019
Date Written: August 28, 2019
The mathematical(logical), technical, theoretical exposition of the multiplier given in chapter 10 of the General Theory by Keynes is identical to the exposition given by Keynes in chapter 26 of the A Treatise on Probability in footnote 1 on page 315. The mathematical theory requires that the limit be taken of an infinite, declining, geometric series of numbers. This instantaneous multiplier result, which is derived by an application of the differential calculus, has nothing to do with a dynamic multiplier or of any type of actual, period analysis or income spending process occurring in actual or historical time.
The confusion among economists since 1936 stems from economists taking seriously the claims made by two mathematically illiterate, confused, and inept economists, Joan Robinson and Dennis Robertson, who had no idea about how to use simple algebra, much less differential calculus, in an economic application.
This confusion between a theoretical, mathematical, economics model and the actual real world process it has been used to model through simplification, lies at the heart of the exchanges between A. Cottrell and Basil Moore in 1994. Once this is exposed, their exchanges over the multiplier show that they have nothing to do with what Keynes wrote on pages 122-123 and the General Theory.
Keywords: IS-LM, IS-LP(LM), J. Robinson, R. Kahn, Keynes, mathematical illiteracy, A. Robinson, Y=C+I, D-Z model
JEL Classification: B10, B12, B14, B16, B20, B22
Suggested Citation: Suggested Citation