J M Keynes’s IS-LM Model in Chapter 21 in Part IV of the General Theory on Pages 298–299: Some Examples of Cognitive Dissonance Among Economists Attempting to Deal With Keynes’s Innovation in 1936 in 2018–2019
32 Pages Posted: 9 Mar 2020 Last revised: 29 Jun 2020
Date Written: February 9, 2020
No macroeconomist in the 20th or 21st century has been able to deal effectively with Keynes’s original work done on his IS-LM model that he carried out between December ,1933 and February ,1936,where the final version appeared in the General Theory or in his deployment of that model in his reply to Jacob Viner in his February,1937 Quarterly Journal of Economics article.
The major impediment to the grasping and understanding of Keynes’s IS-LM model for economists appears to be the claim, made by the astonishingly mathematically illiterate economist ,Joan Robinson, about having collaborated with Keynes on the writing of the General Theory. This belief is easily demonstrated to be false for any economist who reads pages 134-148 of Volume 14 of the Collected Writings of John Maynard Keynes, where Keynes, in letters to J. Robinson, categorizes Joan Robinson’s understanding of his liquidity preference theory of the rate of interest as being ”nonsense”.
These important pages of correspondence , especially the letters from Keynes to J. Robinson of November 4th,November 8th ,and November 9th, 1936,completely demolish any claims made by J. Robinson about assisting Keynes or collaborating with Keynes or helping Keynes in the writing of the General Theory .Keynes’s mention of help received from J. Robinson in his Preface to the General Theory was clearly withdrawn in these exchanges between September,1936 and November ,1936.
What Keynes discovered in this correspondence in 1936 was that J. Robinson was completely ignorant of the basic concepts used by him in the construction of his liquidity preference theory of the rate of interest in chapters 13,14,15,16,17 and 21 of the General Theory. J. Robinson’s comments on Keynes’s General Theory relied completely on her being coached, assisted and supported by her husband ,Austin Robinson, and her lover,Richard Kahn.There are a number of similarities between Joan Robinson and Elizabeth Holmes ,who was able to successfully escape being exposed as an intellectual fraud from 2003-2018.Joan Robinson continues to be accepted as a researcher who worked closely with Keynes,despite massive evidence to the contrary.
Joan Robinson claimed in 1962 that the IS-LM model was the work of Bastard Keynesians ,who did not understand what Keynes was doing in his analysis in the General Theory. It is Joan Robinson, and not the Bastard Keynesians, who ,unfortunately, only got it half right, who did not understand what Keynes was doing in both the General Theory and the 1937 Quarterly Journal of Economics article.
The continuing impact of Joan Robinson in misleading the entire economics profession for 84 years can be traced simply by examining the recent literature written about the General Theory and /or the IS-LM model. Keynes’s total contribution in the General Theory in 1936, which was the IS-LM model ,combined with the D-Z model that incorporated expectations and uncertainty, will never be recovered until the many myths made up about Keynes by J. Robinson are finally removed from the literature on Keynes.
Keywords: Keynes, Is-Lm Chapter 21, Part IV, Three Elements, Determinate, Quantitative, Equilibrium, a System of Simultaneous Mathematical Equations
JEL Classification: B10, B12, B14, B18, B20, B22
Suggested Citation: Suggested Citation