Given R. Kahn’s Own 1936 Admission to H. Neisser That "My Own Ideas Were Largely Derived From Mr. Keynes", Shackle’s Claim in 1951 That "…In 1929 Lord Keynes … Groped for the Multiplier Analysis, but Failed to Seize It …", Along With Other Such Claims in His Article, Are Dubious

Abstract

There is a very major problem with Shackle’s 1951 paper in the Economic Journal concerning the history of the multiplier. Shackle makes claims in his 1951 article, that were later repeated many times in other Shackle articles, that lead a reader to the conclusion that Kahn invented and developed the theory of the multiplier. However, these claims directly contradict Kahn’s own 1936 admission that “My own ideas were largely derived from Mr. Keynes.” If Kahn’s ideas were largely derived from Keynes, then Shackle’s claims that Kahn invented and developed the theory of the multiplier is dubious. A myth has been created in the economics profession that Kahn made an completely independent, extremely crucial contribution to the development of the General Theory that was of such great importance that Keynes would not have been able to write the General Theory without it. This position is simply dubious, since Keynes had already developed and applied the mathematical and logical analysis in chapter 26 of the A Treatise on Probability in footnote 1 on page 315 to a problem that involves exactly the same analysis that is used to derive the multiplier. Keynes’s conclusion in 1921 in chapter 26 of the TP requires a reader to simply replace Keynes’s q with Kahn’s k from his 1931 article to obtain the exact same answer for the employment multiplier and replace Keynes’s q with Keynes’s b, the marginal propensity to consume, to obtain the investment multiplier in the GT in 1936.Keynes did not need Kahn at all in order to write chapter 10 of the General Theory. Everything written over the last 84 years in the history of economic thought and the history of macroeconomics about Keynes’s contributions concerning the multiplier in the General Theory are based on a very shaky foundation that needs to be completely rewritten.