Investopedia’s ‘What Is the Keynesian Multiplier?’ Needs to Be Completely Revised to Correct Its Many Errors of Omission and Commission

Abstract

Investopedia’s “What is the Keynesian Multiplier “ is fundamentally flawed and needs to be completely rewritten in order to eliminate a number of errors of omission and commission concerning Richard Kahn and J M Keynes. First,Richard Kahn’s article ,published in 1931 in the Economic Journal,was derived from Keynes’s earlier work in his A Treatise on Probability ,1921(Brady,2004) and his May,1929(Kent,2007) arithmetic example ,which follows directly from the mathematical model presented in chapter 26 of the A Treatise on Probability on page 315 in footnote 1.The discussion in the General Theory on pp.122-123 of the theory of the multiplier follows directly from the A Treatise on Probability. Second,Investopedia’s article completely ignores the series of articles written by Keynes in 1937 and 1938 in England on war finance and unemployment, first discussed by Terence Hutchison in 1977,demonstrating that Keynes’s support for deficit finance was strictly limited to the occurrence of a severe recession or depression. Third, Investopedia’s article completely ignores the extensive 250 pages of correspondence in Volume 27 of the Collected Writings of John Maynard Keynes detailing Keynes’s explicit support for deficit finance for the support and maintenance of public infrastructure projects only which would pay for themselves overtime in the long run.The government budget would always be balanced..There would be a separate capital account budget devoted to public infrastructure spending that would have to be in balance in the long run. Only the capital account could be in deficit .Keynes’s clear cut disagreement with supporters of deficit financed tax cuts in England in 1942-1944 is explicit in these two hundred and fifty pages (CWJMK,pp.225-475). Fourth,the belief that M. Friedman showed that there were errors in the logical and mathematical construction of the multiplier has no support.M. Friedman never showed there were any mathematical and logical errors in the multiplier concept.