Abstract

An enduring myth accepted by all Orthodox and heterodox economists is that it was Richard Kahn who discovered and originated the concept of the multiplier. Kahn then supposedly showed Keynes how the multiplier concept could be specified mathematically so as to provide hard support for Keynes’s views in the late 1920s about increased initial government spending on public infrastructure generating much larger increases in total spending than the original injection, leading to decreasing levels of unemployment. There are three major problems with this story. First, Kahn, himself, in a 1936 response to Hans Neisser in the Review of Economics and Statistics stated that most of his ideas about the multiplier concept came from Keynes. Second, the mathematical and logical development of the multiplier concept had already been formalized and formulated precisely by Keynes in 1921 on p. 315 in footnote 1 of the A Treatise on Probability in section 8 of chapter 26. Third, Keynes provided an arithmetic example of the mathematical technique worked out in the A Treatise on Probability in May, 1929 (Kent, 2007). There is simply no foundation for the myth, promoted by Joan Robinson, that Kahn was the author of the multiplier concept. Kahn went along with Robinson because he was involved in a 54-year old relationship with Joan Robinson. Keynes taught Kahn the theory of the multiplier concept and left it up to Kahn to write a full blown article on it, which was then published by Keynes in the June,1931 issue of the Economic Journal.

Keywords: Multiplier, Infinite series, Finite limit, Geometrical series, Decreasing series, Neisser, A Treatise on Probability, General theory