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Hawtrey on the Keynesian Multiplier: A Question of Cognitive Dissonance?

Hawtrey on the Keynesian Multiplier: A Question of Cognitive Dissonance? History of Political Economy 32:4 (2000) implicitly, and Keynes, explicitly, founded on the principle of the marginal propensity to consume and that considers savings a negative but necessary evil in the investment and income-creation process. Thus, although Hawtrey was familiar with the geometric series formula and employed it to illustrate his general equilibrium analysis, and also used the multiplier label to describe one such analysis (Hawtrey 1950, 441–43), his criticisms of the Keynesian multiplier argument (Hawtrey 1950, 1952) must not be seen as a puzzling inconsistency on his part. Neither should Hawtrey’s own reference to Kahn’s 1931 article as the original source of the Keynesian multiplier argument (Hawtrey 1950, 76 n) be regarded as an example of his own cognitive dissonance. Arguments by Wright (1956), G. L. S. Shackle (1967, 186–202), and Patrick Deutscher (1990, 134) come close to making my point in claiming that Kahn originated the Keynesian multiplier argument (see also King 1998, 63; and Patinkin 1982, 26 n). Hawtrey, Kahn, and Keynes employed the same mathematical formula that underlies a multiplier or cumulative-process analysis, but their conceptions of the economic process, especially the role of savings, differed significantly. Indeed, Hawtrey’s distinction between his analysis and http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png History of Political Economy Duke University Press

Hawtrey on the Keynesian Multiplier: A Question of Cognitive Dissonance?

History of Political Economy , Volume 32 (4) – Dec 1, 2000

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Publisher
Duke University Press
Copyright
Copyright 2000 by Duke University Press
ISSN
0018-2702
eISSN
1527-1919
DOI
10.1215/00182702-32-4-889
Publisher site
See Article on Publisher Site

Abstract

History of Political Economy 32:4 (2000) implicitly, and Keynes, explicitly, founded on the principle of the marginal propensity to consume and that considers savings a negative but necessary evil in the investment and income-creation process. Thus, although Hawtrey was familiar with the geometric series formula and employed it to illustrate his general equilibrium analysis, and also used the multiplier label to describe one such analysis (Hawtrey 1950, 441–43), his criticisms of the Keynesian multiplier argument (Hawtrey 1950, 1952) must not be seen as a puzzling inconsistency on his part. Neither should Hawtrey’s own reference to Kahn’s 1931 article as the original source of the Keynesian multiplier argument (Hawtrey 1950, 76 n) be regarded as an example of his own cognitive dissonance. Arguments by Wright (1956), G. L. S. Shackle (1967, 186–202), and Patrick Deutscher (1990, 134) come close to making my point in claiming that Kahn originated the Keynesian multiplier argument (see also King 1998, 63; and Patinkin 1982, 26 n). Hawtrey, Kahn, and Keynes employed the same mathematical formula that underlies a multiplier or cumulative-process analysis, but their conceptions of the economic process, especially the role of savings, differed significantly. Indeed, Hawtrey’s distinction between his analysis and

Journal

History of Political EconomyDuke University Press

Published: Dec 1, 2000

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