On the spreading of an idea: the strange case of Mr. Harrod and the multiplier

History of Political Economy (31:2, Summer 2000)


In 1932, Roy Harrod transposed Kahn's employment multiplier to foreign trade. He discussed its implications with Kahn and later on with Meade, who represented it in terms of an elegant mathematical formula. In 1933, Harrod was able to integrate it into his book on International Economics. The employment and foreign trade multipliers (as they were later called) share the same analytical properties, and reflect the same kind of process of spreading to the whole system of a local disturbance (public works or an increase of exports, respectively) to the old state of equilibrium, via changes in the level of income.

One would thus suppose that the ground for Harrod's understanding of the investment multiplier was fertile. But in spite of the fragments of the new Keynesian doctrine which Harrod read, including The Means to Prosperity, and notwithstanding a tutorial by Kahn on the recent development of Keynes's thought on the matter, Harrod curiously failed to grasp its implication until he read the General Theory in proof. Harrod was only ready to appreciate the implications of the multiplier after having interpreted Keynes's book as a complete re-organisation of the relationship between economic magnitudes and concepts.

This paper illustrates this strange case, which is interesting for two reasons. The first is that the chronology shows that, contrarily to what some readers have supposed, Harrod did not act as an early commentator of the General Theory, and did not see anything of it before June 1935. Secondly, Harrod's troubles in transposing the multiplier to investment provides an example of the lack of automatism in the diffusion and acceptance of scientific concepts.

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