Brian Chapman

Brian Chapman

Academic Contractor and Pianist

Projects Demonstrations Contact
Dissident Economics: Keynesian Multiplier Theory, Baumol's Disease
Audio CDs: Mozart, Beethoven, Brahms, Chopin, Winterreise, Quintets Order Form

Background, 1995-1997
Late in 1995, while I was directing Monash University's Quality Education at a Distance (QED) Research Unit, I received a contract from Harper Collins Educational, later bought out by Addison Wesley Longman, to produce an Interactive Study Guide as a computer-based companion to the then forthcoming edition of Economics, 3rd Australian Edition by Waud, R. N., Maxwell, P., Hocking, A., Bonnici, J. and Ward, I. (The textbook was published by AWL in 1996; my Economics: An Interactive Study Guide was published by AWL in 1997 - see the above 'Projects' link.) The project involved re-arranging the entire text into 3-layered hypertext and converting all the static diagrams, as far as reasonably possible, into interactive animated diagrams.

It was while engaged on this contract, working from the publisher's galley proofs, that I first encountered Keynesian multiplier theory. My first reaction on reading this was one of concern on concluding that, in an effort to make the ideas as simple as possible for 1st-year students, the authors of the textbook had fallen into logical error. On checking more widely in textbooks by Samuelson, McTaggart and others, I was even more concerned to discover that they all said the same thing. So I then checked what Keynes had originally said in his General Theory of Employment, Interest and Money (1936) and was immediately struck by the circular logic leaping out of pages 113-115. My attempts to secure engagement with my arguments by academic economists were generally frustrating: a very common reaction was, "Hey, I'm a Microeconomist and that's Macroeconomics; you'll have to talk with a Macro expert." My plaintive retort that I was talking about ECON101 was to no avail. So I sought engagement by submitting an abstract for communication at the 1997 Conference of Economists in Hobart, Tasmania - the paper was received politely by a small audience, with no proper engagement with the arguments. I subsequently moved on to other pursuits, resolving to do some proper research in Economics one day, should the opportunity ever arise.

Graduate Scholar again, 2001-2005
The opportunity came in 2001 when I was admitted as a graduate scholar in Monash University's Department of Economics to pursue a critical investigation into Keynesian Multiplier Theory. Unfortunately, satisfactory terms of candidature could not be continued in that environment (a chronic and, ultimately, unsolved problem was the total lack of an appropriate supervisor in Macroeconomics) and my candidature was transferred in 2002 to Monash University's School of Political and Social Inquiry, Faculty of Arts, where it continued until the end of 2005 under the kindly, supportive protection of Mr John Arnold as Head of School. During that time I produced three major studies: (a) an historical and quantitative survey of the growth of Australia's progressive income tax since Federation, particularly the growth following the Second World War; (b) an expanded inquiry into the logical, algebraic and diagrammatic errors inherent in Keynesian Multiplier Theory; (c) A detailed criticism of the phenomenon in Macroeconomics known as "Baumol's Disease'.

Although I communicated the fruits of this research at conferences and seminars, receiving warm support and encouraging feedback each time, I was unable to find any mainstream economics journal prepared to publish any of my three major papers. More seriously, no supervisor with the required expertise in Macroeconomics could be found. I imagine that my candidature established something of a record: the longest period of doctoral candidature, extending over five calendar years, without ever proceeding to 'confirmation of candidature', while supported for 3.5 years as a full-time graduate scholar. Eventually, late in 2005, a confirmation panel was put together with the kind cooperation of A/Prof Steve Keen acting as external supervisor. Unfortunately, though the volume and quality of my work was noted by the panel, confirmation was 'deferred' on the technicality that no internal supervisor had yet been found to certify that the work was worthy of examination. Attempts were made to transfer my candidature to the University of Western Sydney under A/Prof. Steve Keen but this proved to be impractical so I withdrew my candidature and returned to educational software development, scientific editing, and biomedical teaching and research.

In Good Company, 2006-2009
Nonetheless, the effort was not entirely wasted - I had no real need of a second PhD and I had certainly satisfied my curiosity concerning the intellectual destitution of Keynesian Multiplier Theory. In this respect I concur with the growing band of dissident economists, as reported by A/Prof Steve Keen, who "tend to be united in regarding neoclassical economic theory as pompous drivel"

On June 7, 2009 Steve posted on his blog: "In Debunking Economics, I argued that economic theory had done such damage to society that humanity would be better off if everything ever written about economics by anyone-including yours truly-were obliterated, and the world had to start again from scratch. Unfortunately that can't be done-everything, even economics, develops in an evolutionary way-but the next best thing is to admit how wrong neoclassical thought has been, and to start developing alternatives."

In complete agreement with these sentiments, my contribution here is to dissect and expose in detail the errors in mainstream macroeconomic theories as I find them. This is what I have attempted to do in my analytical critiques of Keynesian Multiplier Theory and "Baumol's Disease".

Keynesian update - July 2009
When my Keynesian Multiplier Theory (KMT) paper was rejected for publication back in 2003, I attempted to submit it for possible oral presentation to the Australasian Teaching Economics Conference (ATEC) in 2004. However, it was again rejected, this time on the grounds that KMT was then rather old-fashioned and boring, that Macroeconomics pedagogy had, so to speak, 'moved on'. I thought it remarkable that the paper's thesis - that KMT was wrong from beginning to end - seemed not to be of the slightest interest. Five years later, in the context of the Global Financial Crisis, I re-submitted the paper for presentation at ATEC 2009 and was delighted to have it accepted. Soon after its acceptance, I discovered that another non-economist - the engineer and entrepreneur Yuichiro Hayashi - had used a different approach to conclude independently that Keynesian Multiplier Theory is wrong.