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"Not increased the joy" or "Increased the joy" in Isaiah 9:3?

"The people that walked in darkness have seen a great light: they that dwell in the land of the shadow of death, upon them hath the light shined. Thou hast multiplied the nation, and not increased the joy: they joy before thee according to the joy in harvest, and as men rejoice when they divide the spoil. For thou hast broken the yoke of his burden, and the staff of his shoulder, the rod of his oppressor, as in the day of Midian." (Isaiah 9:2-4)

The KJV follows the main Masoretic reading which says, "...and not increased the joy".  Modern translations such as the NKJV, ESV and NIV omit "not".  This omission is an alternative reading provided in the margin of the Masoretic text.  From a textual viewpoint, scholars acknowledge that the KJV reading is more likely to be true.  However, some scholars question this reading because they perceive that it does not fit the context.  On the face, "not increased the joy" may appear to contradict the immediately following "they joy before thee...."  However, the KJV reading makes perfect sense upon closer reading.

To begin with, the "nation" in verse 3 is not the same as the "people that walked in darkness" in verse 2.  We must read this prophecy in light of its actual prophetic application.  Matthew cites this prophecy at Matthew 4:12-17:

"Now when Jesus had heard that John was cast into prison, he departed into Galilee; And leaving Nazareth, he came and dwelt in Capernaum, which is upon the sea coast, in the borders of Zabulon and Nephthalim: That it might be fulfilled which was spoken by Esaias the prophet, saying, The land of Zabulon, and the land of Nephthalim, by the way of the sea, beyond Jordan, Galilee of the Gentiles; The people which sat in darkness saw great light; and to them which sat in the region and shadow of death light is sprung up. From that time Jesus began to preach, and to say, Repent: for the kingdom of heaven is at hand."

Matthew says Isaiah's prophecy at 9:3 was fulfilled at the time of our Lord's first coming.  This was a time when the Roman Empire had multiplied its nation and had occupied Judea.  It is because of this painful Roman oppression that the Lord's words, "the kingdom of heaven is at hand" had such a powerful impact on the Galileans.  It is in this historical context of Roman oppression that the Lord came as light to the people.  We must then read verse 4 together with verse 3, for verse 4 refers to this oppression by the foreign nation.  With this in mind, we can read Isaiah 9:3 and make sense of what is being said.  The passage is quoted again below with tags to provide possible identifications of the referents:

"The people [the oppressed Jews] that walked in darkness have seen a great light [Jesus Christ]: they [the oppressed Jews] that dwell in the land of the shadow of death, upon them hath the light shined. Thou [God] hast multiplied the nation [the Roman Empire], and not increased the joy: they [the oppressed Jews] joy before thee according to the joy in harvest, and as men rejoice when they divide the spoil. For thou hast broken the yoke of his burden, and the staff of his shoulder, the rod of his oppressor [the Roman Empire], as in the day of Midian" (Isaiah 9:2-4)

Thus "the nation" which God has multiplied is the Roman Empire. The Hebrew word for "nation" is most often used to refer to a Gentile nation.  The word could generically refer to "heathen" or "Gentile" as in numerous places in the Bible.  That God would have a part in multiplying an oppressive Gentile nation is consistent with the rest of the Bible (e.g. Habakkuk 1:5-6).

The point of Isaiah 9:3 and its surrounding verses is that God's light will come to his people during a time of great oppression by a foreign power.  So the "nation" that has multiplied is not Israel, but the Gentile Roman Empire.  The growth of the Roman Empire, or Gentiles in general, obviously did "not increase the joy" of the Jews.  But since the light had come, the people joyed before the Lord for the Lord had broken the yoke of the oppressing Romans.