ABSTRACT

In his celebrated 1988 book Horizontalists and Verticalists, as well as in his subsequent work (for example, Moore, 1994), Basil Moore severely criticized the Keynesian multiplier theory. According to him, the identity of saving and investment, which is tied in with the endogeneity of money, refutes ‘the Keynesian notion that the level of income adjusts to bring planned saving and planned investment . . . into equality by a “multiplier” process’ (Moore, 1988, p. 309). This chapter examines this argument. It will conclude that Moore’s criticism of the multiplier is well grounded, although it is not the end of the multiplier story. It is instead, I shall claim, a half-way point toward a better understanding of the originality of Keynes’s analysis, as opposed to its standard interpretation.