20 THE GENERAL THEORY OF EMPLOYMENT BK I.

worked out (like Mill’s) as being based on “real” ex-changes with money introduced perfunctorily in alater chapter, is the modern version of the classicaltradition. Contemporary thought is still deeply steepedin the notion that if people do not spend their moneyin one way they will spend it in another.1 Post-wareconomists seldom, indeed, succeed in maintaining thisstandpoint consistently ; for their thought to-day is toomuch permeated with the contrary tendency and withfacts of experience too obviously inconsistent with theirformer view.2 But they have not drawn sufficientlyfar-reaching consequences; and have not revised theirfundamental theory.

In the first instance, these conclusions may havebeen applied to the kind of economy in which weactually live by false analogy from some kind of non-exchange Robinson Crusoe economy, in which the in-come which individuals consume or retain as a resultof their productive activity is, actually and exclusively,the output in specie of that activity. But, apart fromthis, the conclusion that the costs of output are alwayscovered in the aggregate by the sale-proceeds resultingfrom demand, has great plausibility, because it is diffi-cult to distinguish it from another, similar-lookingproposition which is indubitable, namely that the in-come derived in the aggregate by all the elements in thecommunity concerned in a productive activity neces-sarily has a value exactly equal to the value of the output.

Similarly it is natural to suppose that the act of

1 Cf. Alfred and Mary Marshall, Economics of Industry, p. 17: “It is notgood for trade to have dresses made of material which wears out quickly.For if people did not spend their means on buying new dresses they wouldspend them on giving employment to labour in some other way.” Thereader will notice that I am again quoting from the earlier Marshall. TheMarshall of the Principles had become sufficiently doubtful to be very cautiousand evasive. But the old ideas were never repudiated or rooted out of thebasic assumptions of his thought.

2 It is the distinction of Prof. Robbins that he, almost alone, continues tomaintain a consistent scheme of thought, his practical recommendationsbelonging to the same system as his theory.