60 THE GENERAL THEORY OF EMPLOYMENT BK. II

It remains true, however, that net income, beingbased on an equivocal criterion which differentauthorities might interpret differently, is not perfectlyclear-cut. Professor Hayek, for example, has suggestedthat an individual owner of capital goods might aim atkeeping the income he derives from his possession con-stant, so that he would not feel himself free to spend hisincome on consumption until he had set aside sufficient tooffset any tendency of his investment-income to declinefor whatever reason .1 I doubt if such an individual exists;but, obviously, no theoretical objection can be raisedagainst this deduction as providing a possible psycho-logical criterion of net income. But when ProfessorHayek infers that the concepts of saving and investmentsuffer from a corresponding vagueness, he is only rightif he means net saving and net investment. The savingand the investment , which are relevant to the theory ofemployment, are clear of this defect, and are capableof objective definition, as we have shown above.

Thus it is a mistake to put all the emphasis on netincome , which is only relevant to decisions concerningconsumption, and is, moreover, only separated fromvarious other factors affecting consumption by anarrow line; and to overlook (as has been usual) theconcept of income proper, which is the concept relevantto decisions concerning current production and is quiteunambiguous.

The above definitions of income and of net incomeare intended to conform as closely as possible tocommon usage. It is necessary, therefore, that Ishould at once remind the reader that in my Treatiseon Money I defined income in a special sense. Thepeculiarity in my former definition related to that partof aggregate income which accrues to the entrepreneurs,since I took neither the profit (whether gross or net)actually realised from their current operations nor theprofit which they expected when they decided to under-

1 “The Maintenance of Capital”, Economica, August 1935, p. 241 et seq.