CH. 6 THE DEFINITION OF INCOME 61

take their current operations, but in some sense (not,as I now think, sufficiently defined if we allow for thepossibility of changes in the scale of output) a normalor equilibrium profit; with the result that on this defini-tion saving exceeded investment by the amount of theexcess of normal profit over the actual profit. I amafraid that this use of terms has caused considerableconfusion, especially in the case of the correlative useof saving; since conclusions (relating, in particular, tothe excess of saving over investment), which were onlyvalid if the terms employed were interpreted in myspecial sense, have been frequently adopted in populardiscussion as though the terms were being employedin their more familiar sense. For this reason, and alsobecause I no longer require my former terms to expressmy ideas accurately, I have decided to discard them—with much regret for the confusion which they havecaused.

II. Saving and Investment

Amidst the welter of divergent usages of terms, itis agreeable to discover one fixed point. So far as Iknow, everyone is agreed that saving means the excessof income over expenditure on consumption. Thusany doubts about the meaning of saving must arisefrom doubts about the meaning either of income or ofconsumption. Income we have defined above. Expendi-ture on consumption during any period must meanthe value of goods sold to consumers during that period,which throws us back to the question of what is meantby a consumer-purchaser. Any reasonable definitionof the line between consumer-purchasers and investor-purchasers will serve us equally well, provided that itis consistently applied. Such problem as there is, e.g.whether it is right to regard the purchase of a motor-caras a consumer-purchase and the purchase of a houseas an investor-purchase, has been frequently discussedand I have nothing material to add to the discussion.