64 THE GENERAL THEORY OF EMPLOYMENT BK. II

Income is created by the value in excess of user costwhich the producer obtains for the output he has sold;but the whole of thvs output must obviously have beensold either to a consumer or to another entrepreneur;and each entrepreneur’s current investment is equal tothe excess of the equipment which he has purchasedfrom other entrepreneurs over his own user cost.Hence, in the aggregate the excess of income over con-sumption, which we call saving, cannot differ from theaddition to capital equipment which we call investment.And similarly with net saving and net investment.Saving, in fact, is a mere residual. The decisions toconsume and the decisions to invest between themdetermine incomes. Assuming that the decisions toinvest become effective, they must in doing so eithercurtail consumption or expand income. Thus the actof investment in itself cannot help causing the residualor margin, which we call saving, to increase by acorresponding amount.

It might be, of course, that individuals were so têtemontée in their decisions as to how much they themselveswould save and invest respectively, that there wouldbe no point of price equilibrium at which transactionscould take place. In this case our terms would ceaseto be applicable, since output would no longer have adefinite market value, prices would find no resting-place between zero and infinity. Experience shows,however, that this, in fact, is not so; and that there arehabits of psychological response which allow of anequilibrium being reached at which the readiness tobuy is equal to the readiness to sell. That there shouldbe such a thing as a market value for output is, at thesame time, a necessary condition for money-income topossess a definite value and a sufficient condition forthe aggregate amount which saving individuals decideto save to be equal to the aggregate amount whichinvesting individuals decide to invest.

Clearness of mind on this matter is best reached,