CH. 8 THE PROPENSITY TO CONSUME: I 97

This is especially the case where we have shortperiods in view, as in the case of the so-called cyclicalfluctuations of employment during which habits, asdistinct from more permanent psychological propensi-ties, are not given time enough to adapt themselves tochanged objective circumstances. Fora man’s habitualstandard of life usually has the first claim on his income,and he is apt to save the difference which discoversitself between his actual income and the expense of hishabitual standard; or, if he does adjust his expendi-ture to changes in his income, he will over short periodsdo so imperfectly. Thus a rising income will often beaccompanied by increased saving, and a falling incomeby decreased saving, on a greater scale at first thansubsequently.

But, apart from short-period changes in the level ofincome, it is also obvious that a higher absolute levelof income will tend, as a rule, to widen the gap betweenincome and consumption. For the satisfaction of theimmediate primary needs of a man and his family isusually a stronger motive than the motives towardsaccumulation, which only acquire effective sway whena margin of comfort has been attained. These reasonswill lead, as a rule, to a greater proportion of incomebeing saved as real income increases. But whetheror not a greater proportion is saved, we take it as afundamental psychological rule of any modern com-munity that, when its real income is increased, it willnot increase its consumption by an equal adsoluteamount, so that a greater absolute amount must besaved, unless a large and unusual change is occurringat the same time in other factors. As we shall showsubsequently,1 the stability of the economic systemessentially depends on this rule prevailing in practice.This means that, if employment and hence aggregateincome increase, not all the additional employment will berequired to satisfy the needs of additional consumption.

1 Cf. p. 251 below.H