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Classical economic theory chooses to concern itself with the movements of goods and capital and to ignore the psychology of the “movers.” The occasional mention of psychological factors has been shallow and behavioristic. (6, 11,30)
Katona provides the introduction to our interest in economics as a manifestation of individual and group psychology, as opposed to the basic assumption of Keynesian economists that there was “a fundamental psychological rule of any modern community that when its real income is increased, it will not increase its consumption by an equal absolute amount, so that a greater amount must be saved.” (23) Lord Keynes predicted that in economically mature (i.e., industrialized) countries, the capital becomes accumulated, investment opportunities decrease, and eventually the economy goes into a state of chronic depression or “stagnation.”
Keynesian economists view spending as passively tied to, though lagging behind, the income of an economic unit (usually a family). (12) This assumption is contradicted by Katona (15) who produced survey evidence to the effect that the saving and spending functions have separate, complex sociological and psychological determinants. (13,14,16,18)
A serious limitation of Katona's viewpoint is his assumption that the consumer's behavior is in the main rational, and any irrational factors in our economic life can be ignored because they will cancel each other out. Yet, the development of the “consumer” school of economics by Katona and his followers indicated that the “mood” prevalent among the consumers was the prime moving force in our economy. (19) Because of this change in emphasis and object of study, economics has become a behavioral science.
Psychoanalysis, having access to the greatest depth and breadth of understanding of the human mind, can and must make a contribution to this aspect of economics, and we are directed to the study of the psychological factor of “changes in the Amer