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If an author tries to bridge two disciplines but is qualified in only one, he runs the risk of being charged with ignorance in the other. I regret that I must level such a charge against Dr. Krystal's knowledge of economics. I shall try to limit my criticisms to those issues which are pertinent to his theme.
Dr. Krystal does not accurately present the contemporary view of economists concerning the determinants of consumption. For such a view I recommend Paul A. Samuelson's deservedly famous Economics: An Introductory Analysis.1 Nor does he do justice to Lord Keynes.
When Keynes refers to a “fundamental psychological rule” it is clear from the context that he means a general behavioral pattern verified by experience. On pages 96 and 97 of his General Theory he says, “The fundamental psychological law, upon which we are entitled to depend with great confidence both a priori from our knowledge of human nature and from the detailed facts of experience, is that men are disposed, as a rule and on the average [italics mine] to increase their consumption as their income increases, but not by as much as the increase in their income. … This is especially the case where we have short periods in view, as in the case of the so-called cyclical fluctuations of employment during which habits, as distinct from more permanent psychological propensities, are not given time enough to adapt themselves to changed objective circumstances. For a man's habitual standard of life usually has the first claim on
New York: McGraw Hill, 6th Edition, 1964.
his income, and he is apt to save the difference which discovers itself between his actual income and the expense of his habitual standard; or, if he does adjust his expenditure to changes in his income, he will over short periods do so imperfectly. Thus a rising income will often be accompanied by increased saving, and a falling income by decreased saving, on a greater scale at first than subsequently.”
In the General Theory, Keynes was trying