ABSTRACT
Spending on actual goods for future consumption — accumulating real wealth — is one way of saving. The alternative is to increase the stock of purchasing power necessary to buy the goods — by accumulating monetary wealth. The planned cut in total consumption again amounts to 63% of total resources. The failure to replace consumption spending by investment spending cuts effective demand by 63% of total resources. Unlike a switch into real wealth which changes the composition of effective demand, a switch into monetary wealth reduces its volume. Even though the Looking-Glass Utopia has perfectly flexible markets presided over by a Walrasian auctioneer, so that there is no possibility of market imperfection or dynamic disequilibrium, it suffers from unemployment. A “neutral” change in the desire to save will have a significant impact on the level of employment, if the change is reflected in a switch from present consumption to the accumulation of uncommitted purchasing power.
