Defects of consumption function theory

In the final analysis, Keynes's consumption theory still has fundamental defects: first, Keynes's theory is based on subjective psychological analysis, and its logic is not strict. When summarizing the law of decreasing consumption tendency, it is called "normal psychological law" (general theory, 98 pages). Although it is pointed out that some modifications are still needed, it is not difficult. But there is no more sufficient proof or amendment to this. To sum up, "human nature", as the pillar of economic theory, is unconvincing based on psychological analysis.

Secondly, Keynes limited himself to the total analysis, only seeing the phenomenon that income affects consumption, and could not further reveal that the income that affects consumption is the distribution of income, and then the relationship between people in social production. Therefore, it is impossible for him to fundamentally reveal the structural differences between income distribution and consumption and the class differences between capitalists and workers, but he only mentioned "the public" and "residents" in general, and even mentioned "the rich" and "the poor" in details.

Third, many conclusions drawn from his theory are unreasonable. For example, wars and earthquakes can solve the unemployment problem and so on. Here, it is worth pointing out that these arguments seem "strange and absurd", but they are logical in Keynes's theory. Therefore, we cannot simply dismiss them as inhuman. Keynes's conclusion based on human nature is enough to urge future generations to reflect on his theory itself.

The functional relationship between consumption and its determinants. There are many factors that determine the consumption level, such as income, property, interest rate and income distribution. Income is the most fundamental factor. Therefore, the consumption function essentially refers to the functional relationship between consumption and income.