AN ESSAY IN DYNAMIC THEORY of balance, and grasp of it is required as a preliminary to the study of them erminology recently employed by distinguishe authorities, C, is an ex post quantity. I am not clear if C should be regarded as its corresponding ex ante. C is rather that addition to capital goods in any period, which producers regard as ideally suited to the output which they are undertaking in that period For convenience the term ea ante when employed in this article ill be used in this sense The truism stated above, 1(a), gives expression to Mr. Keynes proposition that saving is necessarily equal to investment--that is to ex post investment. Saving is not necessarily equal to ea ante investment in this sense, since unwanted accretions or depletions of stocks may occur, or equipment may be found to have been produced in excess of, or short of, requirements If ec post investment is less than ea ante investment, this means that there has been an undesired reduction of stocks or insufficient provision of productive equipment, and there will be a stimulus to further expansion of output; conversely if eac post investment exceeds ex ante investment. If ea post investment is less than ea ante investment, saving is less than ex ante investment In his Treatise on Money Mr. Keynes formulated a proposition, which has been widely felt to be enlightening, though experience has led him subsequently to condemn the definitions employed as more likely to be misconstrued than helpful. He said that if investment exceeded saving, the system would be stimulated to expand, and conversely. If for the definitions on which that proposition was based, we ubstitute the definition of e ante invest ment given above, it is true that if ec ante investment exceeds saving, the system will be stimulated, and conversely. This truth may nt for the feeling of satisfaction which Mr Keynes'proposition originally evoked and the reluctance to abandon it at his behest. In many connections we are more interested in ea ante than in ex post investment, the latterincluding as it does unwanted accretions of stocks. Mr. Keynes'propos tion of the Treatise may still be a useful aid to thinking, if we substitute for Investment ' in it ex ante investment as defined above 7. Two minor points may be considered before we proceed with the main argument (i)It may be felt that there is something unreal in t analysis, since the increase in capital which producers will regard as right in period 1 is in the real world related not to the increase