The argument of classical economists is that higher savings
leads to more investment and eventually in the future to higher
growth and higher income.
Keynes argued that if individuals save more, they will increase
their consumption possibilities in the future. However, if society
saves more, this may reduce its future income and consumption since
as people save more, they will spend less. Firms will then produce
less. There will be thus a multiplied fall in income. This
phenomenon of higher savings leading to lower income is known as
'the paradox of thrift'.