§3.Let us first examine the economic costs involved in the provision of industrial capital.That process consists in ******, or causing to be made, non-consumable goods, which are useful for assisting the future production of consumable goods, instead of ******, or causing to be made, directly consumable goods.We need not discuss at length the shallow criticism pressed by some socialists to the effect that since labour makes all goods whether non-consumable or consumable, the only economic and human cost of providing these forms of capital is the productive energy of labour.For the decision and effort of mind or will, which determines that non-consumables shall be made instead of consumables, proceeds not from the labour employed in ****** them, but from the owners of income who decide to save instead of spending.This decision to save instead of spending is the economic force which causes so much of the productive power of labour to occupy itself in ****** non-consumables.It is of the first importance that the ordinary business man, to whom 'saving' is apt to mean putting money in a bank, or buying shares, shall realise the concrete significance of his action.
What he is really doing is causing to be made and to be maintained some addition to the existing fabric of material instruments for furthering the future production of commodities.This is not, as it may at first appear, a single act of choice, the determination to use a portion of one's income, say £100, in paying men to make steel rails or to put up a factory chimney, instead of paying them to make clothes, furniture, or wine for one's current consumption.The effort of postponement, or the preference of uncertain future for certain present consumables, necessary for supplying capital, if it is an effort, is a continuous one lasting all the time the capital is in use.The critic who asks, why a single 'act of abstinence'
which is past and done with should be rewarded by a perpetual payment of annual interest, fails to realise that, so far as saving involves a serviceable action of the saver, it goes on all the time that the saver lies out of the full present enjoyment of his property, i.e., as long as his savings continue to function as productive instruments.
This view, of course, by no means begs the question whether there is of necessity and always some human cost or sacrifice involved in such a process of saving.It is, indeed, clear that a good deal of capital may be supplied without any human costs either in postponement of current satisfaction or in risk-taking.The squirrel stores nuts by an organic instinct of economy against the winter, as the bear stores fat.The thrifty housewife lays up provisions by a calculation hardly less instinctive against the probable requirements of the family in the near future.The balancing of future against present satisfaction, involved in such processes, cannot be considered as involving any human cost, but rather some slight balance of utility.
I am certainly in no sense the loser in that I do not lay out all my income the same day that i receive it in purchasing immediate satisfaction.Why I am not the loser is evident.The first 5 per cent of my income I can perhaps spend advantageously at once upon necessaries and comforts which contribute immediately to my welfare.But if I know the sum has got to last me for six months, it will evidently pay me in organic welfare to spread nearly all the rest in a series of expenditures over the whole period, so that I may have these necessaries and comforts all the time.If my income is no more than just sufficient to keep me in full health, i.e., in providing vital 'necessaries', organic welfare demands a quite even expenditure, entailing the proper quantity of postponement.If there is anything over for expenditure on unnecessaries, this will not be quite evenly spread over the six months.For any comforts it affords appear to bring more pleasure if enjoyed now than in three or six months' time.1 And, besides, there is the question of uncertainty of life, upon the one hand, and the risk of being unable to get bold of the future comforts when I may want them.
This depreciation of future as compared with present satisfaction and these risks will properly induce me to grade downwards the expenditure on comforts during the period in question.But in this laying out of my income, so as to secure for myself the maximum of satisfaction and utility,2 there is no human cost or sacrifice.On the contrary, any failure to 'save' or 'postpone' might be attended by a heavy cost.Many a savage has died of starvation because he has gorged to repletion instead of storing food to tide him over till he gets possession of a new supply.Thus this ******st economy of saving, the spreading of consumption over a period of time, is evidently costless.
§4.Now, though the saving which consists in keeping stores of consumables for future consumption does not furnish what would be called capital, and so does not come directly within the scope of our particular enquiry into 'costs of capital,' it gives a useful test for the economy of saving under modern capitalism.The modern saver does not, indeed, usually keep in his possession for future consumption a store of consumable goods.
It would be inconvenient to store them, many of them are by nature perishable and so incapable of storage.Besides, modern industry affords him a way of ****** industrial society store them for him, or, more strictly, makes it produce a constant supply of fresh consumables to which he can get access.
Nay, it provides still better for his needs, for it enables him, by postponing some present consumption to which he is entitled, not merely to take out of the constant social supply the full equivalent of his postponed consumption at any time he chooses, but to receive an additional small regular claim upon other consumptive or productive goods, called interest.
