8o

THE  PROBLEM  OF  THE  UNEMPLOYED

“  spending  ”  on  commodities  an  increased  proportion  of
their  incomes.  Where  no  such  expectation  is  realised,
an  attempt  to  “  operate  ”  the  new  factories  does  not  give
any  net  increase  of  employment,  it  only  gluts  the  markets,
drives  down  prices,  closes  the  weaker  factories,  imparts
irregularity  to  work,  and  generally  disorganises  trade.
The  frequent  recurrence  of  these  phenomena  in  most
departments  of  trade  is  the  strongest  presumptive  evidence
of  an  attempt  of  the  capitalist  classes  to  place  and  to
operate  more  capital  than  is  required  to  maintain  the
current  flow  of  consumption.  An  individual  may  be  a
rich  miser,  a  community  cannot.  To  the  average  reasonable ­
  man  it  is  a  self-evident  fact  that  a  community  cannot
advantageously  save  more  than  a  certain  proportion  of
its  annual  income,  unless  for  the  express  purpose  of  consuming ­
  a  larger  proportion  at  some  not  distant  date.
§  ip.  The  Fallacy  that  Saving  Implies  no
Reduced  Consumption.
The  economist  is,  however,  too  often  blinded  by  the
acceptance  of  a  strange  sophism  to  the  affect  that  “  saving
implies  no  reduction  in  current  consumption,”  a  wild
notion  which  is  due  to  a  failure  to  analyse  the  process
of  saving.  The  following  simple  refutation  of  this  theory
will  suffice.  Suppose  the  case  of  two  economic  communities, ­
  each  with  a  net  annual  income  of  ¿1,500,000,000.
One  nation  spends  the  whole,  saving  nothing;  this  means
that,  after  providing  against  wear  and  tear  of  existing
plant,  all  the  productive  energy  is  devoted  to  producing
“  consumables  ”  which  are  consumed.  The  other  nation
“saves”  ¿200,000,000  annually:  this  means  that,  after
the  same  provision  for  wear  and  tear,  two-fifteenths  of