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A TREATISE ON MONEY

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sumers and the other of which is “ invested Thus“ saving ” relates to units of money and is the sumof the differences between the money - incomes ofindividuals and their money-expenditure on currentconsumption; and “investment” relates to units ofgoods. The object of this chapter is to illustratefurther the significance of the distinction betweenthese two things.

Saving is the act of the individual consumer andconsists in the negative act of refraining from spendingthe whole of his current income on consumption.

Investment, on the other hand, is the act of theentrepreneur whose function it is to make the decisionswhich determine the amount of the non-availableoutput, and consists in the positive act of starting ormaintaining some process of production or of with-holding liquid goods. It is measured by the netaddition to wealth whether in the form of fixedcapital, working capital or liquid capital.

It might be supposed—and has frequently beensupposed—that the amount of investment is neces-sarily equal to the amount of saving. But reflectionwill show that this is not the case, if we exclude fromincome and from saving—as we must for reasonsalready given—the windfall profits and losses ofentrepreneurs.

published in 1926.J More recently Mr. Abbati’s The Final Buyer (1928)has reached—independently I think—some substantially similar results.Mr. Abbati has probably failed to make his thought fully intelligible tothose who have not already found the same clue themselves. But theessence of the distinction between saving and investment is to be found inhis chapter v. Moreover, by the aggregate of “ final buying ”, Mr. Abbatimeans expenditure on consumption plus investment, and he attributesdepressions to a failure of this aggregate to reach the aggregate of money-incomes.

J I do not much like Mr. Robertson’s term “ automatic lacking ”. Ishould prefer “ lacking ” simpliciter for his “ automatic lacking ”, “ Saving ”for his “ spontaneous lacking ” and no special term for his “ induced lacking ”.And looked at from the other point of view, we might speak of “ profiteering ”as the equivalent for the entrepreneur of what “ lacking ” is to the recipientof income.