OH. 12

SAVINGS AND INVESTMENT

175

increase of consumers’ expenditure from the increasedearnings of the factors of production.

Finally, if investment exceeds saving, then—as iseasily seen in the light of the preceding argument-consumers’ expenditure will be increased relatively toproducers’ output of available goods, with the resultthat the prices of consumption-goods will rise ; andthe new investment in excess of the volume of savingwill be made possible, not by voluntary abstentionfrom consumption by refraining from spending money-income, but by involuntary abstention as the resultof money-incomes being worth less (Mr. Robertson’s“ automatic lacking ”).

Now if the decisions as to the proportions of theflow of future output to be in available and in non-available form respectively at a given date were tobe made by the same people who decide how much isto be “ saved ” at that date, no trouble would arise.But if they are made—as in fact they are—by differentpeople, then (except in so far as relief is obtainablefrom variations in the amount of hoarded goods)the net increment to the capital wealth of the com-munity as a whole will differ to a certain extent (moreor less) from the aggregate of the cash-savings ofindividuals, meaning by the latter the portions oftheir cash-incomes which they abstain from spendingon consumption.

There need be no feeling of paradox about thiswhen we remember that Income does not includeProfits or Losses, and that it is these which representthe mysterious difference between savings and thevalue of investment. The vital point to appreciateis this. An act of saving by an individual may resulteither in increased investment or in increased con-sumption by the individuals who make up the rest ofthe community. The performance of the act of savingis in itself no guarantee that the stock of capitalgoods will be correspondingly increased.