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SAYINGS AND INVESTMENT

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over-investment in the above sense. In so far, how-ever, as these theories maintain that the existingdistribution of wealth tends to a large volume ofsaving, which leads in turn to over-investment, whichleads to too large a production of consumption-goods,they are occupying an entirely different terrain frommy theory: inasmuch as, on my theory, it is a largevolume of saving which does not lead to a correspond-ingly large volume of investment (not one which does)which is the root of the trouble.

Mr. J. A. Hobson and others deserve recognitionfor trying to analyse the influence of saving and in-vestment on the price-level and on the Credit Cycle,at a time when orthodox economists were content toneglect almost entirely this very real problem. ButI do not think they have succeeded in linking up theirconclusions with the theory of money or with the partplayed by the rate of interest.

(iv.) A Summary op the Argument

It may help the reader if I endeavour at this stageto give a broad summary (with some sacrifice ofexact accuracy) of the argument of the precedingchapters.

The jprice-level of output as a whole during anyperiod is made up of two components—the price-levelof the goods coming forward for consumption and theprice-level of the goods added to the stock of capital.

In conditions of equilibrium both these price-levelsare determined by the money-cost of production, or,in other words, by the money-rate of efficiency-earnings of the factors of production.

The question whether the price-level of the goodswhich are consumed is in fact equal or unequal to theircost of production, depends on whether the proportionof the income of the community which is spent on con-sumption is or is not the same as the proportion of the