Page:The Economics of Unemployment.djvu/37

natural impulse to raise his consumption immediately, so as to absorb the whole of any enlargement in the output of industry which came to him as income, there could be no increase in the provision of capital, and all further progress in the arts of production, so far as they demanded capital, would be inhibited.

Indeed, it must be admitted that upon this natural conservatism of present consumption, strengthened and directed by reasonable regard for future consumption, the economic progress of mankind depends. It is this conservatism that is expressed in saving. The real economic function of saving must be clearly kept in mind. It does not consist in not spending, i.e. in putting money income in a bank, or even in making an investment. It consists in paying producers to make more non-consumable goods for use as capital, instead of paying them to make more consumable goods and consuming them. This is the vital distinction between spending and saving, so often obscured by dwelling upon the merely monetary aspect.

Now, if we hold, as seems to be the case, that a depression is due to, or testifies to, the existence of an excess of producing power and a corresponding deficiency of consuming power, we can only mean that somehow or other there has been over-saving or under-spending on the part of industrial society, in the sense that more non-consumable, i.e. capital, goods have been created than have been capable of being properly utilised for the supply of future consumption. This is not a theory or an explanation, but rather a description of the actual facts. At a time of depression large bodies of capital stand idle,