words, there exists at any given time an economically sound ratio between spending and saving. Excessive spending (as in the war) encroaches on saved capital, and impairs future productivity. Excessive saving operates, through deficient demand for commodities, to slacken the sinews of production and produce more capital goods than are able to be put to full productive use.
The current distribution of income throughout the industrial world tends normally to evoke a rate of saving and capital creation that is excessive, in this sense. For whereas, under a fairly equal distribution of income, the average pressure of growing human needs for satisfaction will keep a right adjustment between the immediate satisfaction of spending and the postponed satisfaction of saving, under the present unequal and inequitable distribution no such adjustment is maintained. On the contrary, a large part of the surplus unearned income of the rich is found to be excessive, even for purposes of luxurious and wasteful consumption, and accumulates automatically to form an investment fund of capital which is larger than is required, in order to help maintain the growing volume of consumption in the economic world. This excess in capital formation is attested not only by the cut-throat competition and the organised restriction of output which alternate in modem capitalism, but by the normal under-employment both of capital and labour in the industrial system, as well as by the more signal wastes of cyclical depressions.
If the surplus income of the rich which produces this congestion and these stoppages were absorbed.
