To save is to interpose voluntarily an interval between the time when we render services to society and the time when we receive back from society equivalent services. A man, for example, may every day, from the time he is twenty until he is sixty, render to his neighbours professional services equal to four, and demand from them services only equal to three. In that case he reserves the power of drawing upon society in his old age, and when he can no longer work, for payment of the remaining fourth of his forty years’ labour.
The circumstance that he has received and accumulated through a succession of years notes of acknowledgment consisting of bills of exchange, promissory notes, bank notes, money, is quite secondary, and belongs only to the form of the transaction. It has relation only to the means of execution. It changes neither the nature nor the consequences of saving. The illusion to which the intervention of money gives rise in this respect is not the less an illusion, although we are almost always the dupes of it.
In fact, it is with difficulty that we can avoid believing that the man who saves withdraws from circulation a certain amount of value, and, in consequence, does a certain amount of harm to society.
And here we encounter one of those apparent contradictions [p394] which are at war with logic, one of those barriers which would seem to oppose an insurmountable obstacle to progress, one of those dissonances which gives us pain by appearing to call in question the Divine power and will.
On the one hand, we know that the human race can only extend itself, raise itself, improve itself, acquire leisure, stability, and, by consequence, intellectual development and moral culture, by the abundant creation and persevering accumulation of capital. It is this rapid augmentation of capital on which depends the demand for labour, the elevation of wages, and, consequently, the progress of men towards equality.
But, on the other hand, to save is not the opposite of to spend, and if the man who spends gives a fillip to industry and additional employment to labour, does the man who saves not do exactly the reverse? If every one set himself to economize as much as possible, we should see labour languish in the same proportion, and if all could be saved, we should have no fund for the employment of labour.
In such circumstances, what advice can we give? And what solid basis can political economy offer to morals, when we appear to be able to educe from the former only this contradictory and melancholy alternative:—
“If you do not save, capital will not be replaced, but dissipated, the labouring class will be multiplied, while the fund for their remuneration will remain stationary; they will enter into competition with each other, and offer their services at a lower rate; wages will be depressed, and society will, in this respect, be on the decline. It will be on the decline also in another respect, for unless you save you will be without bread in your old age; you can no longer set your son out in the world, give a portion to your daughter, or enlarge your trade,” etc.
“If you do save, you diminish the fund for wages, you injure a great number of your fellow-citizens, you strike a blow at labour, which is the universal creator of human satisfactions, and you lower, consequently, the general level of humanity.”
Now these frightful contradictions disappear before the explanation which we have given of saving—an explanation founded upon the ideas to which our inquiries on the subject of value conducted us.
Services are exchanged for services.
Value is the appreciation of two services compared with each other.
In this view, to save is to have rendered a service, and allow time [p395] for receiving the equivalent service, or, in other words, to interpose an interval of time between the service rendered and the service received.
Now, in what respect can a man do injury to society or to labour who merely abstains from drawing upon society for a service to which he has right? I can exact the value which is due to me upon the instant, or I may delay exacting it for a year. In that case I give society a year’s respite. During that interval, labour is carried on, and services are exchanged, just as if I did not exist. I have not by this means caused any disturbance. On the contrary, I have added one satisfaction more to the enjoyments of my fellow-citizens, and they possess it for a year gratuitously.
Gratuitously is not the word, for I must go on to describe the phenomenon.
The interval of time which separates the two services exchanged is itself the subject of a bargain, of an exchange, for it is possessed of value. It is the origin and explanation of interest.
A man, for instance, renders a present service. His wish is to receive the equivalent service only ten years hence. Here, then, is a value of which he refuses himself the immediate enjoyment. Now, it is of the nature of value to be able to assume all possible forms. With a determinate value, we are sure to obtain any imaginable service, whether productive or unproductive, of an equal value. He who delays for ten years to call in a debt, not only delays an enjoyment, but he delays the possibility of further production. It is on this account that he will meet with people in the world who are disposed to bargain for this delay. They will say to him: “You are entitled to receive immediately a certain value. It suits you to delay receiving it for ten years. Now, for these ten years, make over your right to me, place me in your room and stead. I shall receive for you the amount for which you are a creditor. I will employ it during these ten years in a productive enterprise, and repay you at the end of that time. By this means you will render me a service, and as every service has a value, which we estimate by comparing it with another service, we have only to estimate this service which I solicit from you, and so fix its value. This point being discussed and arranged, I shall have to repay you at the end of the ten years, not only the value of the service for which you are a creditor, but the value likewise of the service which you are about to render me.”
It is the value of this temporary transference of values saved which we denominate interest.
For the same reason that a third party may desire that we [p396] should transfer to him, for an onerous consideration, the enjoyment of a value saved, the original debtor may also desire to enter into the same bargain. In both cases this is called asking for credit. To give credit is to give time for the acquittance of a debt, of a value; it is to deprive oneself of the enjoyment of that value in favour of another, it is to render a service, it is to acquire a title to an equivalent service.
But to revert to the economic effects of saving, now that we are acquainted with all the details of the phenomenon, it is very evident that it does no injury to general activity or to labour. Even when the man who economizes realizes his economy, and, in exchange for services rendered, receives hard cash, and hoards it, he does no harm to society, seeing that he has not been able to withdraw that amount of value from society without restoring to it equivalent values. I must add, however, that such hoarding is improbable and exceptional, inasmuch as it is detrimental to the personal interests of the man who would practise it. Money in the hands of such a man may be supposed to say this: “He who possesses me has rendered services to society, and has not been paid for them. I have been put into his hands to serve him as a warrant; I am at once an acknowledgment, a promise, and a guarantee. The moment he wills it, he can, by exhibiting and restoring me, receive back from society the services for which he is a creditor.”
Now this man is in no hurry. Does it follow that he will continue to hoard his money? No; for we have seen that the lapse of time which separates two services exchanged becomes itself the subject of a commercial transaction. If the man who saves intends to remain ten years without drawing upon society for the services that are owing to him, his interest is to substitute a representative, in order to add to the value for which he is a creditor the value of this special service. Saving, then, implies in no shape actual hoarding.
Let moralists be no longer arrested by this consideration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .