It is clear, then, that expenditure, not parsimony, is the province of the class of land proprietors, and, that it is on the due performance of this duty, by the class in question, that the production of national wealth depends. And not only does the production of national wealth depend upon the expenditure of the class of land proprietors, but, for the due increase of this wealth, and for the constantly progressive maintenance of the prosperity of the community, it is absolutely requisite, that this class should go on progressively increasing its expenditure.It is spending which causes wealth to grow, not saving. And Spence makes no bones about it as this example shows:
The prosperity of the country would be as much promoted, if an owner of an estate of 10,000 l. a year, were to expend this sum in employing 500 men to blow glass bubbles, to be broken as soon as made, as if he employed the same number in building a splendid palace. . . . The 500 glass blowers would require as much wealth to be brought into existence from the soil, would consume as much food, and would consequently be as prosperous, as the 500 palace builders.Spence owns that it would be better to build palaces since this would add to the capital stock of the nation. But even so, the creation of no value at all would have the same economic effect on the level of prosperity as the building of a palace. There is no substantive difference between this and Keynes in the General Theory.
Pyramid-building, earthquakes, even wars may serve to increase wealth, if the education of our statesmen on the principles of the classical economics stands in the way of anything better. . . .
If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again. . . there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a great deal greater than it actually is.Keynes too stated that it would be better to build something useful, but argued that even completely unproductive spending would add to wealth. And for both Keynes and Spence, it was the restrictions in demand caused by saving which was at the heart of the problem.
It was to this kind of argument in Spence that James Mill replied. And this is why the argument moves in the way it does from demand deficiency to the causes of recession. Mill finds it beyond comprehension that someone should recommend wasteful expenditure as a means of generating wealth. Spending is a depletion of wealth while saving adds to it. The idea of spending one's way to prosperity was the worst sort of nonsense to Mill as it was to the entire classical school.
--Steven Kates, “On the True Meaning of Say's Law,” Eastern Economic Journal 23, no. 2 (Spring 1997): 196-197.
No comments:
Post a Comment