Section V.2D-V.2E of II.1 (“The Problem of Scale (Part I)”)
Considering “The General Theory” of Lord Keynes
V.2D
Keynes convincingly makes the case on ‘the social dangers of the hoarding of money’ and the need for us to orbit a new ethic around “investment” (which entails “saving money,” while “saving money” doesn’t necessarily entail “investing”).³⁴⁶ As a result, I do indeed think Keynes establishes that ‘[t]he absurd, though almost universal, idea that an act of individual saving is just as good for effective demand as an act of individual consumption, has been fostered by the fallacy.’³⁴⁷ When we talking about “savers,” it’s easy to fall into an uncritical acceptance of “the morality of saving money,” but when we talk about “hoarders,” our thinking can dramatically shift, suggesting that even we subconsciously understand that savings must ultimately transition into investing. If Keynes is able to convince of us at least this, he has made the case he seems most concerned to make.
‘A decreased readiness to spend will be looked on in quite a different light if, instead of being regarded as a factor which will, cet. par., increase investment, it is seen as a factor which will, cet. par., diminish employment.’³⁴⁸ When we think “savings,” we tend to think “future spending,” but when we say “hoarding,” the very change in the language makes it clear that Keynes was right to be concerned. Suddenly the connection of “saving” and “investment” is severed in favor of a connection between “hoarding” and “diminishing employment” — the ethics shift instantly once we consider ‘what lies in the other scale.’³⁴⁹ CE argued that increased savings didn’t decrease employment, but instead that the act of saving suggested the person doing the saving was “notably wise,” and thus the “investment to come” would, more likely than not, prove prosperous. For CE, less spending contributed to a lower interest rate, which would cause more investment — the market self-corrected — but Keynes convincingly argued that less spending caused less employment, which caused less spending, and then it didn’t matter what constituted the interest rate: nobody had wages to make investments.
‘The habit of overlooking the relation of the rate of interest to hoarding may be a part of the explanation why interest has been usually regarded as the reward of not-spending, whereas in fact it is the reward for not-hoarding.’³⁵⁰ This is a key distinction: we benefit from interest rates only when spending is for the sake of investing, a contingency which the ethic of “pure saving” fails to delineate (considering this, we could perhaps say that Keynes is more against “hoarding” than “saving,” per se). Surveying CE, Keynes wrote…
.
.
.
For the rest of the piece, which can be found on Substack due to formatting issues, please see:
.
.
.
Notes
³⁴⁶Keynes, John Maynard. The General Theory of Employment, Interest, and Money. Orlando, FL: First Harvest/Harcourt, Inc., 1964: 161.
³⁴⁷Keynes, John Maynard. The General Theory of Employment, Interest, and Money. Orlando, FL: First Harvest/Harcourt, Inc., 1964: 211.
³⁴⁸Keynes, John Maynard. The General Theory of Employment, Interest, and Money. Orlando, FL: First Harvest/Harcourt, Inc., 1964: 185.
³⁴⁹Keynes, John Maynard. The General Theory of Employment, Interest, and Money. Orlando, FL: First Harvest/Harcourt, Inc., 1964: 174.
³⁵⁰Keynes, John Maynard. The General Theory of Employment, Interest, and Money. Orlando, FL: First Harvest/Harcourt, Inc., 1964: 174.
.
.
.
For more, please visit O.G. Rose.com. Also, please subscribe to our YouTube channel and follow us on Instagram, Anchor, Facebook, and Twitter.
