A prudent person who thought that he would derive equal gratifications from equal means at all stages of his life, would perhaps endeavour to distribute his means equally over his whole life: and if he thought that there was a danger that his power of earning income at a future date would run short, he would certainly save some of his means for a future date.He would do this not only if he thought that his savings would increase in his hands, but even if he thought they would diminish.He would put by a few fruit and eggs for the winter, because they would then be scarce, though they would not improve by keeping.If he did not see his way to investing his earnings in trade or on loan, so as to derive interest or profits from them, he would follow the example of some of our own forefathers who accumulated small stores of guineas which they carried into the country, when they retired from active life.They reckoned that the extra gratification which they could get by spending a few more guineas while money was coming in fast, would be of less service to them than the comfort which those guineas would buy for them in their old age.The care of the guineas cost them a great deal of trouble; and no doubt they would have been willing to pay some small charge to any one who would have relieved them from the trouble without occasioning them any sort of risk.
We can therefore imagine a state of things in which stored-up wealth could be put to but little good use; in which many persons wanted to make provision for their own future; while but few of those who wanted to borrow goods, were able to offer good security for returning them, or equivalent goods, at a future date.In such a state of things the postponement of, and waiting for enjoyments would be an action that incurred a penalty rather than reaped a reward: by handing over his means to another to be taken care of, a person could only expect to get a sure promise of something less, and not of something more than that which he lent: the rate of interest would be negative.(11*)Such a state of things is conceivable.But it is also conceivable, and almost equally probable, that people may be so anxious to work that they will undergo some penalty as a condition of obtaining leave to work.For, as deferring the consumption of some of his means is a thing which a prudent person would desire on its own account, so doing some work is a desirable object on its own account to a healthy person.
Political prisoners, for instance, generally regard it as a favour to be allowed to do a little work.And human nature being what it is, we are justified in speaking of the interest on capital as the reward of the sacrifice involved in the waiting for the enjoyment of material resources, because few people would save much without reward; just as we speak of wages as the reward of labour, because few people would work hard without reward.
The sacrifice of present pleasure for the sake of future, has been called abstinence by economists.But this term has been misunderstood: for the greatest accumulators of wealth are very rich persons, some of whom live in luxury, and certainly do not practise abstinence in that sense of the term in which it is convertible with abstemiousness.What economists meant was that, when a person abstained from consuming anything which he had the power of consuming, with the purpose of increasing his resources in the future, his abstinence from that particular act of consumption increased the accumulation of wealth.Since, however, the term is liable to be misunderstood, we may with advantage avoid its use, and say that the accumulation of wealth is generally the result of a postponement of enjoyment, or of a waiting for it.(12*) Or, in other words again, it is dependent on man's prospectiveness; that is, his faculty of realizing the future.
The "demand price" of accumulation, that is, the future pleasure which his surroundings enable a person to obtain by working and waiting for the future, takes many forms: but the substance is always the same.The extra pleasure which a peasant who has built a weatherproof hut derives from its usance, while the snow is drifting into those of his neighbours who have spent less labour on building theirs, is the price earned by his working and waiting.It represents the extra productiveness of efforts wisely spent in providing against distant evils, or for the satisfaction of future wants, as compared with that which would have been derived from an impulsive grasping at immediate satisfactions.Thus it is similar in all fundamental respects to the interest which the retired physician derives from the capital he has lent to a factory or a mine to enable it to improve its machinery; and on account of the numerical definiteness of the form in which it is expressed, we may take that interest to be the type of and to represent the usance of wealth in other forms.
It matters not for our immediate purpose whether the power over the enjoyment for which the person waits, was earned by him directly by labour, which is the original source of nearly all enjoyment; or was acquired by him from others, by exchange or by inheritance, by legitimate trade or by unscrupulous forms of speculation, by spoliation or by fraud: the only points with which we are just now concerned are that the growth of wealth involves in general a deliberate waiting for a pleasure which a person has (rightly or wrongly) the power of commanding in the immediate present, and that his willingness so to wait depends on his habit of vividly realizing the future and providing for it.
9.But let us look more closely at the statement that, as human nature is constituted, an increase in the future pleasure which can be secured by a present given sacrifice will in general increase the amount of present sacrifice that people will make.
