Of Capital. 27
administer to the production of a greater quantity of wealth than that which is actually produced.
Intimately connected with this portion of the subject of capital there is a very widespread misconception that there would be a glut of capital if it were increased beyond a certain point; in fact, that capital might be so augmented that no industry would be found upon which it could be employed. Therefore, a certain waste of capital is considered necessary in order to prevent such a glut. Now, it has been explicitly stated that capital is the result of saving, and therefore if capital is increased, the increase must be due to greater saving. Let it therefore be supposed that the rich spend much less upon luxuries, and resolve to employ labourers with the money thus saved. It may be imagined that if such saving were continued, our various industrial marts would soon be overstocked, and that warehouses would be filled with goods for which there was no demand. There are few even amongst political economists who do not sometimes write and speak as if they believed that the unproductive expenditure of the rich is required to give adequate employment to the poor. But if such an increase of capital as that described should occur, two suppositions may be made; an increase of population proportionate to the increase of capital may occur; or, secondly, the population may remain the same as it was, before the increase of capital commenced.
The first case presents no difficulty; the increased capital would be required to support the increased population. But the second case must be carefully considered, and it at once suggests this difficulty: if all the labourers were previously fully employed, how could the increase of capital give additional employment to labourers?
A particular point, which may be keenly disputed in an abstract science, such as political economy, is frequently completely obscured in the ambiguities of general language: and, of this, the question under discussion affords a striking example. It therefore becomes very necessary, as a preliminary process, to attribute a distinct meaning to the above expression,—'giving additional employment to the labourers.' The augmentation in the capital of the country has been supposed
BOOK I.
CH. IV.
Fears of a 'glut' of capital are based upon misconception.
An increase of capital might accompany an increasing or a stationary state of population.
In either case the fear of a glut are imaginary.