Saving: Difference between revisions
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It is evident that, for any formation of [[capital]], there must be '''saving''' — a restriction of the enjoyment of consumers’ goods in the present — and the [[investment]] of the equivalent resources in the production of capital goods. This enjoyment of consumers’ goods — the satisfaction of wants — is called [[consumption]]. The saving may result from an increase in the available supply of consumers’ goods. Saving involves the restriction of consumption compared to the amount that could be consumed; it does not always involve an actual reduction in the amount consumed over the previous level of consumption. | It is evident that, for any formation of [[capital]], there must be '''saving''' — a restriction of the enjoyment of consumers’ goods in the present — and the [[investment]] of the equivalent resources in the production of capital goods. This enjoyment of consumers’ goods — the satisfaction of wants — is called [[consumption]]. The saving may result from an increase in the available supply of consumers’ goods. Saving involves the restriction of consumption compared to the amount that could be consumed; it does not always involve an actual reduction in the amount consumed over the previous level of consumption. | ||
Because [[capital]] is perishable, it must be renewed, if man wishes to enjoy the fruits of higher production. Saving must be | Because [[capital]] is perishable, it must be renewed, if man wishes to enjoy the fruits of higher production. Saving must be repeated to preserve the structure of capital, over and over.<ref name="Rothbard_Saving_Capital">Murray N. Rothbard. [http://mises.org/rothbard/mes/chap1d.asp "9. The Formation of Capital"], [[Man, Economy and State]], online edition, referenced 2009-07-09.</ref> | ||
As Mises put it, "saving and the resulting accumulation of capital goods are at the beginning of every attempt to improve the material conditions of man; they are the foundation of human civilization. Without saving and capital accumulation there could not be any striving toward non-material ends."<ref name="Mises_saving">Ludwig von Mises. [http://mises.org/humanaction/chap15sec2.asp#p260 "2. Capital Goods and Capital"], [[Human Action]], online version, referenced 2009-07-10.</ref> | |||
==References== | ==References== | ||
{{Reflist}} | {{Reflist}} | ||
[[Category:Economical Concepts]] | [[Category:Economical Concepts]] | ||
Revision as of 12:03, 10 July 2009
To increase production, man must form capital. To create it, he must restrict his consumption and transfer his labor for that period from producing immediately satisfying consumers’ goods.
The restriction of consumption is called saving, and the transfer of labor and land to the formation of capital goods is called investment.[1]
Saving and Capital
It is evident that, for any formation of capital, there must be saving — a restriction of the enjoyment of consumers’ goods in the present — and the investment of the equivalent resources in the production of capital goods. This enjoyment of consumers’ goods — the satisfaction of wants — is called consumption. The saving may result from an increase in the available supply of consumers’ goods. Saving involves the restriction of consumption compared to the amount that could be consumed; it does not always involve an actual reduction in the amount consumed over the previous level of consumption.
Because capital is perishable, it must be renewed, if man wishes to enjoy the fruits of higher production. Saving must be repeated to preserve the structure of capital, over and over.[2]
As Mises put it, "saving and the resulting accumulation of capital goods are at the beginning of every attempt to improve the material conditions of man; they are the foundation of human civilization. Without saving and capital accumulation there could not be any striving toward non-material ends."[3]
References
- ↑ Murray N. Rothbard. "9. The Formation of Capital", Man, Economy and State, online edition, referenced 2009-07-09.
- ↑ Murray N. Rothbard. "9. The Formation of Capital", Man, Economy and State, online edition, referenced 2009-07-09.
- ↑ Ludwig von Mises. "2. Capital Goods and Capital", Human Action, online version, referenced 2009-07-10.