CH. 2 POSTULATES OF THE CLASSICAL ECONOMICS 19

As a corollary of the same doctrine, it has been sup- posed that any individual act of abstaining from con- sumption necessarily leads to, and amounts to the same thing as, causing the labour and commodities thus released from supplying consumption to be invested in the production of capital wealth. The following passage from Marshall's Pure Theory of Domestic Values1 illustrates the traditional approach:

The whole of a man's income is expended in the purchase of services and of commodities. It is indeed commonly said that a man spends some portion of his income and saves another. But it is a familiar economic axiom that a man purchases labour and commodities with that portion of his income which he saves just as much as he does with that he is said to spend. He is said to spend when he seeks to obtain present enjoyment from the services and commodities which he purchases. He is said to save when he causes the labour and the commodities which he purchases to be devoted to the production of wealth from which he expects to derive the means of enjoyment in the future.

It is true that it would not be easy to quote com- parable passagesfrom Marshall's later work2 or from Edgeworth or Professor Pigou. The doctrine is never stated to- day in this crude form. Nevertheless it still underlies the whole classical theory, which would collapse without it. Contemporary economists, who might hesitate to agree with Mill, do not hesitate to accept conclusions which require Mill's doctrine as their premiss. The conviction, which runs, for ex- ample, through almost all Professor Pigou's work, that money makes no real difference except frictionally and that the theory of production and employment can be

1 P. 34.

2 Mr. J. A. Hobson, after quoting in his Physiology of Industry(p. 102) the above passage from Mill, points out that Marshall commented as follows on this passage as early as his Economics of Industry, p. 154.“But though men have the power to purchase, they may not choose to use it.” “But”, Mr Hobson continues,"he fails to grasp the critical importance of this fact, and appears to limit its action to periods of‘crisis’.” This has remained fair comment, I think, in the light of Marshall's later work.