CHAPTER 7

THE MEANING OF SAVING AND INVESTMENT

FURTHER CONSIDERED

I

In the previous chapter Saving and Investment have been so defined that they are necessarily equal in amount, being, for the community as a whole, merely different aspects of the same thing. Several contem- porary writers (including myself in my Treatise on Money ) have, however, given special definitions of these terms on which they are not necessarily equal. Others have written on the assumption that they may be un- equal without prefacing their discussion with any defini- tions at all. It will be useful, therefore, with a view to relating the foregoing to other discussions of these terms, to classify some of the various uses of them which appear to be current.

So far as I know, everyone agrees in meaning by Saving the excess of income over what is spent on consumption. It would certainly be very inconvenient and misleading not to mean this. Nor is there any important difference of opinion as to what is meant by expenditure on consumption. Thus the differences of usage arise either out of the definition of Investment or out of that of Income.

II

Let us take Investment first. In popular usage it is common to mean by this the purchase of an asset, old

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