CH. 8 THE PROPENSITY TO CONSUME : I 99

come, the less favourable to consumption, and there-fore to employment, will a given level of investmentprove to be.

When the whole of this financial provision (orsupplementary cost) is in fact currently expended inthe upkeep of the already existing capital equipment,this point is not likely to be overlooked. But whenthe financial provision exceeds the actual expenditureon current upkeep, the practical results of this in itseffect on employment are not always appreciated. Forthe amount of this excess neither directly gives rise tocurrent investment nor is available to pay for con-sumption. It has, therefore, to be balanced by newinvestment, the demand for which has arisen quite in-dependently of the current wastage of old equipmentagainst which the financial provision is being made;with the result that the new investment available toprovide current income is correspondingly diminishedand a more intense demand for new investment isnecessary to make possible a given level of employ-ment. Moreover, much the same considerations applyto the allowance for wastage included in user cost,in so far as the wastage is not actually made good.

Take a house which continues to be habitable untilit is demolished or abandoned. If a certain sum iswritten off its value out of the annual rent paid by thetenants, which the landlord neither spends on upkeepnor regards as net income available for consumption,this provision, whether it is a part of U or of V, con-stitutes a drag on employment all through the life ofthe house, suddenly made good in a lump when thehouse has to be rebuilt.

In a stationary economy all this might not be worthmentioning, since in each year the depreciation allow-ances in respect of old houses would be exactly offsetby the new houses built in replacement of those reach-ing the end of their lives in that year. But such factorsmay be serious in a non-static economy, especially