176 THE GENERAL THEORY OF EMPLOYMENT BK. IV

market, tends towards an equilibrium level such thatthe aggregate demand for capital in that market,at that rate of interest, is equal to the aggregate stockforthcoming at that rate”.1 Or again in ProfessorCassel’s Nature and Necessity of Interest it is explainedthat investment constitutes the “demand for waiting”and saving the “supply of waiting”, whilst interestis a “price” which serves, it is implied, to equate thetwo, though here again I have not found actual wordsto quote. Chapter vi. of Professor Carver’s Distribu-​​​tion of Wealth clearly envisages interest as the factorwhich brings into equilibrium the marginal disutilityof waiting with the marginal productivity of capital.2Sir Alfred Flux ( Economic Principles, p. 95) writes:“If there is justice in the contentions of our generaldiscussion, it must be admitted that an automatic adjust-ment takes place between saving and the opportunitiesfor employing capital profitably. . . . Saving will nothave exceeded its possibilities of usefulness ... solong as the rate of net interest is in excess of zero.”Professor Taussig ( Principles , vol. ii. p. 29) drawsa supply curve of saving and a demand curve re-presenting “the diminishing productiveness of theseveral instalments of capital”, having previously stated(p. 20) that “the rate of interest settles at a point wherethe marginal productivity of capital suffices to bringout the marginal instalment of saving”.3 Walras, in

1 Cf. p. 186 below for a further discussion of this passage.

2 Prof. Carver’s discussion of Interest is difficult to follow (I) through hisinconsistency as to whether he means by “marginal productivity of capital”quantity of marginal product or value of marginal product, and (2) throughhis making no attempt to define quantity of capital.

3 In a very recent discussion of these problems (“Capital, Time and theInterest Rate”, by Prof. F. H. Knight, Economica, August 1934), a discussionwhich contains many interesting and profound observations on the natureof capital, and confirms the soundness of the Marshallian tradition as tothe uselessness of the Böhm-Bawerkian analysis, the theory of interest isgiven precisely in the traditional, classical mould. Equilibrium in the fieldof capital production means, according to Prof. Knight, “such a rate ofinterest that savings flow into the market at precisely the same time-rateor speed as they flow into investment producing the same net rate of returnas that which is paid savers for their use”.