188 THE GENERAL THEORY OF EMPLOYMENT BK. IV

to be said is that, taking the rate of net interest on the invest-ments of new capital in each of those trades [i.e. on marginalinvestments] to be about 3 per cent; then the aggregate netincome rendered by the whole of the trade-capital invested inthe various trades is such that, if capitalised at 33 years’ purchase(that is, on the basis of interest at 3 per cent), it would amountto some seven thousand million pounds. For the value of thecapital already invested in improving land or erecting a building,in making a railway or a machine, is the aggregate discountedvalue of its estimated future net incomes [or quasi-rents]; andif its prospective income-yielding power should diminish, itsvalue would fall accordingly and would be the capitalised valueof that smaller income after allowing for depreciation” (p. 593).

In his Economics of Welfare (3rd edn.), p. 163, ProfessorPigou writes: “The nature of the service of‘waiting’ has beenmuch misunderstood. Sometimes it has been supposed to con-sist in the provision of money, sometimes in the provision oftime, and, on both suppositions, it has been argued that no con-tribution whatever is made by it to the dividend. Neither sup-position is correct. ‘Waiting’ simply means postponing con-sumption which a person has power to enjoy immediately, thusallowing resources, which might have been destroyed, to assumethe form of production instruments.1 . . . The unit of ‘wait-ing’ is, therefore, the use of a given quantity of resources 2 —forexample, labour or machinery—for a given time. ... In moregeneral terms we may say that the unit of waiting is a year-value-unit, or, in the simpler, if less accurate, language of Dr. Cassel,a year-pound. ... A caution may be added against thecommon view that the amount of capital accumulated in any yearis necessarily equal to the amount of ‘savings’ made in it. Thisis not so, even when savings are interpreted to mean net savings,thus eliminating the savings of one man that are lent to increasethe consumption of another, and when temporary accumulationsof unused claims upon services in the form of bank-money areignored; for many savings which are meant to become capital

1 Here the wording is ambiguous as to whether we are to infer that thepostponement of consumption necessarily has this effect, or whether it merelyreleases resources which are then either unemployed or used for investmentaccording to circumstances.

2 Not, be it noted, the amount of money which the recipient of incomemight, but does not, spend on consumption; so that the reward of waitingis not interest but quasi-rent. This sentence seems to imply that the releasedresources are necessarily used. For what is the reward of waiting if thereleased resources are left unemployed?