226 THE GENERAL THEORY OF EMPLOYMENT bk. iv

pose exactly where we draw the line between the costswhich we deduct before calculating q and those whichwe include in c, since in what follows we shall beexclusively concerned with q - c.

(iii) Finally, the power of disposal over an assetduring a period may offer a potential convenience orsecurity, which is not equal for assets of different kinds,though the assets themselves are of equal initial value.There is, so to speak, nothing to show for this at theend of the period in the shape of output; yet it is some-thing for which people are ready to pay something.The amount (measured in terms of itself) which theyare willing to pay for the potential convenience orsecurity given by this power of disposal (exclusive ofyield or carrying cost attaching to the asset), we shallcall its liquidity-premium /.

It follows that the total return expected from theownership of an asset over a period is equal to its yieldminus its carrying cost plus its liquidity-premium, i.e.to q-c + /. That is to say, q-c+l is the own-rateof interest of any commodity, where q, c and l aremeasured in terms of itself as the standard.

It is characteristic of instrumental capital ( 'e.g . amachine) or of consumption capital {e.g. a house)which is in use, that its yield should normally exceedits carrying cost, whilst its liquidity-premium is prob-ably negligible; of a stock of liquid goods or of surpluslaid-up instrumental or consumption capital that itshould incur a carrying cost in terms of itself withoutany yield to set off against it, the liquidity-premiumin this case also being usually negligible as soon asstocks exceed a moderate level, though capable ofbeing significant in special circumstances; and ofmoney that its yield is nil, and its carrying cost negli-gible, but its liquidity-premium substantial. Differentcommodities may, indeed, have differing degrees ofliquidity-premium amongst themselves, and moneymay incur some degree of carrying costs, e.g. for safe