CH. 23

NOTES ON MERCANTILISM, ETC.

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individual himself, but it raises wages, gives work to theunemployed, and scatters blessings on every side. F rom thedaily papers to the latest economic treatise, from the pulpitto the House of Commons , this conclusion is reiterated andre-stated till it appears positively impious to question it. Yetthe educated world, supported by the majority of economicthinkers, up to the publication of Ricardo’s work strenuouslydenied this doctrine, and its ultimate acceptance was ex-clusively due to their inability to meet the now explodedwages-fund doctrine. That the conclusion should havesurvived the argument on which it logically stood, can beexplained on no other hypothesis than the commandingauthority of the great men who asserted it. Economic criticshave ventured to attack the theory in detail, but they haveshrunk appalled from touching its main conclusions. Ourpurpose is to show that these conclusions are not tenable, thatan undue exercise of the habit of saving is possible, and thatsuch undue exercise impoverishes the Community, throwslabourers out of work, drives down wages, and spreads thatgloom and prostration through the commercial world whichis known as Depression in Trade. . . .

The object of production is to provide “utilities and con-veniences” for consumers, and the process is a continuous onefrom the first handling of the raw material to the momentwhen it is finally consumed as a utility or a convenience.The only use of Capital being to aid the production of theseutilities and conveniences, the total used will necessarily varywith the total of utilities and conveniences daily or weeklyconsumed. Now saving, while it increases the existing aggre-gate of Capital, simultaneously reduces the quantity of utilitiesand conveniences consumed; any undue exercise of this habitmust, therefore, cause an accumulation of Capital in excessof that which is required for use, and this excess will exist inthe form of general over-production . 1

In the last sentence of this passage there appears theroot of Hobson’s mistake, namely, his supposing thatit is a case of excessive saving causing the actualaccumulation of capital in excess of what is required,which is, in fact, a secondary evil which only occursthrough mistakes of foresight; whereas the primary

1 Hobson and Mummery, Physiology of Industry, pp. iii-v.