CH. 24

CONCLUDING NOTES

373

of capital depends not at all on a low propensity toconsume but is, on the contrary, held back by it; andonly in conditions of full employment is a low pro-pensity to consume conducive to the growth of capital.Moreover, experience suggests that in existing condi-tions saving by institutions and through sinking funds ismore than adequate, and that measures for the redistri-bution of incomes in a way likely to raise the propensityto consume may prove positively favourable to thegrowth of capital.

The existing confusion of the public mind on thematter is well illustrated by the very common beliefthat the death duties are responsible for a reductionin the capital wealth of the country. Assuming thatthe State applies the proceeds of these duties to itsordinary outgoings so that taxes on incomes and con-sumption are correspondingly reduced or avoided, itis, of course, true that a fiscal policy of heavy deathduties has the effect of increasing the community’spropensity to consume. But inasmuch as an increasein the habitual propensity to consume will in general(i.e. except in conditions of full employment) serve toincrease at the same time the inducement to invest, theinference commonly drawn is the exact opposite ofthe truth.

Thus our argument leads towards the conclusionthat in contemporary conditions the growth of wealth,so far from being dependent on the abstinence of therich, as is commonly supposed, is more likely to beimpeded by it. One of the chief social justifications ofgreat inequality of wealth is, therefore, removed. I amnot saying that there are no other reasons, unaffectedby our theory, capable of justifying some measure ofinequality in some circumstances. But it does disposeof the most important of the reasons why hitherto wehave thought it prudent to move carefully. Thisparticularly affects our attitude towards death duties;for there are certain justifications for inequality of