Savings

Agriculture is the first step toward civilization, because it requires a significant advance in men’s conceptual development: it requires that they grasp two cardinal concepts which the perceptual, concrete-bound mentality of the hunters could not grasp fully: time and savings. Once you grasp these, you have grasped the three essentials of human survival: time-savings-production. You have grasped the fact that production is not a matter confined to the immediate moment, but a continuous process, and that production is fueled by previous production. The concept of “stock seed” unites the three essentials and applies not merely to agriculture, but much, much more widely: to all forms of productive work. Anything above the level of a savage’s precarious, hand-to-mouth existence requires savings. Savings buy time.

Deferred consumption (i.e., savings) on a gigantic scale is required to keep industrial production going. Savings pay for machines which enable men to produce in a day an amount of goods they would not be able to produce by hand in a year (if at all). This enables the workers in turn to defer consumption and to save some of their income for their future needs or goals. The hallmark of an industrial society is its members’ distance from a hand-to-mouth mode of living; the greater this distance, the greater men’s progress.

The major part of this country’s stock seed is not the fortunes of the rich (who are a small minority), but the savings of the middle class—i.e., of responsible men who have the ability to grasp the concept “future” and to deposit one dollar (or more) into a bank account. A man of this type saves money for his own future, but the bank invests his money in productive enterprises; thus, the goods he did not consume today, are available to him when he needs them tomorrow—and, in the meantime, these goods serve as fuel for the country’s productive process.

Consumption is the final, not the efficient, cause of production. The efficient cause is savings, which can be said to represent the opposite of consumption: they represent unconsumed goods. Consumption is the end of production, and a dead end, as far as the productive process is concerned. The worker who produces so little that he consumes everything he earns, carries his own weight economically, but contributes nothing to future production. The worker who has a modest savings account, and the millionaire who invests a fortune (and all the men in between), are those who finance the future.