f shop-goods by
raising prices and circulating more money down the paths of production
stimulates and strains the sinews of production, and if the existing
machinery of production is inadequate it supplies a motive-power to
increase "saving." In no case can a community consume faster than it
produces. An individual can do so by living on his capital, a nation
may do so for a time by living upon its capital, giving to other
nations by means of an increased debt a lien upon its future wealth.
But a whole industrial community can never live upon its capital, can
never in the literal sense of the term "spend too much." This
statement requires a single qualification. While a community can never
by "spending" deplete its capital, while it cannot increase its
"spending" without at the same time increasing its real capital,[169]
it will doubtless be profitable to a progressive community to reduce
its consumption for a while below the normal proportion in order to
fully utilise new discoveries in the industrial arts which shall
justify in the future increased consumption.

But with this necessary qualification it is true that a community
cannot exceed in the direction of spending. But the balance may lean
the other way. A community may "save too much," that is to say, it may
establish a larger quantity of productive machinery and goods than is
required to maintain current or prospective consumption. What is to
prevent a community consisting of a vast number of individuals with no
close knowledge of one another's actions, desires, and intentions,
making such a miscalculation as will lead them to place at each of the
points A, B, C, D, E, and in all or most branches of industry, a
larger quantity of forms of capital than are required?

It is said that the harmony which subsists between the social interest
and the self-interest of individuals will prevent this, or, in other
words, that individuals would find that if they attempted to unduly
increase the aggregate of capital beyond what was socially
advantageous in view of the community's consumption, it would not pay
them to do so. Is this true?

An individual working entirely for himself, whose capital lay in his
tools and his raw or unfinished commodities, would never increase the
latter unduly. A socialist community properly managed would never add
to its stock of machinery or increase the quantity of its raw
materials or unfinished goods, so as to leave any machines unused o