The Kinetic Theory of Economic Crises 35 



luxury, while labor for productive consumption could produce 

 only laborers' necessaries. If only the latter labor were employed, 

 all surplus would necessarily, other things being equal, be saved 

 for multiplied further production, — and so on, ad infinitum. By 

 devising this logical contrast he succeeded in drawing the great 

 moral lesson that only by saving does wealth increase. 



The moral lesson, however, was partly at the expense of expe- 

 rience, and hence was not likely to sink deeply into minds not of 

 a doctrinaire or puritanic type. Wealth created by new inven- 

 tions is only remotely or secondarily, at most, due to the intention 

 of saving ; it may be so recent that there has not been time to 

 consume it or otherwise to determine its destination. The ideal 

 premises of Mill, relating to ultimate social effects, are given a 

 practical application not warranted by experience : the conclusion 

 is reached that now, to-day, we should not indulge in any luxury. 

 Only minds addicted to the practice of abstractions can easily 

 reach and hold Mill's conclusions and at the same time make the 

 allowances due to the momentary conjuncture. Such minds 

 doubtless feel from the beginning the wholly idealistic environ- 

 ment. Again, when Mill's argument passes over to consideration 

 of the effects of circulating and fixed capital respectively, one 

 feels that the point of view is not quite so long-time. The "cap- 

 ital" here spoken of is not that ideal capital that was to be heaped 

 up indefinitely, but is that which either does or does not, may or 

 may not, within a reasonable time and with little delay, support 

 laborers. The two discussions, — on luxury and on circulating 

 capital, — are contiguous in the arrangement of the book, and yet 

 the transition from long- to short-time point of view is not 

 expressed. 



Again, in his chapters on credit, Mill speaks of "capital" in 

 the financial sense of the promises of men as to their mutual 

 dealings in abstract value! But he elsewhere defines capital as 

 food, shelter, tools, and clothing of laborers. Here again the 

 experienced student at once reads the future (or promise-) envi- 

 ronment into the text, but the inexperienced is hopelessly left in 

 the rear. The fallacies of the popular conception of the quantity 

 theory of money are clearly due to an ignorance of the fact that 



35 



