Profit and Wages; A Study in the Distribution of Income

This historic book may have numerous typos and missing text. Purchasers can download a free scanned copy of the original book (without typos) from the publisher. Not indexed. Not illustrated.1916 Excerpt: ... fication is a complete denial of the initial hypothesis, there should be an end of experiment with such fictitious stuff. (The time-preference theory is a remarkably consistent piece of theorizing and therein doubtless lies its great attraction. But it is spun out of nothing. It is not denied that expectations, or let us say rather hopes and fears, of an increase or decrease in the proportion of income to wants may have some influence on saving, lending, and borrowing; may be among the psychic conditions out of which these acts sometimes arise. The business of life insurance depends on an appeal to such motives. The amount of savings which seek interest-yielding investments may be affected by their intensity. Influencing the supply of loan funds they may have some influence on the rate of interest. But to grant that these expectations, hopes, and fears have an influence on the rate of interest is far from admitting that they are a direct determinant, sufficiently definite and powerful, to be given a place in a carefully formulated general theory of the rate of interest. And in any case they are subordinate in importance to most of the purposes and calculations that rule in the direct investment of capital in the It should be noted, however, that in buying life insurance, the one really clear and important case of an occasion for comparing amounts of consumable wealth of different periods with reference to a difference in the state of provision for the wants of these periods, the preference is for future goods, and, therefore, the reverse of the time-preference called for by the theory under consideration. productive process. Of these calculations, we have seen, the concept of time-preference gives 'a false notion. We may conclude, therefore, that the effor...