15 Saving
In the most primitive of instances, saving is preparation for future consumption. The farmer who sets aside grain for consumption in the winter is saving for future consumption. The hunter who preserves his meat is storing food to save him the effort of hunting in future. It is generally considered to be good sense to set aside provisions in case of emergency, or to labor to provide for future needs before enjoying leisure time.
The introduction of money transforms the act of saving. A person who saves money is not storing the product of his own labor, but is storing the goods he will receive in exchange for his own labor. That is, instead of saving grain that has been produced, a man may save money to buy grain that has not yet been produced. This gives him the ability to set aside the benefit of his present labor for consumption many years in the future, and many miles away.
Savings provides wealth and capital to provide for many useful things. If our basic survival needs are satisfied for the future, we may spend our time doing other things. There never was any explosion of science or the arts in a society that is starving, but only in one that has enough necessities saved to allow men to spend their time in activities that do not produce food.
The same relationship exists between savings and capital. The man who spends all day catching fish with his hands has no time to weave a net or build a boat that will make his time more productive in future. He must catch enough today to feed himself tomorrow, on which day he can devote his effort to other tasks.
Savings is particularly important to modern production, in which materials must be purchased and wages paid long before a finished good is brought to market. The farmer who does not save his grain has nothing to eat while he plants for the next harvest, nor any way to pay laborers to assist him. The factory workers will not wait for finished goods to be sold to collect their wages, nor will the cotton farmer be willing to wait for finished clothing to be sold to be paid for his harvest.
However the use of money and instruments of credit create some very dangerous illusions about savings. It makes it difficult to appreciate the source of wealth, disconnecting it from the labor that is required to produce it, which spawns all manner of misunderstandings and superstitions about money.
One of the main illusions is that a person who saves is taking value out of circulation. A farmer who stores his own grain is not denying others the ability to consume it - as it was produced only to be stored for his future consumption. He would not have produced it otherwise, so the amount he saves represents additional production, not a subtraction from it, and does no harm to society.
Another misconception is that saving is the opposite of spending. It is not, but is instead the deferment of spending to another time. What is saved today will be consumed later - so it might be accurate to state that saving detracts from immediate spending, but it does not eliminate spending forever.
Money allows services to be saved. It is easy to see how a farmer may store a portion of his crop, but how may a doctor save a portion of his surgery for future consumption? It is only by transmuting his effort into coin that it can be saved. And it is only because this is possible that services are a viable profession.
Seen another way, the money that is saved is a loan that the saver has extended to society. He has given others the ability to pay him with goods until some future date. Those who criticize savers of hoarding do not seem to appreciate the favor of the interest-free loan that savers have granted to all of society.
There is some criticism of the saver who demands interest, but this is only because of the debasement of money. The farmer who sets aside a pound of wheat today shall have a pound of wheat next year (provided it does not rot). But if he sells his wheat for coin and the money is debased, he will not be able to buy the same pound of wheat, so he must earn interest merely to preserve his spending power. IF money were not tampered with, interest for its depreciation would be unnecessary.
He mentions the desire of interest for other reasons - the inconvenience of delayed consumption, the risk of not getting value in future, the risk to any money invested in a productive operation, etc. But in terms of savings, much of this is moot - savings seeks to have the same amount of purchasing power in future as the money had when it was set aside. Anything else is investment.
He mentions credit as the opposite of savings - getting to enjoy value now instead of waiting until a future time when the value is produced. Granting a person credit is doing them a favor, however much they grumble when it is time for them to return what was borrowed. And in a money society, credit and savings are natural complements to ensure that value can be created by assets that have been set aside.
Those who "hoard" are again granting society a no-interest loan until they spend their hoards. And their hoards will invariably be spent, by their heirs if they do not spend it in their lifetime. He who hoards more than he needs to consume cheats himself - of the pleasure of what he might have purchased, or the pleasure of spending more time in leisure activities rather than producing excess. It does no harm to anyone else in society, and as such moralists should cease to be dismayed by the practice.