This section is from the "The Science Of Wealth" book, by Amasa Walker.
Reproductive consumption is the use of wealth as capital. Only a portion of the wealth of the world is applied to the office of creating new wealth. That portion is called "capital:" that application is reproductive consumption.
It has been shown that mankind are continually wearing out their wealth; indeed, that it wears out by natural causes, independently of use; and that therefore, if men would not become destitute, they must make constant, unceasing efforts after fresh production.
But it is a principle of our nature to do what we have to do with as little labor as possible; that is, with as much help as possible. Now, it is found true, that, by employing present wealth, production is easier and larger, even after the amount so used has been replaced. For this reason, men take freely of what they have, and destroy it to-day that they may get a greater good tomorrow. This is the only reason why capital is used. The first capital was created without capital. Why should not all succeeding creations be brought about likewise? Because it is found to save human labor and multiply human enjoyments to devote the present to the future.
But this application of capital presupposes the constancy of nature. Men would not put grain into the ground unless they had the assurance of a return. Every act of this kind requires faith, — is an act of faith.
But even yet we have not secured reproductive consumption. Every article of value, either in itself, or in that it will exchange for other things, is fitted to gratify some craving of the human appetites, tastes, or passions; and, if nothing withstands these, they will certainly prevail. Here is an object of value. A positive force operates on the possessor to consume it at once; and he will do so as surely as a hungry lion will tear his prey, unless something more than brutal instinct of immediate self-gratification is found in the man. What is that which can stand up against the craving of immediate wants, and keep them away from wealth, that it may be devoted to other uses? It is not necessarily a high moral quality. It may be purely selfish. It may look on to the gratification of personal desires only. It may entertain no benevolent designs, nor be capable of any sacrifice for others. All its denial may be in its own interest. Yet we say that it is wise and brave and commendable. It is the principle of frugality. Only as this is found can the reproduction of wealth be secured. Here, then, we have the conditions complete. The process is as follows: —
1st, The certainty that present wealth will fail in time.
2d, The willingness to anticipate such destitution by labor.
3d, The fact that capital can greatly assist labor in this matter.
4th, Such a constancy in nature as secures the return of capital.
5th, Such a capacity of self-denial as will resist the impulse of immediate gratification, and devote wealth to reproduction.
But we find we have omitted one condition. Here is wealth. If nothing intervenes, it will certainly be devoted to luxurious consumption, because the desires of man in that direction are a positive and constantly operating force. Frugality comes in with wise forecast and strong restraint, and wrests a share from the grasp of the appetites. Seemingly all that is necessary has been attained. But it is yet to be decided whether this share shall go into the province of mistaken, or into that of reproductive consumption. There is a very considerable chance yet before it. We have not, however, regarded this as of great practical importance, inasmuch as it is generally admitted that the intelligence of mankind is, on the whole, sufficient to direct its own industry; and that this intelligence resides not in the major will of the mass, but in each individual, or voluntary association. It has often been proposed to take wealth away from luxurious consumption, by force of law, for the good of the whole; but legislators and philosophers have usually agreed to leave it to the intelligence and self-interests of capitalists and laborers how the wealth so saved from luxury shall be applied. To be sure, we have found in certain specific matters, and under the confusion of political forms, that laws have been enacted to instruct industry as to its own wants and behoofs; but such can never be reasonably defended on general grounds, and have to hide themselves under pleas of state policy, or find "protection" under the banners of party. It will not be necessary to discuss, as a principle, the superiority of government over individual and associated intelligence and interest in the direction of labor.
We have now shown how it is that wealth becomes capital; for what reasons and by what forces it is taken out of the province of enjoyment or of waste, and devoted to the office of reproduction.
I. What amount of reproductive consumption is necessary?
What should be the proportion of capital to the entire mass of wealth, to secure the industrial well-being of any people? This question will be best answered by an examination of the several offices which capital is to perform.
1st, Capital must support labor.