Savings

SAVING. —

I. NOTION

It is the positive difference between income and expenditure (in the case of a business, it is identified with profit). It arises and increases in two ways: a) by increasing income; b) by reducing expenditure. The first path requires ingenuity, initiative, prudence, and industriousness, but also a growing investment of fixed and circulating capital; the second path, in addition to prudent management that eliminates all waste, requires renunciation and limitations in consumption—limitations which, however, beyond a certain point affect productivity itself and cancel saving. The two forms must coexist, the first being more suited to classes

with variable incomes, and the second more suited to classes with fixed incomes; and they necessarily complement each other, since neither has the character of a universal rule. Indeed, the first form (productive saving) could not be implemented without the capital supplied by the second, nor could the latter (saving through abstinence) become general without provoking extremely serious crises as a consequence of reduced consumption.

The connection, therefore, ordinarily established between the concepts of saving and sacrifice is relative: it involves a preference for productive consumption (also called consumption of saving) over consumption for enjoyment, on the basis of calculations of expediency that incorporate moral, provident, and speculative considerations.

By “setting aside” the things saved, in order to hoard them or transform them into instruments of new production (capital), either directly, if he is also an entrepreneur, or by lending them to others in exchange for interest or income, the saver demonstrates that these things constitute for him, at present, the “superfluous”; that which, according to the Gospel, must return to the poor through the ordinary means of the productive employment of capital, a source of new work and new saving, or through the extraordinary means of charity (alms, donations, and various forms of assistance). The saver’s act thus gives practical definition to the concepts of necessity and superfluity, which are subjective and theoretically undefined.

II. TRANSFORMATION OF SAVINGS

The transformation of savings into instruments of new production and therefore of income (houses, workshops, ports, railways, machines, raw materials, patents, etc.) constitutes a function of capital importance in the economy, and is therefore rightly called the “capital function”: hence the designations “capital” for savings thus transformed, “capitalist” for the saver who has carried out the transformation, and “capitalism” for the economic system that recognizes the capital function as its foundation (today, however, this word is used in a disparaging sense, to designate excessive and pathological forms of the system, whose economic and moral effects weigh upon social life).

Savings, being firmly linked to the free choice between immediate consumption for enjoyment and productive consumption, are an act of will and therefore a moral act: indeed, they depend on diligence, enterprise, and generosity (predominant in the first of the forms considered above), and on the virtues of prudence, temperance, and renunciation (predominant in the second form). Where these qualities and virtues are held in little esteem, savings do not arise in the quantity required annually, and economic life languishes. Strong peoples, who firmly established their fortunes, were always thrifty peoples; and so were individuals, families, and businesses.

III. SAVING IN ITS FORMATION AND USE

Saving, in its formation and use, is also the product of a specific culture and of the saver’s degree of contractual capacity, manifested especially in the choice of investments. In particular, concern over risks and devaluation clips the wings of initiative and leads people to prefer consumption for enjoyment or hoarding, or indirect investments, of short duration and less useful to society. This is detrimental to economic life, which can bestow the well-being due to progress and maintain the demand for labor and its remuneration at high levels only if it is fed annually by the masses of new saving required at least to employ the new workers (on average, millions of lire are required for each worker), properly distributed between fixed and circulating capital and among the various branches of industry. Otherwise, the familiar phenomena of overproduction occur, with a consequent decrease in real wages and therefore in consumption, so that producers gradually cease to produce and to save.

As always, this scientific and practical requirement of the economy is also foreshadowed in an evangelical precept, the parable of the talents, which makes the proper use of saving a moral obligation, linked with the other obligation of returning the surplus to the poor who made it possible through their labor, even though they themselves were not in a position to save.

IV. HONESTY OF SAVING

Contrary to collectivist theories, honest saving represents an indisputable property of the saver: and there is no reason why this principle should change depending on whether the things saved are used in one way or another. Leo XIII wrote in Rerum novarum: « If, then, the artisan, by means of his savings, came to make some savings and, in order to secure them better, invested them in a piece of land, this land is ultimately nothing other than wages disguised in another form, and consequently is his property, no more and no less than the wages themselves ». The expropriation or, worse still, the confiscation of capital must therefore be rejected as contrary not only to morality and law, but to reason itself and to the general and particular interest. There are other legitimate and effective means of enabling workers to participate in ownership of the means of production: individually accumulated savings employed productively, the various types of association contracts with entrepreneurs, workers’ shareholding, cooperative societies, etc. Every threat to property (« the “vital space of the family,” » as defined by Pius XII), deprives the individual of the possibility of resisting attacks upon his own freedom: and means restoring a hundredfold the exploitation from which, in words, one claims to liberate him. It also means, beyond the offence against the person, suppressing initiative, resulting in a serious decline in the productivity of labour, and consequently in production and consumption. Indeed, it is well known that in countries under collectivist regimes, or where State capitalism prevails, the productivity of labour falls to extremely low levels, as revealed both by the very high prices of products on the international market, by the compensation sought through various forms of activism and emulation, and finally by the extraordinary extent of forced labour.

V. PROGRESSO NELLA GENESI DEL R

Progress in the formation, accumulation, and investment of saving is oriented toward technical insurance arrangements that achieve an ever-greater division of risk, and toward the invention of contracts and institutions that raise the degree of negotiability of its symbols and, to a lesser extent, protect them from devaluation (v. SVALUTAZIONE MONETARIA). Both the so-called capitalist countries—with their mortgage and building credits, financial, fiduciary, and securities companies, holdings, trustees, and government bonds themselves—and the countries in which the State functions as a centralized economic organism, absorbing all saving and distributing it according to planned criteria (v. SANTIFICAZIONE), tend toward a form of total insurance. What characterizes the two so-called political blocs on the economic plane is above all the path chosen for the accumulation, insurance, and investment of saving. A middle-ground conception might be the extension of the insurance method to all the symbols of saving in all the countries of the world by an autonomous economic organism, on the basis of freedom; in this way, saving would ultimately lose its monetary and national characteristics.