ȁȀȁ Partʺ: Economicsas capital goods ordinarily presupposes an increase at least partly in physi-
cal quantity. Maurice Allais finds this distinction important (ȀȈȃȆ, vol.ŕŕ:
chap.ŕŤand passim; passages on this and related topics reviewed below
are widely scattered in his two volumes).
People’s overall willingness to wait,ifit were somehow predetermined,
would promote capital formation all the more if people did not have the
option of waiting through ownership of land in particular. Accumulation
of wealth in bid-up land values partially gratifies the overall willingness to
wait, leaving less of that willingness for satisfaction in ways that ultimately
result in capital formation.
Allais’s point serves a deeper understanding of capital and interest,
but no policy conclusions immediately follow. It concernshowthe taste
for waiting is gratified. It does not contradict recognition that waiting per-
formed through landownership makes the interest rate lower and capital
construction and maintenance greater than these would be if the waiting
so performed did not occur at all, not even through ownership of wealth
in other forms.
It does seem plausible that waiting is more attractive and therefore
more abundant overall with than without the landownership option. Allais
seems to take the overall supply of waiting tacitly for granted, however,
and to suppose that if thrift could not find an outlet in landownership, it
would all seek an outlet in ownership of capital goods, either directly or
through securities, further lowering the interest rate and promoting real
capital formation.
Ļe opportunity to accumulate wealth as privately owned land cuts
two ways. On the one hand, it broadens the opportunities open to savers,
thereby improving the overall attractiveness of waiting and so presum-
ably increasing its total performance (assuming, anyway, a “normal” rather
than “backbending” response to its rewards). On the other hand, the land-
ownership option diverts some fraction of total waiting away from capi-
tal formation into accumulation of private wealth in the socially rather
fictitious form of bid-up land values. Ļe inelasticity of land’s supply
is relevant: strengthened demand increases its quantity much less than
its market value (and not merely nominal price but value relative to
other things). It is not obvious whether the absolute volume of wait-
ing devoted to capital formation is larger or smaller than it would be if
the growth of land values didnotaccrue to private owners. Allais evi-
dently believes that it is smaller, which is why he wants to restrain that
accrual.