ȁȀȅ Partʺ: Economicsvolume goes down. Another strand, Allais’s, tacitly assumes high substi-
tutability: the propensity to save will be satisfied in some form or other;
and if satisfying it in a socially fictitious way is made less attractive, more
will be satisfied through real capital formation.
Ļis second strand of analysis tacitly supposes that land simply exists.
If it can be created and destroyed, then the argument is stronger for
treating it like any other capital good. If land does not, in fact, go on
yielding a stream of services that remains unimpaired forever despite the
conditions of ownership, then the signals and incentives transmitted by
the price system can usefully guide the exploitation and conservation of
depletable resources, whether or not they are straightforwardly replace-
able. Restricting private ownership of resources and of incomes from them
would impair these signals and incentives. Anthony Scott (ȀȈȄȄ) devel-
ops this point at length. He further argues, among other things, that
nothing is sacred about conserving depletable resources in their original,
nature-given form; man-made capital goods can often sensibly replace
them. Because investments in resource conservation and in man-made
capital goods are essentially similar, maintaining greater stocks of natu-
ral resources means having less man-made capital goods—given the total
volume of investable saving.
None of the above cancels what was said near the start of this paper
about how people’s willingness to acquire and hold land rather than spend
the proceeds of its sale on current consumption does tend to hold down
the interest rate and promote capital formation. Nor does anything cancel
the reservation, largely attributable to Allais, that,given the propensity to
postpone current consumption, conceived of as a function of income and
wealth, the opportunity to accumulate private wealth in the form of land,
as compared with its absence, does tend to absorb the propensity to wait
in such a way as to impede capital formation.
Allais is not the only economist to mention land (as well as money; see
a later section) in an analysis of unproductive diversion of the willingness
to save; so does Maxwell J. Fry (ȀȈȇȇ, p.ȀȆ). Ļe total market value of
wealth, including the value of land and collectibles, appears with positive
sign as an argument in the economy’s consumption function and with a
negative sign in its saving function. Other things equal, the larger this
wealth term is, the larger is the volume of consumption out of a given
real income and the smaller the volume of resources released by saving for
real investment. Ļe more people satisfy their desire to hold savings by
holding wealth of a privately genuine but socially spurious kind, such as