in the Robinson Crusoe tradition the fisherman who has a horde , a stockpile to fall back on, is the one that can take time out of hand to mouth fishing with a spear; and create a net.
Ahh ok, so would you classify that as saving? That sort of saving can’t really sustain a complex multi-stage system of production…
evidence? argument?
Alex, I think your problem is that your viewing money as geld rather than as an indeterminate resource. For example, Crusoe could save enough money to buy the amount of fish he needs to make it through building the hut. It sustains a complex capital structure because resources can be directed to growing the structure rather than mere survival(the effects are just localized).
Ha, how did I manage to turn this into “my problem”? I have no misunderstanding about how a stash of gold can be considered as maintaining a capital structure, but you’d be hard-pressed to convince me that such a structure would achieve any sort of complexity. Just consider how limited an entrepreneur’s options would be by being limited to saving for his or her own personal use. There would be no collective pooling of money to loan out for large business endeavors and unless you considered every capitalist to be the Renaissance man, it’d be practically impossible for capital to be efficiently allocated to those most efficient in the event of some new business opportunity – every entrepreneur would have to potentially drop whatever they were doing and fix the disequilibrium himself, rather than have the luxury of identifying the disequilibrium and allocating money to someone else more adept and willing to fix it. Is cash hoarding an important component in the complex capital systems of modern economies? Yes, somewhat. Is it the source of its complexity and delicately woven framework that is highly adaptable to changes in demand? Not at all. Such a truly complex capital structure requires interpersonal investment.
I think it is illustrative that your examples of “complex capital structures” involve nothing more than Crusoe economics.
You’re ignoring what happens when people ‘hoard’ money. They are foregoing consumption or investment on their own, which means (in the aggregate) that the price of both consumer goods and investment goods fall - the more ‘hoarding’ takes place, the more these prices fall.
Other individuals will both consume more and invest more because of the falling prices.
The only thing you can say with certainty is that lending directly for the purposes of production would increase investment more than hoarding.
You can’t make the claim that hoarding wouldn’t contribute indirectly to investment, it probably would as prices fell across the board.
More important still is to stop looking at investment and savings in terms of money. When someone ‘hoards’, they make available a resource to someone else that they would have consumed otherwise. Isn’t this just savings by a different name?
I’m not denying that what you’re saying is correct. What I was saying only pertained to the thought experiment in which the only kind of ‘saving’ that took place in a hypothetical economy was cash hoarding, and that no interpersonal investment could take place. Again, this is nothing more than a thought experiment. Obviously in real life, all sorts of interpersonal investment take place. If you read the earlier posts, I was trying to show how much more important interpersonal investment was in maintaining a complex capital structure compared to merely cash hoarding for your own purposes; I was NOT saying that cash hoarding had no effect on funds that could eventually be used for interpersonal investment. Again, thought experiment. Everything you said rings true when the restriction of no interpersonal investment is lifted.
bear in mind that just as people dont purchase large ticket consumer items mere cents at a time, but hoard thousands of dollars and then spend the hoard, so too with investment, where people extend loans to others, they dont typically lend cents at a time, they accumulate a hoard of savings, which ones accumulated in a heap can then be loaned out as a lump. i dont see how you could have ‘large scale’ ‘interpersonal investment’ as you called it without hoarding.
Me neither. Agreement sure is awesome.