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A TREATISE ON MONEY

BK. Ill

junction with the costs of shutting-down productionand opening up again, so that results have often to beaveraged over a period,—of how there can be losses,i.e. of why entrepreneurs continue to produce thoughat a loss. And, just in the same way, the period whichmust elapse before the supply of specialised factors ofproduction can be increased, and the long-time con-tracts (partly conditioned by the length of life of thesespecialised factors) into which entrepreneurs mustenter to induce this increase of supply, are the explana-tions why, for a time, profits can exist.

(3) Savings. —We shall mean by Savings the sumof the differences between the money-incomes ofindividuals and their money-expenditure on currentconsumption.

Thus profits, not being part of the income of thecommunity, are not part of its savings either—evenwhen they are not spent on current consumption.They are not only the balancing figure which accountsfor the difference between the value of the nationaloutput (or national dividend) and its cost of produc-tion, both in terms of money; but they also account,as we shall see, for the difference between the value ofthe increment of the national wealth in any period andthe aggregate of individual savings as defined above.

That is to say, the value of the increment of thewealth of the community is measured by Savings plusProfits.

(4) Investment. —We shall mean by the rate ofInvestment the net increment during a period of timeof the capital of the community (as defined in thenext section of this Chapter) ; and by the value ofInvestment, not the increment of value of the totalcapital, but the value of the increment of capitalduring'any period. We shall find, therefore, that thevalue of current investment, as thus defined, will beequal to the aggregate of Savings and Profits, as thusdefined.