Keynes, Dickens, Thackeray, Consumption and Debt

 

My contention that for the system as a whole the amount of income which is saved, in the sense that it is not spent on current consumption, is and must necessarily be exactly equal to the amount of net new investment has been considered a paradox and has been the occasion of widespread controversy. The explanation of this is undoubtedly to be found in the fact that this relationship of equality between saving and investment, which necessarily holds good for the system as a whole, does not hold good at all for a particular individual. There is no reason whatever why the new investment for which I am responsible should bear any relation whatever to the amount of my own savings. Quite legitimately we regard an individual’s income as independent of what he himself consumes and invests. But this, I have to point out, should not have led us to overlook the fact that the demand arising out of the consumption and investment of one individual is the source of the incomes of other individuals, so that incomes in general are not independent, quite the contrary, of the disposition of individuals to spend and invest; and since in turn the readiness of individuals to spend and invest depends on their incomes, a relationship is set up between aggregate savings and aggregate investment which can be very easily shown, beyond any possibility of reasonable dispute, to be one of exact and necessary equality. Rightly regarded this is a banal conclusion. But it sets in motion a train of thought from which more substantial matters follow. It is shown that, generally speaking, the actual level of output and employment depends, not on the capacity to produce or on the pre-existing level of incomes, but on the current decisions to produce which depend in turn on current decisions to invest and on present expectations of current and prospective consumption. Moreover, as soon as we know the propensity to consume and to save (as I call it), that is to say the result for the community as a whole of the individual psychological inclinations as to how to dispose of given incomes, we can calculate what level of incomes, and therefore what level of output and employment, is in profit-equilibrium with a given level of new investment; out of which develops the doctrine of the Multiplier. Or again, it becomes evident that an increased propensity to save will ceteris paribus contract incomes and output; whilst an increased inducement to invest will expand them. We are thus able to analyse the factors which determine the income and output of the system as a whole;—we have, in the most exact sense, a theory of employment. Conclusions emerge from this reasoning which are particularly relevant to the problems of public finance and public policy generally and of the trade cycle.

-Keynes, The General Theory of Employment, Interest, and Money

Many questions that in the 20th Century were of consuming interest to social scientists (and in the early 21st century to journalists arguing about 20th Century social scientists) were in the 19th Century of great interest to novelists. This is especially true of the relationship between money, debt, investment, consumption, and the broader economy, and the moral valence of each. For 19th century (English) novelists, the “money view” and the “real economy view” weren’t just opposing analytical stances, they were something like opposing ideologies of what capitalism should be and what it is to be dignified and virtuous in a newly capitalist society. That is, Scrooge isn’t bad because he is a capitalist, he is bad because he is laying up silver in a vault instead of throwing parties ala Fezziwig, instead of buying stuff and spending (and having kids or otherwise giving money to the younger generation). The Christmas Carol is full of descriptions of things for sale and the joy of purchase and consumption…

“The brightness of the shops where holly sprigs and berries crackled in the lamp heat of the windows, made pale faces ruddy as they passed. Poulterers’ and grocers’ trades became a splendid joke: a glorious pageant, with which it was next to impossible to believe that such dull principles as bargain and sale had anything to do. “

And the book’s moral outrage is not directed towards the getting of money but towards the failure to spend it (for example when the servants pick through his paltry belongings after his putative death, or in this scene after he is reborn in Christ/consumption):

“It’s Christmas Day!” said Scrooge to himself. “I haven’t missed it. The Spirits have done it all in one night. They can do anything they like. Of course they can. Of course they can. Hallo, my fine fellow!”
“Hallo!” returned the boy.
“Do you know the Poulterer’s, in the next street but one, at the corner?” Scrooge inquired.
“I should hope I did,” replied the lad.
“An intelligent boy!” said Scrooge. “A remarkable boy! Do you know whether they’ve sold the prize Turkey that was hanging up there?—Not the little prize Turkey: the big one?”
“What, the one as big as me?” returned the boy.
“What a delightful boy!” said Scrooge. “It’s a pleasure to talk to him. Yes, my buck!”
“It’s hanging there now,” replied the boy.
“Is it?” said Scrooge. “Go and buy it.”
“Walk-er!” exclaimed the boy.
“No, no,” said Scrooge, “I am in earnest. Go and buy it, and tell ’em to bring it here, that I may give them the direction where to take it. Come back with the man, and I’ll give you a shilling. Come back with him in less than five minutes and I’ll give you half-a-crown!”

The key word in the early chapter where Scrooge Bah! Humbugs to the charity workers (and paraphrases Ricardo and Malthus to them) is not kindness or generosity but “liberality,” a word that the charity workers try to press upon Scrooge and he Bah! Humbugs away:

“Scrooge and Marley’s, I believe,” said one of the gentlemen, referring to his list. “Have I the pleasure of addressing Mr Scrooge, or Mr Marley?”

“Mr Marley has been dead these seven years,” Scrooge replied. “He died seven years ago, this very night.”

“We have no doubt his liberality is well represented by his surviving partner,” said the gentleman, presenting his credentials.

It certainly was; for they had been two kindred spirits. At the ominous word “liberality”, Scrooge frowned, and shook his head, and handed the credentials back.

“At this festive season of the year, Mr Scrooge,” said the gentleman, taking up a pen, “it is more than usually desirable that we should make some slight provision for the Poor and destitute, who suffer greatly at the present time. Many thousands are in want of common necessaries; hundreds of thousands are in want of common comforts, sir.”

“Are there no prisons?” asked Scrooge.

“Plenty of prisons,” said the gentleman, laying down the pen again.

“And the Union workhouses?” demanded Scrooge. “Are they still in operation?”

“They are. Still,” returned the gentleman, “ I wish I could say they were not.”

“The Treadmill and the Poor Law are in full vigour, then?” said Scrooge.

“Both very busy, sir.”

“Oh! I was afraid, from what you said at first, that something had occurred to stop them in their useful course,” said Scrooge. “I’m very glad to hear it.”

“Under the impression that they scarcely furnish Christian cheer of mind or body to the multitude,” returned the gentleman, “a few of us are endeavouring to raise a fund to buy the Poor some meat and drink, and means of warmth. We choose this time, because it is a time, of all others, when Want is keenly felt, and Abundance rejoices. What shall I put you down for?”

“Nothing!” Scrooge replied.

“You wish to be anonymous?”

“I wish to be left alone,” said Scrooge. “Since you ask me what I wish, gentlemen, that is my answer. I don’t make merry myself at Christmas and I can’t afford to make idle people merry. I help to support the establishments I have mentioned: they cost enough: and those who are badly off must go there.”

“Many can’t go there; and many would rather die.”

“If they would rather die,” said Scrooge, “they had better do it, and decrease the surplus population. Besides — excuse me — I don’t know that.”

“But you might know it,” observed the gentleman.

“It’s not my business,” Scrooge returned. “It’s enough for a man to understand his own business, and not to interfere with other people’s. Mine occupies me constantly. Good afternoon, gentlemen!”

 

Orwell has a long essay somewhere about how Dickens is not a socialist, but someone who wants the capitalist system to be conducive to humane domesticity. I’d also argue that he was someone who wanted the existing system to take consumption and the enjoyment of the fruits of the world amid family and children (the invocation of Malthus in the beginning of the book is not accidental) as its central action rather than the accumulation of money claims:

“But now a knocking at the door was heard, and such a rush immediately ensued that she with laughing face and plundered dress was borne towards it the centre of a flushed and boisterous group, just in time to greet the father, who came home attended by a man laden with Christmas toys and presents. Then the shouting and the struggling, and the onslaught that was made on the defenceless porter! The scaling him with chairs for ladders to dive into his pockets, despoil him of brown-paper parcels, hold on tight by his cravat, hug him round his neck, pommel his back, and kick his legs in irrepressible affection! The shouts of wonder and delight with which the development of every package was received!”

As contrast, and to suggest that Dickens’ normative framework wasn’t uncontroversial in his own time– take for example, this passage from Thackeray‘s Vanity Fair:

I SUPPOSE there is no man in this Vanity Fair of ours so little observant as not to think sometimes about the worldly affairs of his acquaintances, or so extremely charitable as not to wonder how his neighbour Jones, or his neighbour Smith, can make both ends meet at the end of the year. With the utmost regard for the family, for instance (for I dine with them twice or thrice in the season), I cannot but own that the appearance of the Jenkinses in the Park, in the large barouche with the grenadier-footmen, will surprise and mystify me to my dying day: for though I know the equipage is only jobbed, and all the Jenkins people are on board wages, yet those three men and the carriage must represent an expense of six hundred a-year at the very least—and then there are the splendid dinners, the two boys at Eton, the prize governess and masters for the girls, the trip abroad, or to East-bourne or Worthing, in the autumn, the annual ball with a supper from Gunter’s (who, by the way, supplies most of the first-rate dinners which J. gives, as I know very well, having been invited to one of them to fill a vacant place, when I saw at once that these repasts are very superior to the common run of entertainments for which the humbler sort of J’s acquaintances get cards)—who, I say, with the most good-natured feelings in the world, can help wondering how the Jenkinses make out matters? What is Jenkins? We all know—Commissioner of the Tape and Sealing Wax Office, with £1200 a-year for a salary. Had his wife a private fortune? Pooh—Miss Flint—one of eleven children of a small squire in Buckinghamshire. All she ever gets from her family is a turkey at Christmas, in exchange for which she has to board two or three of her sisters in the off season; and lodge and feed her brothers when they come to town. How does Jenkins balance his income? I say, as every friend of his must say, How is it that he has not been outlawed long since; and that he ever came back (as he did to the surprise of everybody) last year from Boulogne?

Undoubtedly the narrator’s arch tone here is ironic, but the implied normative framework here is a familiar story of savings as virtue and debt as vice. The story Dickens tells, on the other hand, suggests that consumerist capitalism (as ideology and system) finds itself in competition with the equally “capitalist” desire to lay up silver against a darker day, a familiar theme for observers of the macroeconomy.

 

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