some consumption is investment in human capital. I said what | think this overlooks
(self-invested work) and what it forgets to exclude (recovered human depreciation).
My own way of putting things mightn’t strictly need the terms investment or saving except to translate my ideas into the language we all know. That translation is essential if | hope to be understood. It will first take account of the fact that Keynes meant investment and saving as to physical capital only, with labor or human capital to arrive exogenously as an outcome somehow of consumption. That led to the
Y=1+C equation
output = investment + consumption. (4.1) Gross and net versions of (4.1) meant gross and net of depreciation. Thus
gross output = gross investment + consumption (4.1a) and
net output = net investment + consumption. (4.1b) In the General Theory, where (4.1) appears in his Chapter 6, (4.1) it means the gross version unless otherwise specified. I prefer the opposite, and mean the net version (4.1b) unless otherwise specified. My ex ante investment corresponds to Keynes’ “intended saving” through consumption restraint. My “depreciation investment”, or “depreciation plowback”, means just enough ex ante investment to offset actual depreciation, not book depreciation, of physical capital. 1 assume that we intuit roughly how much this is
when I say that optimum ex ante investment is depreciation plowback. Now let’s
consider how that could be true.
Chapter 4 Mill’s Idea 1/11/16 7
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