The Economic Consequences of the Peace: The Cake That Was Never Eaten

In the same chapter, Keynes asks how Europe had built so many railways, factories and cities before the war.His answer is about saving, and he explains it with a cake.

“Europe was organised to build up the greatest possible amount of capital.Much of the new income went to the class least likely to spend it, because the new rich preferred the power of investment to the pleasures of spending.Like bees, they saved and stored, and the whole community gained from it.

Workers accepted that they could call very little of the cake their own, though they had helped to bake it.The rich were allowed to call the best part of the cake theirs, on the silent condition that they ate very little of it.The duty of saving became nine tenths of virtue, and the growth of the cake became a kind of religion.

Saving was said to be for old age or for your children, but the real virtue of the cake was that it was never to be eaten, neither by you nor by your children after you.If the cake kept growing by compound interest, perhaps one day there would at last be enough to go round.But the war has shown everyone that consumption is possible, and has shown many that self-denial is in vain.”Keynes feared that this old bargain, which had built the modern world, could not be rebuilt.