THE CONTROL OF MONEY 169

ECONOMY.

That Parliament, charged with controlling so large a sum,,
should be careful with it, is a truism. The word "economy*',
however, when applied to Government finance, has two distinct
meanings. Economy is, in substance, the spending of money and
resources in such a way that they will give the greatest possible
satisfaction. If the question is put, "Would it be economical to
cut down the public services and so reduce taxation?" the point
really at issue is this:—Less money will be spent on something
the Government provides; it may be armaments, schools, or
Old Age Pensions; taxpayers, having to pay less, will spend more
on the things that they, as individuals, like—say, books, amuse-
ments, or clothes. Fewer men and materials will be employed
on making armaments or schools, and more on providing amuse-
1 ments or clothes. Will that be a better use of resources? Will it
increase the welfare of the people as a whole ? Will high taxes
cause people to save less, and so dry up the flow of capital to
industry? Will those who manage industry be less willing to
take risks, because part of their profits will be taken by the
State? It would certainly be uneconomical to abolish all
expenditure on education, in order to reduce the Income Tax;
it would equally be uneconomical to increase educational
expenditure tenfold at the present time. But apart from these
extreme examples, there can be no definite statement of fact
about what is economical. The phrase "welfare of the nation as
a whole" is vggue; .nations are composed of groups whose
interests differ and conflict. When people discus? a proposal to
increase Old Age Pensions by heavier taxes on the richer classes
they will try to show that it will, or will not, mean a better use
of the nation's resources; but they will be strongly influenced
by the effect that the scheme is going to have on them. "Economy"
in this sense is therefore a question in dispute between
parties.

There remains a second meaning, more restricted and easier to
define. Once it is settled that the State is to carry out a given total