§10. Wide Opportunities Stabilize Interest

The existence of a wide variety of available income streams, then, acts as a sort of governor or balance wheel which tends to check any excessive changes in the rate of interest. Interest cannot fall or rise unduly; any such fluctuation corrects itself through the choice of appropriate income streams.

We see here a reason why interest does not suffer very violent fluctuations. It is not only true that natural processes are regular enough to prevent sudden and great changes in the income stream; it is also true that Edition: current; Page: [205] man constantly aims to prevent such changes. Man is not the slave of Nature; to some extent he is her master. He has many ways to turn. He possesses, within limits, the power to flex his income stream to suit himself. For society as a whole, the flexibility is due to the adaptability and versatility of capital—especially human capital commonly called labor; for the individual, the flexibility is greater still, since he possesses a two-fold freedom. He is not only free to choose from among innumerable different employments of capital, but he is free to choose from among different ways of exchanging with other individuals. This power to exchange is the power to trade incomes; for under whatever form an exchange takes place, at bottom what is exchanged is income and income only.

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