The problem with "savings" is that the everyday understanding of the term is "to hoard money." Hoarding money does not create investment, or accumulate capital. It merely enables you to lay claim to a larger share of whatever plant and labour exists when you move to spend the money.

I think the fallacy here is the idea that money always represents the same thing. It does not. Imagine: 1 million people are expropriated of their savings which they planned to use to buy a (imported) car and that capital accumulation is used to say, build a dam?

As a layman, it strikes me that you are being too theoretical. For me it depends on how capital accumulation is used. Politics can help there.

This may not seem like such a problem - after all, working 60 % of the time for 50 % of the goods isn't an atrocious deal. But during the time (a decade and a half or so) that plant is deteriorating, you'd have to work longer hours to obtain the same production (on average you'd have to work something like 1 % longer every year - minus any advances in total factor productivity)

My impression again is that you are over-theorizing (and over-simplifying). Interestingly I think the seeds of an answer are in your own words: "minus any advances in total factor productivity".

I would really like to continue this discussion, but this is above my paygrade and I do not have the time (the deadline to submit my PhD is looming)

My understanding - subject to correction - is:

He proposes investment would be returned by the goods/services the productive unit outputs.  This would be in two ways:

1.  Direct use of the output

Example: investers in a windmill power plant would receive (time limited?) compensation in the form of electricity which they would use to power their own productive unit to manufacture goods/services.  

2. Indirect use of the output

The investor would sell the electricity to a third party, in some manner or form, in order to reap the benefit(s) of their investment.

One result of this system would be to limit the Return on Investment (ROI.)  Investment funds "tied-up" in an electric power plant can only receive an ROI limited to the actual Real Economy value of the electricity.  Thus disabling the ability of certain classes of investors (read: rentiers, for one) to churn their investment at a higher rate than the wealth (in my example electricity) produced by the Real Economy.

In concrete terms, an investor receiving 100 megawatts of electricity for their investment can only get an ROI of what 100 megawatts of electricity is worth.  Unlike our current predatory financial capitalist  system, the investor cannot reap the benefits of selling 500 megawatts; if an investor tries they run smack into what is commonly called "Fraud."  

One rather nice 'externality' of Chris' proposal is: it ties the health of the FIRE sectors to the health of the Real Economy.  IF an investor gets an ROI based on the ability of their investments to produce goods/services THEN they have a vital interest in the continuing ability of their firms, say, to continue to produce over the long term.  This is complete contradiction to our current system in which the Financial Interests - particularly the (so-called) "Investment Banks" - to deploy their capital (equity and debt) as quickly as possible and as many times as possible to maximize short-term gain.  Effectively Chris' proposed system reduces the baneful effects of Compound Interest run amok.

And I'm going to stop here so Chris and weigh in and tell me where I got it wrong.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre