debited to the field being plowed. So also the payment of money
from one fund to another is to be credited to the first fund and
simultaneously debited to the second. Such a double-ended item
—at once a service( relatively to one item of wealth), and a dis-
service (relatively to another)—I have called an interaction.
It follows: (1) that, if both the plow and the field, or both
the funds of money, or, in general terms, both 4 and B, are in-
cluded in the collection of capital sources whose income we are
recording, then this interaction cancels itself out, it being plus
$100 (say) relatively to 4 and, at the very same time, minus $100
relatively to B; (2) that, if the first source, 4, but not the sec-
ond, B, is included in our accounting, so that the interaction is
split, as it were, the positive aspect of the interaction alone enters,
contributing $100 to the total net income included in this account-
ing; and (3) that, if B, is included but not 4, only the negative
aspect enters, thus subtracting $100 from the total net income in-
cluded in this accounting.
If we follow the productive processes, stage by stage, from
the labor exerted at the start to the psychic satisfaction experienced
at the end, we shall find every intermediate link of the chain or
chains*, to be an interaction. We credit the production of logs,
that is the money value of that process, to the logging camp and
debit the self same item to the lumber yard. We credit a sale of
lumber to the yard and debit it to the purchaser’s stock of lum-
ber and so on until we reach, say, the shelter of a resulting
dwelling.
It will be seen from this that every interaction implies in-
come but simultaneous reinvestment. This is simply “double
entry bookkeeping.”
It will also be seen that almost every income item is one or
the other side of an interaction. In fact the only items which
are not interaction are psychic satisfactions, which are positive
only, and psychic sacrifices (labor), which are negative only.
In practical accounting, of course, we cannot extend our meas-
urements so far as to include the psychic elements at all but, as
we shall see, we can reach very nearly the same results by stop-
ping slightly short of this theoretically ultimate stage.
* We must not forget, however, (as has been done by some of my critics) that, in cal
culating the total net income from a specific collection of wealth or property during a
specific period of time, we do not necessarily include each, or any “chain” as a
whole. The time limits imposed may cut off either end or both. Moreover the be-
ginning (labor) of some chains may be included within those limits and the end
(satisfaction) of others. These (labor and satisfaction), i. e., their money measures,
will constitute the only items surviving excepting the split interactions, 4. e., those
for which one of the interacting items of capital is not included inthe collection
under discussion. All other interactions are self-cancelling, each consisting of a pair
of positive and negative items of income which are simultaneous, not successive.
This point is more fully elaborated in The Nature of Capital and Income
