The nature of capital and income

Bibliographic data

Monograph

Identifikator:: 102659555X

URN:: urn:nbn:de:zbw-retromon-82920

Document type:: Monograph

Author:: Fisher, Irving http://d-nb.info/gnd/118533541

Title:: The nature of capital and income

Place of publication:: New York

Publisher:: The Macmillan Company

Year of publication:: 1923

Scope:: XXI, 427 Seiten

Digitisation:: 2019

Collection:: Economics Books

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Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Part II. Income

Collection:: Economics Books

108 NATURE OF CAPITAL AND INCOME [Cmae. VII of double counting. This fallacy they escape only in the case of the very durable instruments, such as the dwelling, and the very perishable instruments, such as the bread. The dwelling is too evidently not income ever to be so regarded, and, as to bread, one of the two elements—its use —is overlooked altogether. But it is felt that inter- mediate types, like the piano, are as fairly entitled to be called income, when acquired, as the bread, and that their services are as fairly entitled to be called income as are the services of the dwelling. Consequently both are deemed income. But a piano valued at $500 is so valued because this sum is the capitalized value of the future expected uses which, let us say, are $600, distributed over the lifetime of the instrument. Consequently if, when the piano is first purchased, it is entered as real income to the extent of $500, and then later its subsequent services in providing its owner with music are also counted as income to the extent of $600, it is clear that there has been double (though successive) counting. The services of the piano have been counted as income in anticipation as well as in realization. Yet this error, in one form or another, is not infrequently committed. It is virtually in this way that Cannan® and others regard “savings” as income in the year in which the savings are accumulated, although the interest upon those savings will be counted as income in subsequent years. The nature of the fallacy is seen as soon as we translate from money to other instruments. If a man saves up money and purchases an automobile, it is clearly double counting to call the automobile thus ob- tained “real income,” and then include its subsequent uses in the real income of ensuing years. It does not matter t Elementary Political Economy, London, 1888, pp. 58, 59. The fallacy of including savings in income will be treated at greater length in Chap. XIV. The reader who believes that savings ought to be regarded as income is asked to stay judgment until he has finished Chap. XIV.

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