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 III. Capital and income

Collection:: Economics Books

Skc. 2] FOUR INCOME-CAPITAL RATIOS 185 represented by four ratios. As we have seen, both capital and income may be measured either in quantity or value. It follows that the relation of income to the capital which bears it takes four different forms, according as the income and the capital are measured in one or the other of these two ways. These four forms of the income-to-capital ratio follow: — (1) The ratio of the quantity of services per unit of time to the quantity of capital which yields those services may be called the physical productivity of capital. Thus, if 10 acres of land yield, in a certain year, 60 bushels of wheat, the ratio of income to the capital may be expressed as 6 bushels per acre per year. This is its physical productivity. In like manner, if 10 looms will weave 500 yards of cloth in a day, the ratio of services to the quantity of capital, or the physical productivity of the looms, is 50 yards per machine per day. (2) The ratio of the value of the income from capital to the quantity of the capital may be called the value produc- tivity. Thus, if 10 acres of land yield a net return worth $200 a year, the value productivity is $20 per acre per year. This is what has ordinarily been called the rent of land. The same principles apply to the rent of a dwelling or of any other article of capital. Another example of value productivity is found in the wages of the laborer. (3) The ratio of the quantity of services rendered by capital to the value of the capital may be called its phys- wal return. Thus, if $100 worth of capital applied to land in the form, say, of agricultural implements adds to the yield of the land one bushel, the physical return of this capital is 15 of a bushel per year per dollar invested. Such a con- cept of physical return is familiar to students of classical economics under the head of “doses” of capital applied to land. (4) The ratio of the value of services to the value of the capital yielding them may be called the value return. Thus,

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