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

Usage license:: Get license information via the feedback formular.

Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Part IV. Summaries

Collection:: Economics Books

SEc. 9] SUMMARY OF PART III 321 curve of capital-value is at the beginning. When the ele- ment of chance or luck is taken into account, the capital curve is less likely to begin at the zero line. It may begin at some point above; it will not begin at any point below; for if the present value of the chance of gain did not out- weigh the present value of the chance of loss, the enterprise would never be undertaken at all. In the great majority of cases, the capital-value at the outset of an enterprise is greater than zero; that is, in the estimation of those who enter into it, the gains will not only pay for the costs with interest, but something in addition, even when the element of chance is included in the discounting operation. At any rate, it is not infrequent that when a new enterprise is started, those who have the first knowledge of the possibilities, and the first opportunity to exploit them, expect returns out of proportion to the ordinary rate of interest and compensation for risk. The only reason this is not more generally true is because of the existence of competition, by which the special advantage of individuals through special knowledge, foresight, etc., is offset by the vigilance of their rivals. With these points in mind, we observe that the history of the value of any particular article of capital-wealth may be represented as in Figure 32. Starting at 4, some point above the zero line, the capital-value rises to B, because, let us say, of the first expenditure involved. From B it proceeds along a discount curve to C. There, through the influence of the risk element, it suddenly drops to D, at which point some new information has reduced the prospect of future gain or increased the risk of future loss. From D in turn it proceeds along the discount curve to E. At this point the cost EF is incurred, but at the same time confidence as to the future receives a shock, and instead of proceeding from F, the curve drops at once toG. Thencelt rises gradu- ally and normally to H, when the first income item, HI, is received. This being, let us say, Jess than was anticipated, Y

Access restriction

Copyright

fullscreen: The nature of capital and income

Monograph

Chapter

Table of contents

Download

Monograph

Chapter

This page

Image fragment

Citation links

Citation recommendation