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 I. Capital

Collection:: Economics Books

52 NATURE OF CAPITAL AND INCOME [Cmar. IV 1905, is a flow of wheat. The term “wealth” by itself is insufficient to determine which of these two kinds of mag- nitudes is meant. Similarly, when we speak of property or of value, we may have in mind either a fund or a flow. A thousand shares in a certain company owned by a cer- tain man at a certain time constitute a particular fund of property ; the number of shares transferred in a week on the stock exchange constitute a flow of property. Again, the value of the checks held at noon of any day by one bank drawn on other banks constitutes a fund of value; the value of the checks which pass through a clearing-house in twenty- four hours constitutes a flow of value. Services and satis- factions, unlike wealth and property, can exist only as flows; a fund of either is impossible. A fund is fully specified by one magnitude only; a flow requires two, — the amount of flow and the duration of flow. From these two a third follows, — the rate of flow or the quotient of the amount divided by the duration. The rate of flow is often of more importance than the amount of flow. Thus we care less to know the aggregate wages of a work- man‘ during a lifetime than the rate of his wages during various periods of his life. The distinction between a fund and a flow has many applications in economic science.! The most important ap- plication is to differentiate between capital and income. Capital is a fund and income a flow.. This difference be- tween capital and income is, however, not the only one. There is another important difference, namely, that capital is wealth, and income is the service of wealth. We have therefore the following definitions: A stock of wealth ex- isting at an instant of time is called capital. A flow of sero- ices through a period of time is called income. Thus, a dwelling house now existing is capital ; the shelter it affords or the bringing in of a money-rent is its income. 1 For some of these applications, e.g. to monetary circulation, see: “What is Capital ?”” Economic Journal, 1897.

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