Economic essays

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Monograph

Identifikator:: 1753623200

URN:: urn:nbn:de:zbw-retromon-136107

Document type:: Monograph

Title:: Economic essays

Place of publication:: New York

Publisher:: Macmillan

Year of publication:: 1927

Scope:: viii, 368 S.; Ill., graph. Darst.

Digitisation:: 2021

Collection:: Economics Books

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Document type:: Monograph

Structure type:: Chapter

Title:: Clark's reformulation of the capital concept / Frank A. Fetter

Collection:: Economics Books

152 ECONOMIC ESSAYS IN HONOR OF JOHN BATES CLARK with the unfortunate result that his unified conception is con- verted into the dualistic conception already foreshadowed by Hadley. This is the passage: * Capital is a fund and income a flow. This difference between 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 existing at an wnstant of time is called capital. A flow of services through a period of time is called income. Now it must be said of these dualistic definitions that they are quite useless for the purpose in view. Fisher's own work on capital and income deals mainly with financial conceptions untouched in these definitions, incomes as price-quanta, dis- counted and summed up in capital (also a price quantum) con- ceived of as the present worth of claims to future monetary incomes, no matter whence or how derived (even from intangible rights). And the definitions are at least in part tautological, for while it would be logically possible (even though theoretically useless) to have a fund of wealth (material goods) and to con- trast it with a flow of the same goods, it is not possible to con- ceive of a literal stock of services at an instant of time; it is possible only to conceive of their present worth as a financial fund at an instant of time. Services (taken in the sense of uses either of wealth or of human beings) may conceivably be delayed or hastened, but they are in their very nature a flow; they cannot be heaped up and constitute a stock of services. They can at most, as they occur, be “incorporated” in durable forms of wealth. If this is so, then why this elaborate contrast between a flow of services and a fund of something quite different? It is the vestigial remains of the older conception that Fisher has been obliged to discard. The idea of a “fund” as a financial sum, estimate, or valuation, at an instant of time, has become confused with the idea of a “fund” as a heap or store of physical goods existing at an instant of time. The phrases of Fisher's definitions form a superficial, verbal bond of connection between the old conception and the new one, while in fact the essential distinction has become that not between income as a flow and capital as a fund (of the “very same” material things) but that between a valuation of services L The Nature of Capital and Income (1906), p. 52. Italics in the original.

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