Capital Gains in Economic Theory and National Accounting

Steindl, Josef

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Document type:: Works

Collection:: Josef Steindl Collection

Title:: Capital Gains in Economic Theory and National Accounting: Alte Version

Author:: Steindl, Josef

Scope:: Typoskript, 15 Blätter, mit Anstreichungen und Anmerkungen

Year of publication:: ohne Datum

Language:: English

Note:: Eine längere Version des vorliegenden Textes wurde post mortem (1998) publiziert. Die in diesem Typoskript vorhandenen Texteile sind im Wesentlichen identisch mit dem publizierten Text (es fehlen Kapitel 9 und Teile von Kapitel 10).

Topic:: Economic history,economic theory,current developments

JEL Classification:: E22 [Investment, Capital, Intangible Capital, Capacity] E01 [Measurement and Data on National Income and Product Accounts and Wealth, Environmental Accounts]

Shelfmark:: S/M.22.6

DOI:: https://doi.org/10.48671/nls.js.AC14446150

10 V- MACROECONOMIC IMPLICATIONS OF CREATING CAPITAL GAINS. There is a certain terminological difficulty: Saving and investment stands in the same relation as capital gains and what? We might call it capital gains creating credit, although it is not always and entirely credit but may be paid out of the buyers own pocket. It is strictly the asset buyer's spending in so far as it finances the increase in the asset price. We might for the time being call it inflationary spending on assets.Now this spending creates capital gains of the same amount which may be spent again on consumption or investment or may be kept in financial assets.At the same time, however, it burdens the buyer of the asset just as much with interest payments ( debt service ) as if the credit had been used only for productive investment. Now we must refer to a rather old fashioned distinction between production and consumption credit: If the credit serves to initiate additional production (especially increased productivity) then the interest and in good time also the capital can be paid out of the additional profits created by means of the credit. In the case of the credits which are used only to create capital gains, in the contrary, the interest has to be paid from existing incomes: That means the distribution of the society's income will be affected,there will be a shift of incomes in favor of the rentier. This will be true whether the assets are land or shares or even raw material stocks. The most important case is probably that of urban land because there is here a long run tendency to an increase in values which means that the shift in income is continuing, just as it had been predicted by Ricardo, only for different reasons. The same burdening of the society's income by

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