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

Author:: Steindl, Josef

Scope:: Typoskript, 13 Blätter, mit handschriftlicher Ergänzung auf Seite 1 sowie handschriftlicher Paginierung (beides nicht vom Verfasser)

Year of publication:: 1992

Language:: English

Note:: Der vorliegenden Text wurde post mortem (1998) mit geringfügigen Änderungen publiziert.

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.78.1

DOI:: https://doi.org/10.48671/nls.js.AC14446488

shift in distribution owing to the interest payments may and most probably will,however, influence effective demand in the long run unfavorably if, as is likely, the interest income is less readily spent than most other incomes. In all cases the shift to interest receivers can be avoided if the total income of society increases correspondingly so that relatively speaking the position of rentiers is unchanged. The aftereffects of a consumers'credit or a budget deficit will become more inconvenient if the (net) borrowing is repeated, with the object of holding effective demand on the same level. The income is then shifted more and more to the rentiers. Since the interest has to be paid out of the new credits these have either to be increased or the effective demand created will decrease. Similar effects will obtain in the case of continuing increase in land or other asset prices. If, in order to escape from these troubles, measures are taken to reduce the debt then this will necessarily mean a corresponding more or less drastic restriction of effective demand. The experience of this is nowadays familiar to everybody in view of the frequent instances of restrictive budget policies. The dilemma is, however, the same for households and corporations. VII.LINKS TO THE THEORY OF INFLATION We have drawn a parallel between the concepts of Investment and Saving on the one hand and "Inflationary Spending" on Assets and Realised Capital Gains on the other. Actually this parallel is really hardly new or strange to the Keynesian tradition if we think of the way in which Keynes dealt with the phenomenon of demand inflation ( Kalecki's opinion on the subject was the same). The logic of effective demand implies that in an underemployed economy additional investment ( or budget expenditure or exports or any other additional kind of spending ) will call forth additional output and incomes sufficient to create the saving necessary to finance the investment. If, however, full or over full employment of resources has been reached so that additional output can not materialise then further additions to investment ( or other types of spending ) will exhaust themselves in an increase of prices and the excess profits thereby created will finance the investment ( or other types of spending ). Thus the identity of the amounts of investment and saving will again be established but by a different mechanism - increase of prices rather than increase in output. In the case of raw materials where supply is inflexible at least in the short run the price adjustment method is valid even in an otherwise underemployed economy. The view of capital gains suggested in this paper is nothing but the application of the same ideas to the special case of non-reproduceable or limited assets, a

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