Full text: Capital Gains, Pension Funds and

not be better to regard them as income in the accounts, since they 
share essential features of income: They can be consumed without 
borrowing, leaving the capital intact; and if they are not 
consumed they become investment-the~'fTT r st~piaee in financial 
assets. This statement has to be qualified insofar as the 
purchasing power of money changes; it is only the "real” capital 
gains i.e. those which go beyond the amount of inflation which 
can be consumed while leaving the capital intact. But these 
admittedly unpleasant problems of adjusting for inflation are not 
peculiar or new. They occur in the assessment of net profits as 
well and could not therefore be a reason for not dealing with 
realised capital gains in the accounts.) L fcn ^ 
We shall assume in the following,that there is no inflation. 
pThe question is: What is the place of the realised capital gains 
in the national accounts? They result from the sale of goods which 
are irreproduceable but which from the business man's point of 
view are capital, an asset. The concept overlaps with the 
positional goods of Fred Hirsch (Hirsch 19 ). Tibor Scitovsky^J^ 
has been acutely aware of the need for special attention to this 
class of goods. He argues that positional goods are different from 
ordinary consumption since they do not directly induce 
reproduction and do not give rise to a multiplier. They are more 
like saving than consumption. But the positional goods which 
interest us in the present context such as land are not considered 
consumption, they are simply disregarded by the national accounts. 
The argument (SNA) is that when land is traded the seller receives 
what the buyer pays and the flow accounts are not directly 
affected. If for example the purchase is financed by credit the 
money lent by the bank^ to the buyer comes back iffto^ the account^ 
of the seller.

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