Full text: Capital Gains in Economic Theory and National Accounting

5 
of the successive vendors of the land. The value of the land in so 
far as it is not directly owned has its counterpart in an equal 
value of financial instruments which served to finance the 
successive purchases in the same way as reproduceable real capital 
has its counterpart in the instruments of credit which made its 
coming into existence possible. The current increase in land 
value, as far as it is realised ( by the land changing hands ) is 
financed by saving in form of financial assets. Since these gains 
seem to be quite sizeable it appears that Ricardo's rent has not 
lost in importance since his time, the decrease in importance of 
agricultural rent having been compensated by an increased 
importance of urban rent. Marxists and Ant-imarxists- have been 
Ui/f' 
unanimous in denying the importance of rent since, they argued, 
rent and profit, capital and land, could in practice not easily be 
distinguished. But the above analysis shows that there is a 
conceptual difference between them which is quite important. 
IV. CAPITAL GAINS AND THE NATIONAL ACCOUNTS. 
The exclusion of the capital gains from the national accounts has 
led to glaring misinterpretations of the data. If households 
finance consumption by means of realised capital gains this 
appears in the accounts as a reduction of personal saving. If 
corporations use such gains to pay more dividends then the 
accounts show a reduction in retained profits. The distortion of 
the savings rate which has been caused by the stock exchange boom 
in the middle of the 80s in connection with the pension funds has 
been dealt with in an earlier paper ( Steindl 1990 ). 
The capital gains do not arise in the circular flow of production 
and incomes, they occupy a special position in the accounts.
	        

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