Economics Dictionary of ArgumentsHome
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| Income: In economics, income is defined as the total monetary or material benefits that accrue to an economic entity due to the provision of production factors. Factors of production are labor, capital and land. Income can be divided into gross or net income, nominal or real income, individual or household income or national income. See also Labor, Income tax._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Murray N. Rothbard on Income - Dictionary of Arguments
Rothbard III 208 Income/trade/exchange/Rothbard: (…) the consumer must have money in his cash balance in order to spend it on consumers’ goods, and, likewise, the producer must have the original money to invest in factors. Where does the consumer get the money? (…) in the last analysis he must have obtained it from the sale of some productive service. (…) laborers and landowners use the money thus obtained to buy the final products of the production system. The capitalist-producers also receive income at each stage of the production process. (…) the net incomes accruing to the owners of capital goods are not simply the result of the contribution to production by the capital goods, since these capital goods are in turn the products of other factors. Producers: Where, then, do the producers acquire their money for investment? Clearly, from the same sources only. From the income acquired in production, individuals can, in addition to buying consumers’ goods, purchase factors of production and engage in the productive process as producers of a good that is not simply their own labour service. Rothbard III 209 Investments: In order to obtain the money for investment, then, an individual must save money by restricting his possible consumption expenditures. >Loans/Rothbard, >Production/Rothbard, >Investments, >Factors of production/Rothbard, >Consumption. Rothbard III 300 Income/Rothbard: Everyone attempts to maximize the [psychic income], which includes on its value scale a vast range of all consumers’ goods, both exchangeable and nonexchangeable. Exchangeable goods: exchangeable goods are generally in the monetary nexus, and therefore can be purchased for money, whereas nonexchangeable goods are not. We have indicated some of the consequences of the fact that it is psychic and not monetary income that is being maximized, and how this introduces qualifications into the expenditure of effort or labor and in the investment in producers’ goods. >Action/Rothbard, >Allocation/Rothbard, >Exchange/Rothbard. Subjectivity: It is also true that psychic income, being purely subjective, cannot be measured. Utility/praxeology: Further, from the standpoint of praxeology, we cannot even ordinally compare the psychic income or utility of one person with that of another. We cannot say that A’s income or “utility” is greater than B’s. We can - at least, theoretically - measure monetary incomes by adding the amount of money income each person obtains, but this is by no means a measure of psychic income. Furthermore, it does not, as we perhaps might think, give any exact indication of the amount of services that each individual obtains purely from exchangeable consumers’ goods. An income of 50 ounces of gold in one year may not, and most likely will not, mean the same to him in terms of services from exchangeable goods as an income of 50 ounces in some other year. The purchasing power of money in terms of all other commodities is continually changing, and there is no way to measure such changes. Rothbard III 301 Purchasing power: Even if we confine ourselves to the same period, monetary incomes are not an infallible guide. There are, for example, many consumers’ goods that are obtainable both through monetary exchange and outside the money nexus. Psychic income: Neither can we measure psychic incomes if we confine ourselves to goods in the monetary nexus. Utility/marginal utility: It follows that the law of the diminishing marginal utility of money applies only to the valuations of each individual person. There can be no comparison of such utility between persons. Thus, we cannot, as some writers have done, assert that an extra dollar is enjoyed less by a Rockefeller than by a poor man. If Rockefeller were suddenly to become poor, each dollar would be worth more to him than it is now; similarly, if the poor man were to become rich, his value scales remaining the same, each dollar would be worth less than it is now. >Marginal utility of money/Rothbard, >Marginal utility/Rothbard. Rothbard III 533 Income/business/profit/Rothbard: Are “capital gains” - increases in capital value - income? If we fully realize that profits and capital gains, and losses and capital losses, are identical, the solution becomes clear. No one would exclude business profits from money income. The same should be true of capital gains. >Business/Rothbard, >Economy/Rothbard, >Production/Rothbard, >Production structure/Rothbard, >Profit/Rothbard, >Rate of profit/Rothbard, >Gain and Loss/Rothbard._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
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