Spencer Heath Archive

Item 1890

Pencil draft of an article.

No date

 

 

WHAT IS A NATIONAL INCOME

     Those people who do not distribute their services and goods among themselves by voluntary exchange, that is, by contracts or sales, produce very meagerly and do not have any national incomes. Each person (or group) does whatever he does for his own satisfaction and not for the benefit of others through sales to them of his services or goods or of their use.

     A nation of such persons could have an inconsequential national production but not any national income. There would be no balanced exchanges, no giving one to another of the equivalent of what he receives. There could be none; for there would be no general standard of value whereby to ascertain the equivalence of goods and services in exchange. Production would be for use, for the use of the producer alone, and not for the profit — profit to all — that arises out of the social process of mutual exchange. All possession and enjoyment would be determined by the power to seize and control, as against the power to have and to hold, and between slavery and savagery men could only precariously breed and exist.

    The national income thus depends on there being a general market in which the national product as services and goods is voluntarily contributed, assorted and redistributed to its members in due proportion to their respective contributions. In consequence of this redistribution great profits are made and vast values arise.

     This proportionate distribution out of the general market is maintained by the social technique of accountancy. This is a device for keeping the score among contracting parties as to their degree of fulfillment or completion at any one time of their various contracts and obligations. Unliquidated balances as shown by the accounts represent the excess in what one party has given over what he has received. For this he is entitled to have a purchase-draft from the other party upon the general market wherewith to liquidate in services or goods the balance that is his due.

    Money, whether check money or government money, is simply a claim against the general market that is good for the purchase of services and goods. There is no other way in which it can be “redeemed.” The income of a person or a corporation over a period of time is the increased value, tangible and otherwise, of the property itself or, symbolically, the money value of the increase plus the increase, if any, its “cash position,” which latter, if any, represents goods and services delivered the equivalent of which in other services or goods is yet to be received.

    The national income for a period may be taken in either of two ways: Either as the total of all new contributions to the market, the net contributions, or, symbolically, the total of new credits established or new money issued against these new or net contributions.

     Credit for contributions is purchasing power, and in that sense money. Credit that is established by government, or government issue of money, also has purchasing power. The only difference is that government purchasing power is not based on contributions or sales. By right of might, however — seizing private credits and creating public ones as “loans” — government exercises its first claim of 30 to 50 per cent against the national income in services and goods. The remainder is divided into two parts: The part that maintains the population and is thereby consumed and the part called savings that replenishes and increases the productive capital from the contractual administration of which by its owners, their officers and employes, the entire national income proceeds.