Figure 12-6 pulls together in a simplified way the main elements of income determination. Without saving and investment, there would be a circular flow of income between business and the public: above, business pays out wages, interest, rents, and profits to the public in return for the services of labor and property; and below, the public pays consumption dollars to business in return for goods and services. Realistically, we must recognize that the public will wish to save some of its income, as shown at the spigot Z. Hence, businesses cannot expect their consumption sales to be as large as the total of wages, interest, rents, and profits.
Paul SamuelsonRelated topics
above business circular consumption expect flow goods interest labor large property public return save show simplified wages way wish profits rentsRelated quotes
This concept of capital-rebuilding is so important that it may be desirable to digress for a moment. In the broadest sense of the word, capital means the sum total of the valuable things possessed by the individuals of a society, excluding "claims," that is, mere titles to property. The word is used to mean both the inventory of these valuable things; the houses, factories, machines, livestock, stocks of raw materials, and goods in all stages of completion; and also to mean the sum of the values of these things. It should generally be clear from the context which of these two meanings is intended.
Kenneth Boulding
The distinction between true and false consciousness, real and immediate interest still is meaningful. But this distinction itself must be validated. Men must come to see it and to find their way from false to true consciousness, from their immediate to their real interest. They can do so only if they live in need of changing their way of life, of denying the positive, of refusing. It is precisely this need which the established society manages to repress to the degree to which it is capable of "delivering the goods” on an increasingly large scale, and using the scientific conquest of nature for the scientific conquest of man.
Herbert Marcuse
There is still and must ever be a tremendous amount of manual labor, but to a large extent this has become specialized and too often would be designated correctly as drudgery. The opportunity for education of the mind, however, has greatly increased until it has become well-nigh universal. School and college athletics have become necessary. With the development of our industrial and commercial life, there are more and more those who are engaged in purely clerical activities. All of this makes it more necessary than ever that we should stimulate every possible interest in out of door health-giving recreation.
Calvin Coolidge
Whenever the rate of return on capital is significantly and durably higher than the growth rate of the economy, it is all but inevitable that inheritance (of fortunes accumulated in the past) predominates over saving (wealth accumulated in the present). ... The inequality r > g in one sense implies that the past tends to devour the future: wealth originating in the past automatically grows more rapidly, even without labor, than wealth stemming from work, which can be saved. Almost inevitably, this tends to give lasting disproportionate importance to inequalities created in the past, and therefore to inheritance.
Thomas Piketty
I did say in print, in February, 1929 that there was no hope for economic recovery in Europe before American interest rates came down. That wouldn't be until the American boom collapsed - which was likely to happen within the next few months.And this did, in fact, happen in October 1929.
What made me expect this, of course, was one of my main theoretical beliefs - that an inflationary boom cannot be maintained indefinitely. I was sure that a very unstable situation was created by the artificial prolongation of the boom in 1927, when the Federal Reserve tried to stave off a collapse by credit expansion.
Friedrich Hayek