The Influence of Government Activity on the Distribution of National Income

Abstract

We call income all those direct, or consumer, goods which accrue to an economic subject over time and which, by implication, can be consumed without impairing the source from which this flow of goods originates, except for such losses as can be covered by amortization and insurance. Unlike the static concept of wealth, the concept of income is dynamic, in so far as it deals with the time flow of goods to the economic subject. Given the money stock and the prices of consumer goods, the sum of all the products of quantity of each good or service times its price constitutes the aggregate money income of any country. A few words may be said right at the outset about how aggregate income, or the sum total of consumer goods, is distributed at all stages of production among those who contribute to its creation. Aggregate income is distributed in the first place among stages of production; within any one stage, it is, secondly, distributed among the various production units taking part in the process of production; and within any one production unit, it is, thirdly, distributed among the factors of production employed therein.