CHAPTER 9

CERTAIN DEFINITIONS

Before we can formulate our Fundamental Equations,we must first make precise our use of certain terms.

(i.) Income, Profits, Savings and Investment

(1) Income .—We propose to mean identically thesame thing by the three expressions : (1) the com-munity's money-income ; (2) the earnings of the factorsof 'production ; and (3) the cost of production ; and wereserve the term profits for the difference between thecost of production of the current output and its actualsale-proceeds, so that profits are not part of the com-munity’s income as thus defined.

More particularly we include in Income :

(a) Salaries and wages paid to employees, includingany payments made to unemployed orpartially employed or pensioned employees—these being in the long run a charge onindustry just as much as other outgoings toremunerate the factors of production ;

(h) The normal remuneration of entrepreneurs ;

(c) Interest on capital (including interest from

foreign investments) ;

(d) Regular monopoly gains, rents and the like.

The entrepreneurs being themselves amongst thefactors of production, their normal remuneration—-the