The Pure Surplus Income Ratio; f = vw

 

The Pure Surplus-Income Ratio is calculated at the bottom of the worksheet.  Pure surplus income has been treated elsewhere on this website, (click here) so we will here be brief.

Now it is true that our culture cannot be accused of mistaken ideas on pure surplus income as it has been defined in this essay; for on that precise topic it has no ideas whatever. [CWL 15, 153]

An aggregate profit in that sense is precisely what we have found pure surplus income to be….unlike other income, pure surplus income need not be spent currently without effecting a reduction of total income…….thus it is pure surplus income as a concrete fact which has given rise to the ideal of the “successful man” in our culture…who measures his success in the industrial power of ownership which he wields, in the financial power of possession of large blocks of…securities, and in the social prestige that may be buttressed by the purchase of the most conspicuous products of human art and ingenuity in the past history of man……….pure surplus income is at the nerve center of free economies. [CWL 15  147]

This pure surplus income is quite an interesting object.  When v is greater than zero, it is a rate of income over and above all current requirements for the standard of living, since that is provided by I’, and as well over and above all real maintenance and replacement expenditure, since that is provided by (1-v)I”. [CWL 15, 146]

McShane notes that pure surplus income occupies “center stage” in macroeconomic dynamics.  He points out that an understanding of the interaction of serially-conditioned and crossover-conditioned flows is a.) constitutive of a scientific grasp of economic dynamics, and thus, b.) the key to resolving certain differences of opinion among economists who lack a fully-adequate dynamic heuristic.  The analysis of flows of functional incomes is the key to the sublation of differences among economists.

center stage is occupied by the conception, affirmation, and implementation of pure surplus income… [CWL 21, Editors’ Introduction xxvii]

The flow of income in a functional analysis, however, requires somewhat more attention: it is the corner of the analysis which holds the key to the sublation both of Keynes’ problems of consumption, savings and investments, and of Kalecki’s dictum that the workers spend what they get and the capitalists get what they spend. [McShane 1980, 120]

The graph below is from CWL 15, 150