Independent Applications of National Accounts

f. RECENT publications about national accounts and national income seem still to be based on the opinion that national accounts are mainly a tool for national income theory and evaluation. Among the designers of the national accounts for the Netherlands it is held that these statistics have functions of their own, which are even more. important than their relations to national income statistics. This not too serious con-troversy is apparent for instance in the way in which Mr. R. Tress recently treated the diagrammatic representation of the Netherlands' national accounts, the main ideas behind Derksen's diagram being neglected and the empty rectangles forced to serve national income purposes.1 It is the aim of this article to describe the principal independent functions of national accounts and to show that also their diagrammatic representation has advantages of its own. 2. English-speaking statisticians are accustomed to the idea that national accounts have been invented for the purpose of illustrating the solutions of a few intricate problems in the theory of national income. This was, for instance, the approach used by Mr. Stone in his Memorandum on. Definition and Measurement of the National Income and Related Totals attached to the United Nations Report, Measurement of National Income and the Construction of Social Accounts.2 Although this Memorandum was concerned nearly entirely with social accounts , setting forth a great number of principles for their construiction, its title already shows that it was intended mainly as a help for national income theory. In the National Income Supplement of the Survey of Current Business3 also, the national accounts were introduced as a background for the explanation of the definitions employed by the Department of Commerce. 3. This application of the national accounts is indeed a very important one. As the statisticians from the Department of Commerce National Income Unit pointed out, in their rejoinder to Professor Kuzn.ets4: the accounting approach provides a powerful tool for the solution of many intricate problems that arise in the consistent formulation of national income concepts . Apart from this theoretical application for national incomne purposes, national accounts are helpful in the actual evaluation of national 1 R. C. Tress l'he Diagrammatic Representation of National 'income Flows, Economicl, November, I948, page 276. 2 United Nations. II. I947. 6. 3 U.S. Department of Commerce: Survey of Current Businzess, July, 1947. M. Gilbert, G. Jaszi, E. F. Denisoii, C. F. Schwartz : Objectives of National Income Measurement: A Reply to Professor Kuztoets, Reviewv of Economezics and Statistics, Vol. 30 (1948), page 5I5. 249