A Measurement of the Productive Capacity of Wealth

During the last two decades, considerable progress has been made in the measurement of national income, while the measurement of national wealth has lagged. This situation contrasts with the fact that it was wealth rather than income in which economists were first interested. The late Lord Stamp read a paper to a meeting of the Royal Statistical Society in 1919, in which he discussed the wealth and income of the chief powers of the world. In this paper he considered some eighteen countries for which there were eighteen estimates of national wealth, but only ten of these countries had estimates of national income. Professor Bye, in the second volume of the National Bureau of Economic Research series entitled Conference on Research in National Income and Wealth, goes back even farther to show this change in interest. It may be pointed out that Adam Smith called his famous book The Wealth of Nations. Only since the last war has great progress been made in the measurement of national income. The increase in accuracy of the estimates has brought about an increase in their use until now they serve as legitimate bases for all sorts of comparisons. They stand in somewhat the same position as population estimates, as fundamental points of reference. This development is one of foremost importance in the social sciences. There seems to be little question that adequate measurements of income are more useful than equally adequate estimates of wealth. The former is a measurement of the effectiveness of the working of the economy. The latter is but one of the factors in its working.