Yes, this is a misunderstanding, as you state. 'Correcting' the national
accounts does not I think reduce to eliminating things, but moving them
from one category to another. There is no doubt that interest payments
are actually made, so they must appear somewhere. The question is 'where
should you put them?' A prior question is however 'where are they now?'.
>From the answer to these two questions comes the solution, which
consists always in moving them from one category to another.
Whether the interest should be 'excluded' is a moot point. If you start
from the post-interest profits of the production companies, then you must
add the interest back in, since it was originally part of these profits. If
you start from the pre-interest profits, then you obviously shouldn't add
it twice, but no-one actually does that.
> Of course, interest
> payments are a production cost to a manufacturer, an income for the banker,
> and an appropriation of surplus-value from the social point of view.
There is obviously something going on in your head that isn't going on
in mine. I need to know why this statement seems reasonable to you
before I can go any further, because it seems completely unreasonable
to me.
Interest payments, as I see it, cannot both be a production cost to
the manufacturer and an appropriation from surplus-value. No-one makes
this claim, not even the national accountants. I really don't get your
point.
The distinction between social and manufacturer's surplus value doesn't
help, since the first is just the sum of the second. I'm trying to get
my head around the idea that the same sum can be paid both out
of profits and out of manufacturing costs, and it really doesn't
fit. You'll have to run it past me one pound at a time.
In the company sector accounts, you find one of two systems. If interest is
treated as a deduction from surplus-value (profits) they look like this:
Income section
==============
Gross trading profits = (sales - costs + stock appreciation)
= S - C + A (say)
PLUS non-trading income: + rent =R
+ interest receipts from the banks
=I(in)
PLUS income from abroad + income from abroad = X
============================================================================
Total income S - C + A + R + I(in) + X
Expenditure section
===================
Dividend and interest payments
------------------------------
Dividends on shares = D (say)
Debenture and loan stock = L (say)
Other interest = O (say)
Total = D + L + O = I(out)
Other (simplifying)
------------------
Donations, profits abroad,
taxes, royalties = E
Undistributed (retained) Income = P
===============================================================================
Total expenditure I(out) + E + P
If the same accounts were presented on the principle that interest was a
cost, they would look like this:
Income section
==============
Gross trading profits = S - C - I(out) + I (in) - A
PLUS non-trading income: + rent =R
PLUS income from abroad + income from abroad = X
============================================================================
Total income S - C + A + R - I(out) + I(in) + X
Expenditure section
===================
Other (simplifying)
------------------
Donations, profits abroad,
taxes, royalties = E
Undistributed (retained) Income = P
===============================================================================
Total expenditure E + P
Net interest payments I(in) - I(out) is thus transferred from one heading
to another depending on whether interest is treated as an allocation from
profits, or a manufacturing cost. In the first case it was an allocation
out of profits, in the second case it was a production cost (so that gross
trading profits were correspondingly reduced). When the figure is done this
way, usually the interest costs are termed an 'adjustment for financial
services' and this is what I think you refer to in the second part of your
post.
However, interest payments can be either one or the other. Either they are
a manufacturing cost, or they are an allocation out of profits. They cannot
be both. So I am completely missing your point, I'm afraid.
I think it's quite important when trying to sort out this kind of question,
actually to have the accounts in front of you and see what the
*accountants* do. Particularly before complaining about 'confusion' in
Marx.
Marx did this stuff seventy years before the SNA was even thought of, and
the astonishing thing is just how all the questions he raises and solves,
are still tying the accountants in knots. If you want to see real
confusion, just read the UK 'Sources and Methods'. Then read Marx to
clear your head.
Alan