CHAPTER 4

THE CHOICE OF UNITS

I

In this and the next three chapters we shall be occupied with an attempt to clear upcertain perplexi- ties which have no peculiar or exclusive relevance to the problems which it is our special purpose to examine. Thus these chapters are in the nature of a digression, which will prevent us for a time from pursuing our main theme. Their subject- matter is only discussed here because it does not happen to have been already treated elsewhere in a way which I find adequate to the needs of my own particular enquiry.

The three perplexities which most impeded my progress in writing this book, so that I could not express myself conveniently until I had found some solution for them, are: firstly, the choice of the units of quantity appropriate to the problems of the economic system as a whole; secondly, the part played by expecta- tion in economic analysis; and, thirdly, the definition of income.

II

That the units, in terms of which economists com- monly work, are unsatisfactory can be illustrated by the concepts of the National Dividend, the stock of real capital and the general price- level:-

( i) The National Dividend, as defined by Marshall

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