CHAPTER 4

THE CHOICE OF UNITS

I

In this and the next three chapters we shall be occupied with an attempt to clear up certain 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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