3.

An empirical analysis of circular flow

Thus we’ve familiarized with economic flow in the form of a cycle built up of elementary cost and
income relationship. Our next step is transition form this general scheme to empirical facts.

The difficulty to making it, is the fact that in the former our calculation involved small time spans and
we assumed an exhaustive knowledge of the chain of cause. In the real economic process, one could
establish any number of points of production (with the relative coefficient) but never all of them,
since they’re endlessy.

3.4 “Capitaliztion”

The temporal distribution of individual stages of production is represented by a formula.

aA

3.5 Capital Accumulation and/or Consumption

Fisher’s brief definition of capital:

“A stock of wealth at an instant in time is called capital. A flow of service through a period of time is
called income”.

According to this, the juxtaposing of stock and flow may only be applied to material goods (wealth),
since services can only be imagined in a state of flow.

Flow the quantity of any specified thing undergoing any specified change during any specified
period of time.

Stock the quantity of any specified thing at any istant