National Income

An important comprehensive indicator of a country’s national economy, i.e., the sum of new value created by workers in the sphere of material production of a country over a certain period of time (usually calculated on annual basis).

National income can be identified in both its value form and material form. In the former case, it is equal to the value of the aggregate social product produced by a country in a certain period minus the value of the means of production consumed in the same period; in the latter case, it is equal to the aggregate social product (means of production and means of consumption) produced by a country in a certain period minus the means of production consumed in the same period.

National income is created by workers in all spheres of material production. The main spheres of material production are industry, mining, agriculture, forestry, cattle-raising, construction, as well as a part of transportation, post and telecommunications that serve production. It also refers to sorting, packaging, storage, etc. in the commercial sector, because these labors in the commercial sector, which are the continuation of the production process in the sphere of circulation, also generate part of the national income. Non-material spheres of production, such as state organs, military institutions, cultural and educational units, medical and health units, credit institutions, and non-productive service industries, etc., do not create national income because they do not produce any material materials.

The amount of national income of a country, calculated on the basis of the average population, basically reflects the level of development and abundance of the productive forces of that country. The rate of growth of national income is an important indicator of the rate of development of the national economy of the country. The magnitude of national income is determined by three main factors: the number of workers engaged in the production of material means; the level of the productivity of labor; and the conditions of means of production spent. The most important of these factors is the level of development of the productivity of labor.

In capitalist countries, various reasons limit the growth of national income in different respects and to varying degrees. The reasons are: the anarchy of competition and production, cyclical economic crises and the frequent cases of under-capacity working of capitalist enterprises, all of which cause a large number of unemployed people, thus reduces the labor-power utilized. With the development of capitalism, a large proportion of people who have the capacity to work was displaced from the material sphere of production and transferred to the non-material sphere of production, which led to a deformed expansion of these sectors and relative reduction of national income; a lot of human and material resources were wasted on competition, speculation and advertising, leading to higher costs and lower incomes.

Under the capitalist system, determined by the basic problem that the means of production are in the hands of the capitalists, the distribution of national income merely benefits the bourgeoisie, especially the monopoly bourgeoisie, to the detriment of the proletariat and the other working masses.

Scientific Socialism