Economics for Helen by Hilaire Belloc

I am going to end with a rather difficult subject on which I hesitated whether I should put it into this book or no. If you find it too difficult leave it out; but if you find as you read that you can understand it it is worth going into, because it is quite new (you will not find it in any other book), and it is very useful in helping one to understand certain difficult problems which have arisen in our modern society and which have become a danger to-day. This subject is what I call "Economic Imaginaries."

An imaginary is a term taken from mathematics, and means a value which appears on paper but has no real existence. It would be too long and much too puzzling to explain what imaginaries in mathematics are, but I can give you a very simple example of what they are in Economics. They mean economic values or lumps of wealth which appear on paper when you are making calculations, so that one would think the wealth was really there, but which when you go closely into their nature you find do not really exist.

The first example I will give you is that of a man who, having a large income, gives an allowance to his son living somewhere abroad. Supposing a man in England has £10,000 a year, and he has put his son into business in Paris, but because the young man has not yet learned his business, and is still being helped from home, he allows that son £1,000 a year to spend.

When the Income Tax people go round finding out what everybody has they put down the rich man in England, quite rightly, as having £10,000 a year, and when the value of all incomes in England is _assessed_, _i.e._, when a table is drawn up showing what the total income of all Englishmen is, this man appears, quite properly, as having £10,000 a year. But when the people in France make a similar _assessment_, to find out what the incomes are of all the people living in France, the rich man's son in Paris appears as having £1,000 a year. So when the assessments of England and France are added together and some Government economist is calculating what the total income of the citizens of both countries may be, _that £1,000 a year appears twice_. One of these appearances is an _economic imaginary_. In other words, by the method of calculation used, £1,000 every year appears on the total assessment of England and also of France, making £2,000 of £1,000. The extra £1,000, though appearing on paper, does not really exist at all: it is an "Economic Imaginary."

This is the simplest case of an economic imaginary. It is the case overlap, or counting of the same money twice, and we may put down this case in general terms by saying: "Every unchecked overlap creates an economic imaginary to the extent of that unchecked overlap."

It looks so simple that one might say, "Well, surely everybody would notice that! " But it is very much the other way -- even in this simple case. The more complicated society becomes, the more payments there are back and forth, allowances and pensions and all sorts of arrangements which grow up with increased travel and means of communication and, in general, with the development of society, the more these overlaps come into being and remain unchecked, that is, uncorrected, the greater number there are in which people are not aware that there is an overlap, or if it is an overlap do not remember to mention it, or if they do mention it are not believed. In general the more society increases in complexity the more this kind of economic imaginary by mere overlap increases in proportion to the total real wealth, and the more the total "assessment" of the community is exaggerated.

I will give you one instance, to prove this, which is very striking and which happened in my own experience. A man I knew gave in his income tax returns a few years ago. He had a secretary at home to whom he paid a fairly large salary, and he also used a secretary in town. Their salaries came out of money which he had earned in business but appeared in his taxable general income, for he was not allowed to take it off as an expense. Meanwhile, both the secretary in the country and the secretary in town were paying tax on _their_ salaries, though they came out of a total income which had already paid taxes, and anyone making an assessment of the total income of England would certainly have written down from the official books: "Mr. Blank, so much a year; his secretary A -- , so much a year; his secretary B -- , so much a year," and added up the total. Yet it is clear that the money put down to A and B was imaginary.

I cannot tell you the thousands of ways in which this simple case of overlapping goes on in modern England, for it would be too long to explain, and I have only given you very simple instances, but you may be certain that the economic imaginaries of this kind form at least a quarter of the supposed income of the country.

If there were no other form of imaginaries than this it would be very simple to understand them, and perhaps allow for them in making an estimate of total wealth. Unfortunately, there are any number of different forms much more difficult to seize and cropping up like mushrooms everywhere more and more in a complicated and active society.

For instance: you have (2) the economic imaginary due to _luxurious expenditure_.