Finance, Credit, Investments - Economical CategoriesPosted by Byrd Albertsen on May 18th, 2021 Scientific works in the theories of finances and credit, based on the specification of the research object, are characterized to be many-sided and many-leveled. This is of totality of the economical relations formed in the process of formation, distribution and usage of finances, as money sources is widely spread. For instance, in "the general theory of finances" there are two definitions of finances: 1) "...Finances reflect economical relations, formation of the funds of money sources, in the process of distribution and redistribution of national receipts based on the distribution and usage". This definition is given relatively to the conditions of Capitalism, when cash-commodity relations gain universal character; 2) "Finances represent the forming of centralized ad decentralized money sources, economical relations relatively with the distribution and usage, which serve for fulfillment of the state functions and obligations and also provision of the conditions of the widened further production". This definition is brought without showing the surroundings of its action. We share partly such explanation of finances and think expedient to make some specification. First, finances overcome the bounds of distribution and redistribution service of the national income, though it is just a basic foundation of finances. Also, formation and usage of the depreciation fund that is the part of financial domain, belongs not to the distribution and redistribution of the national income (of newly formed value throughout a year), but to the distribution of already developed value. This latest first appears to be part of value of main industrial funds, later it really is moved to the cost price of a ready product (that's to the value too) and following its realization, and it is set the depression fund. Its source is considered in advance as a depression kind in the consistence of the ready products cost price. Second, main goal of finances is a lot wider then "fulfillment of hawaii functions and obligations and provision of conditions for the widened further production". Finances exist on the state level and also on the manufactures and branches' level too, and in such conditions, when the most the main manufactures are not state. V. M. Rodionova has a different position relating to this subject: "real formation of the money begins on the stage of distribution, once the value is realized and concrete economical types of the realized value are separated from the consistence of the profit". V. M. Rodionova makes an accent of finances, as distributing relations, when D. S. Moliakov underlines industrial foundation of finances. Though Finance Hub SW15 of these give quite substantiate discussion of finances, as a system of formation, distribution and using the funds of money sources, that happens of the next definition of the finances: "financial cash relations, which forms along the way of distribution and redistribution of the partial value of the national wealth and total social product, is related to the subjects of the economy and formation and using hawaii cash incomes and savings in the widened further production, in the material stimulation of the workers for satisfaction of the society social along with other requests". In the manuals of the political economy we meet with the following definitions of finances: "Finances of the socialistic state represent economical (cash) relations, by making use of which, in the form of planned distribution of the incomes and savings the funds of money resources of the state and socialistic manufactures are formed for guaranteeing the growth of the production, rising the material and cultural degree of individuals and for satisfying other general society requests". "The system of creation and using necessary funds of cash resources for guarantying socialistic widened further production represent exactly the finances of the socialistic society. And the totality of economical relations arisen between state, manufactures and organizations, branches, regions and separate citizen according to the movement of cash funds make financial relations". As we've seen, definitions of finances made by financiers and political economists do not differ greatly. In every discussed position there are: 1) expression of essence and phenomenon in this is of finances; 2) this is of finances, because the system of the creation and using funds of cash sources on the level of phenomenon. 3) Distribution of finances as social product and the value of national income, definition of the distributions planned character, main goals of the economy and economical relations, for servicing which it is used. If refuse the preposition "socialistic" in this is of finances, we may say, that it still keeps actuality. We talk with such traditional definitions of finances, without an adjective "socialistic", in the present day economical literature. We might give this elucidation: "finances represent cash resources of production and usage, also cash relations appeared in the process of distributing values of formed economical product and national wealth for formation and additional production of the money incomes and savings of the economical subjects and state, rewarding of the workers and satisfaction of the social requests". in this elucidation of finances like D. S. Moliakov and V. M. Rodionov's definitions, following a traditional inheritance, we meet with the widening of the financial foundation. They concern "distribution and redistribution of the worthiness of created economical product, also the partial distribution of the worthiness of national wealth". This latest is very actual, relatively to the process of privatization and the transition to privacy and is periodically found in practice in different countries, for instance, Great Britain and France. "Finances - are cash sources, financial resources, their creation and movement, distribution and redistribution, usage, also economical relations, which are conditioned by intercalculations between the economical subjects, movement of cash sources, money circulation and usage". "Finances are the system of economical relations, which are connected with firm creation, distribution and usage of financial resources". We talk with absolutely innovational definitions of finances in Z. Body and R. Merton's basis manuals. "Finance - it is the science about how the people lead spending `the deficit cash resources and incomes in the definite time frame. The financial decisions are seen as a the expenses and incomes which are 1) separated with time, and 2) as a rule, it is impossible to take them into account beforehand neither by those who get decisions nor any person" . "Financial theory includes numbers of the conceptions... which learns systematically the subjects of distribution of the money resources relatively to the time factor; it also considers quantitative models, through the help of that your estimation, putting into practice and realization of the alternative variants of each financial decisions take place" . These basic conceptions and quantitative models are employed at every level of getting financial decisions, but in the most recent definition of finances, we meet with the following doctrine of the financial foundation: main function of the finances is in the satisfaction of the people's requests; the subjects of economical activities of any kind (firms, also state organs of each level) are directed towards fulfilling this basic function. For the goals of our monograph, it is important to compare well-known definitions about finances, credit and investment, to choose how and how much you'll be able to integrate the finances, investments and credit into the one total part. Some researcher thing that credit is the consisting part of finances, if it is discussed from the position of essence and category. Another, more numerous group proves, that an economical category of credit exists parallel to the economical category of finances, by which it underlines impossibility of the credit's existence in the consistence of finances. N. K. Kuchukova underlined the independence of the category of credit and notes that it is only its "characteristic feature the turned movement of the value, which is not related to transmission of the loan opportunities together with the owners' rights". N. D. Barkovski replies that functioning of money created an economical basis for apportioning finances and credit as an independent category and gave rise to the credit and financial relations. He noticed the Gnoseological roots of science in money and credit, because the science about finances has business with the research of such economical relations, which lean upon cashflow and credit. Let's discuss the most spread definitions of credit. in the present day publications credit appeared to be "luckier", then finances. For example, we meet the following definition of credit in the finance-economical dictionary: "credit may be the loan in the form of cash and commodity with the conditions of returning, usually, by paying percent. Credit represents a form of movement of the loan capital and expresses economical relations between the creditor and borrower". This can be the traditional definition of credit. In the earlier dictionary of the economy we read: "credit is the system of economical relations, which is formed while the transmission of cash and material means into the temporal usage, generally beneath the conditions of returning and paying percent". In the manual of the political economy published under reduction of V. A. Medvedev the following definition is given: "credit, as an economical category, expresses the created relations between the society, labour collective and workers during formation and usage of the loan funds, beneath the terms of paying present and returning, during transmission of sources for the temporal usage and accumulation". Credit is discussed in the following way in the last education-methodological manuals of political economy: "credit may be the system of money relations, which is created along the way of using and mobilization of temporarily free cash method of hawaii budget, unions, manufactures, organizations and population. Credit has an objective character. It is useful for providing widened further production of the state and other needs. Credit differs from finances by the returning character, while financing of manufactures and organizations by the state is fulfilled without this problem". We meet the following definition if "the span of economy": "credit can be an economical category, which represents relations, as the separate industrial organizations or persons transmit money means to each-other for temporal usage under the conditions of returning. Creation of credit is conditioned by a historical procedure for fulfilling the economical and money relations, the form of which may be the money relation". Following scientists give slightly different definitions of credit: "Credit - is really a loan in the form of money or commodity, that is given to the borrower by a creditor under the conditions of returning and paying the percentage rate by the borrower". Credit is giving the temporally free money sources or commodity as a debt for the defined terms by the price tag on fixed percentage. Thus, a credit may be the loan in the form of money or commodity. Along the way of this loan's movement, an absolute relations are formed between a creditor (the loan is given by a juridical of physical person, who gives certain cash as a debt) and the debtor. Combining every definition named above, we come to an idea, that credit is giving money capital of commodity as a debt, for certain terms and material provision beneath the price of firm percentage rate. It expresses definite economical relations between your participants of the process of capital formation. Necessity of the credit relations is conditioned, in one side, by gathering solid level of temporarily free money sources, and from the next side, existence of requests of these. Though, simultaneously we must distinguish two resembling concepts: loan and credit. Loan is characterized by: o Here, the discussion may touch upon transmission of money and also things form one side (loaner) to some other (borrower): a)beneath the owning of the borrower and, simultaneously, b) under the conditions of returning same amount or same quantity and quality of the items; o The loaning of money may bear no interest; o Any person may take part in it. With the difference with loan, credit, which is somehow a private occasion of the loan, represents: o One side (loaner) gives to the next one (borrower) only money, and _ for temporal usage; o It could not bear no interest (if the assignment doesn't foresee something); o In it creditor isn't any person, but a credit organization (at the first place, banks). So, a credit may be the bank credit. To your mind, it is not correct to utilize "credit" and "loan" because the synonyms. Banking crediting is the union of relations between bank (as a creditor) and its borrower. These relations touch upon: a) Giving a certain amount of money to the borrower for definite purpose (though, we meet the so-called free credits, aims and objects of crediting are not appointed in the assignment); b) Its opportune returning; c) Getting percentage rate from the borrower for using the sources under his/her disposal. The fundamental foundation of the credit essence and its own important element is existence of trust between the two sides (in Latin "credo", that comes the word "credit", means "trust"). From the positioning of circulation of money forms (in the abstraction, historical procedure for formation economical relations and social budget and banking systems expressed by them) comparing different definitions of finances and credit, the paradox conclusion appears: credit is the private occasion of finances. And truly, from the positioning of movement of the money forms, finances represent the procedure of formation and using the funds of cash means. Frequently such movements are fulfilled without returning, but sometimes, you'll be able to give loans from the budget for the investment projects of other needs. Also, when a manufacture or corporations use their cash funds and we mean the finances of industrial subject, such usage could be realized as inside the manufacture or corporation (there is no subject about returning or not returning of the usage), so gratis under conditions of returning. This latest is named commercial form because of transmitting the sources to others, but even in this occasion, it is the element of financial system of the manufacture and corporation. From the point of cash means movement, main character of credit is the process of formation and using the funds of cash means under the conditions of returning and, as a rule, taking the value-percentage. If gating the credit value doesn't take place (even yet in the exceptional occasions), according to the movement form, credit becomes a private occasion of finances, as from the web financial funds (consequently from hawaii budget) the loans which bear no interests may be used. If gating credit value occurs, by the looks form, credit is discussed to be financial modification. From the historical viewpoint, finances (especially in the sort of hawaii budget) and credit (you start with usury, later commercial and banking) were developing differently for considering credit to be the section of finances. Though, from the genetic-historical point of view, previous loaners, before giving loan, needed gathering the permanent capital not returning, that is the net financial foundation. The banks analogously needed concentration of the important own capital for influxing the consumers' means and so you can get higher percentage rate under the conditions of returning. Herewith, exactly on the financial basis, in the sort of financial fund (which later partially becomes loan fund) section of the bank capital is apparently the reservation (insurance) portion of the fund, which naturally is financial rather than loan. So notwithstanding the essential distinctions between finances and credit form the genetic-historical viewpoint, credit appears to be formed from finances and represent their modification. From the essential position of expressing economical relations of finances and credit, we talk with cardinal distinctions between these two categories. Which mostly expressed by the distinction of the movement forms notwithstanding they are returnable or not. Finances express relations in the aspects of distribution and redistribution of social product and area of the national wealth. Credit expresses distribution of the correct value only in the portion of percentage given for loan, while according to the loan itself, a only a temporal distribution of money sources occurs. Herewith, there is a lot of common between the finances and credit as from the fundamental point of view, so according to the form of movement. Concurrently, there exists a significant distinction between finances and credit as in the essence, so in the form too. According to this, there should be a kind of generally economical category, that will consider finances and credit as a complete unity, and in the bounds of the category itself, the separation of the specific essence of the finances and credit would take place. Funding of the money means is common to the researched economical categories. It takes place in any separate system of finances and credit, which were touched upon through the analyses of defining finances and credit. Word combination "funding of the cash sources (fund formation)" reflects and defines exactly essence and form of economical category of more general character, those of finances and credit categories. Though in the in economical texts and practice, it is very uncomfortable to employ a termini, which includes three words. Also, "unloading" having an information hardens greatly its influxing in to the circulation even in the conditions of its strict substantiation and thoroughness. In the discussing context we consider: 1) wide and narrow understanding of economical category of the finances; 2) discussing finances in narrow understanding under general traditional meaning; 3) discussing finances, as funding of the money means, in wide understanding, which concerns finances - in narrow meaning and credit - in complete meaning. Termini "funding" and its own equivalent "fund formation" are employed by us because the purposeful structuring of cash means, which is based on two poles - accumulation of money sources (gathering) and its own usage for definite purpose in the form of financing and crediting. We have established a fresh termini - "finance-investment sphere" (FIS). Analyses about interrelation of finances and credit made by us give us an opportunity of proving, that in the given termini, the term "financial" is used with this is of funding cash sources, its purposeful structuring. In this technique we consider at the same time financial, credit and investments' economical categories. Let's sum up middle results of discussing new concept - "finance-investment sphere" and discuss its investment consisting parts. The concept "investments" was brought in to the native economical science from the West. In the Soviet economical science they for a long period used in the place "investments" the termini "capital placement", which expressed the usage of the industrial factors in the sphere of real industrial activities during realization of capital projects. In one glance, this termini in its concept is identical to the "investments", consequently it is possible to use them as synonyms. Although termini "investments" and "investing" have the advantage towards the termini "capital placement" from linguistic and philological points of view, because they are expressed with one word. This is simply not only economical and comfortable along the way of dealing with the termini "investment" itself, but also it gives an opportunity of termini formation. More concretely: "investment process", "investment domain", "finance-investment sphere" - each one of these termini are much more acceptable. Changing native economical termini with foreign ones is purposeful, if it really matters (by keeping parallel using the native termini for the inheritance). Though we must not change native economical termini into foreign ones all together, when by ordinal traditional language easy to explain private and narrow concrete processes and elements obtain own termini. The "movement" of these termini is approved in the narrow professional bounds, but their "spitting out" into the economical science risk turning economical language into the tangled slang. Let's discuss termini - "investment" and "capital placement's" usage in the economical literature. Investments are placement of funds in to the main and circulation capital for the intended purpose of getting profit. "Investments in material assets - are the placements of funds into the mobile and real estate (land, buildings, furniture and so forth). Investments in financial assets are the placements of funds in to the securities bank accounts along with other financial instruments". We don't meet with the termini "investments" in the last economical dictionary, but we meet up with the combined termini "investment policy" - the union of the industrial decisions, which guarantee main directions of the capital investments, the activities of their concentration in the determinant suburbs, which the reaching of planned rates of development of the society production is depended, balancing and effectiveness, getting more and more production and profit of the national income for each lost Ruble". For today, in probably the most actual definitions, the administrative centre investments are bounded only by financial means, you should definitely only financial, but also the investment of natural, material-technical and informational resources takes place. Labour resources take an actual place in the investment process. They themselves fulfill this or that investment process. A confident side of the discussed definitions is that they connect investment policy and capital placements (investments): - economical development based on the key directions to the concentration; - providing high rates of economical growth; - raising an economical effectiveness, that is expressed: a) by growing the throw off of the production and national income for each and every lost Ruble; b) by fulfilling the branch structure of the investments; c) by improving their technological structure; d) by optimization of their further production structure. Weighed against such definition of the investments (capital placement) the definition of investments in the dictionary attaching the "Economics" is apparently unimproved: "investments - the expenses of gathering production and industrial means and increasing material reserve". In this definition current expenses (production expenses) are blended with the investment (capital) expense. Also, not the investment expenses but (although investments are followed by the appropriate expenses) exactly advancing. It differs from the expenses by that the means (means) are put by returning the advanced values, also, under the conditions of growth, to which the concept-advanced capital is corresponding. the advancing could be realized in the amount of money, natural-material and informational forms. Except the termini "investments", you can find two more termini related with the investment. They are shown below. "Human capital investment" - any activity provided for rising the workers labour productivity (in the way of growing their qualification and developing their abilities); at the expenses of improving the workers' education, health and raising the mobility of the working forces". It is extremely useful to utilize the mentioned termini, though it requires one correction: the human capital investments usually do not concern only workers, but additionally the servants, representatives of each kind of labour. "Investment commodity, capital goods - a capital." In the state manuals of political economy of the reformation time the administrative centre investments are discussed as "expenses for creating new main funds and widening, reconstruction and renewing the active ones". In this definition the investments (capital placements) during separation of the forms (types) of further production of the primary funds are bounded only by main funds (without increases of the circulation funds and insurance reserves): a) creating new ones; b) widening; c) reconstruction; d) renewing. Also, the idea of the industrial gathering appears, at the expenses of widening of basic, circulation funds and in addition insurance reserves takes place". You'll meet below the definitions of investments from "the span of economy": the investments are called "placements of fund in to the basic capital (basic means of production), reserves, also other economical objects and processes, which request long-termed influxing of material and cash means. "Based on the division of capital into physical and money forms, the investments too must be split into material and cash investments". They apportion investment commodity, to which belong industrial and nonindustrial building objects, vehicles purposed for changing or widened technical park and the furniture, increasing reserves among others. "They call the total investments of production an investment product, which is directed towards keeping and increasing the essential capital (basic means) and reserve. Total investments contain two parts. One of these is named the depreciation; it represents important investment resources for compensation of renewal till the amount of before industrial usage, wearing out and repairing of the essential means. Second consisting area of the total investments is represented by net investments - capital investments for the purpose of increasing basic means". Depreciation isn't a compensation resource of wearing the basic funds out, but it is the purposeful financial way to obtain such resources. Human capital investment is "a particular kind of investments, mostly in education and health protection". "Real investments will be the investments in the economical branches and in addition, they are forms of economical activities, which provide influxing the increases of real capital, that is increasing material values of the industrial means". We are able to trust such definition with one specification that material and nonmaterial values too participate in the real capital (wealth), consequently science-researching experimental-construction results, various information, education of he workers among others. Such service as organization of the excitable games, also the service of redistribution social wealth in one private person to another (except charity). "Financial investments represent placement of funds into the shares, obligations, promissory notes, other securities and instruments. Such investments, of course, do not give increases of the real material capital, however they help getting profit, consequently at the expenses of changing the course of the securities in enough time of speculation, or distinguishing the course in various places of sell and purchasing". We share wholly such definition, hence it follows that financial investments (if it is not followed by real investments because of this) do not increase real material wealth and real nonmaterial wealth. According to this context, the expression below is very important: "we must distinguish financial investments, which represent keeping the funds in the means of selling and purchasing the securities for the purpose of getting profit and financial investments, which become cash and real, moved to real physical capital." In the "economical course" quoted before long and short-termed investments are separated. Recognizing the existence of the bounds between them, the authors ascribe short-termed investments to "one month or more" investments. If we get such conditioned criteria, that we can call the investments which overcome the terms of some months, long-termed ones, which is very doubtful and we don't trust it. A long-termed character of the fund placement is a significant feature of the investments (short-term doesn't match the concept of investments). Principally, it would be better to point out quick compensative, middle termed compensative and long-termed compensative investments: - less then six months - quick compensative; - from 6 months up to the year and a half - middle termed compensative; - more then the year and a half - long termed compensative. We stopped at the definition of the investments in the administrative centre work "economical course" for the special purpose, as, inside it the author tried to go over the concept of investments systemically and quite completely, herewith the book is published just now. We'll return to the discussion the definition economical category of "investments" in various publications in the following chapter. The definitions given here are quite enough for having a concept of the level of lighting up the given category in the economical literature. What conclusions could be made according this is of the mentioned economical category in the published works, except the made notions and specifications? There is quite deeply, concretely and thoroughly defined the concept of "investments", different definitions in the economical literature; but mostly atlanta divorce attorneys works concerning the investments discussed by us as yet, there is not opened the essence of investments as an economical category. Atlanta divorce attorneys monograph , even if it has a title investment, as an economical category , there's given only the definition, concept of investments. But, because the Academician Vasil Chantladze explains, "an idea is a discussion, which proves something about the distinguishing feature of the researched object. An idea out of much essential characteristic features represents only one, and essential in it is only - definition". However the categories are much wider; it really is "a key, the most fundamental concept of every science". Economical categories theoretically represent real, objectively existed productive relations. A category may be the defining of occasions of existed characters, connections, relations of the target world. Generally, any educational process is fulfilled by the categories, which give opportunities for dividing the processes and occasions semantically, for expressing the definitions of a subject and realize their specific peculiarities and economical relations of a material world. Our goal is strictly to substantiate investments - being an economical category and in addition, as a financial category in the narrow understanding. Here we apply for another manual thesis made by the academician Vasil Chantladze: "every financial relation can be an economical one and every financial category is and economical one, however, not every economical relation and economical category is financial relation and financial category". Along the way of defining the investments, it is important to take in mind the sides of resources, expenses and incomes, because investment, from one side, is the result of the manufacture's activity, and, from a different one, - part of income, which, in this case, is not useful for usage. Another occasion: it is advisable to discuss investments in two aspects: as a group of reserve and flow, that will reflect the connection between "keeping funds" and "investments".Like it? Share it! More by this author |