Money, Bank Credit, and Economic Cycles - The Ludwig von Mises ...

308 Money, Bank Credit, and Economic Cycleseven the amount spent on consumer goods and services duringeach productive period. Therefore the key is to study grosssaving and investment, i.e., the aggregated value, in monetaryterms, spent in the stages of intermediate goods prior to finalconsumption, an amount which remains hidden if we focusexclusively on the evolution of accounting figures in net terms.This is precisely why we should be especially critical of traditionalnational income accounting measures. For example,the traditional definition of “gross national product” (GNP)contains the word “gross,” yet in no way reflects the true grossincome spent during the year on the entire productive structure.On the one hand, GNP figures hide the existence of differentstages in the production process. On the other hand,what is even more serious and consequential is that the grossnational product, despite the “gross” in its name, does not reflectthe total gross monetary spending which takes place in all productivestages and sectors of the economy. This is because it is based solelyon the production of goods and services delivered to finalusers. In fact it rests on a narrow accounting criterion of addedvalue which is foreign to the fundamental truths of the economy;it only adds the value of consumer goods and servicesand of the final capital goods completed during the year. Itdoes not incorporate the other intermediate products which make upthe stages in the production process and which pass from one stageto another during the financial year. 37 Hence gross nationalproduct figures only include a small percentage of the total37 For instance as Ramón Tamames indicates, the gross national productat market pricescan be defined as the sum of the value of all the final goodsand services produced in a nation in one year. I speak of finalgoods and services because intermediate ones are excluded toavoid the double computation of any value.Fundamentos de estructura económica, 10th revised ed. (Madrid: AlianzaUniversidad, 1992), p. 304. Also see the book by Enrique Viaña Remis,Lecciones de contabilidad nacional (Madrid: Editorial Cívitas, 1993), inwhich he states thatthe distinction between intermediate inputs and depreciationhas given rise to the convention of excluding the former andincluding the latter in the value added. Therefore we distinguishbetween gross value added, which includes depreciation,