WELFARE IMPLICATIONS OF 'SOCIAL INCOME' IN A CHANGING ECONOMY

Samuelson (1961) concluded that in a dynamic setting any scalar concept of current economic activity is inherently myopic with respect to the relevant welfare-space. This conclusion, which virtually undermines any welfare foundations for the concept of income, is shown to be based on an incomplete and inconsistent concept of capital formation. When this is amended, the alleged welfare contradiction in the concept of income vanishes .