Finance, Credit, Investments - Economical Categories

According to the specification of the research object, scientific works on the theories of finances and credit are characterized as being many-sided and many-leveled.

The definition of totality of the economic relations formed in the formation, distribution, and usage of finances, as money sources are widely spread. For example, in “The General Theory of Finances,” there are two definitions of finances:

1) “…Finances reflect economic relations, the formation of the funds of money sources, in the distribution and redistribution of national receipts according to the distribution and usage”. This definition is given relative to the conditions of Capitalism when cash-commodity relations gain universal character;

2) “Finances represent the formation of centralized and decentralized money sources, economic relations relative to the distribution and usage, which serve to fulfill the state functions and obligations and also a provision of the conditions of the widened further production.” This definition is brought without showing the environment in which it is applied. We partly share such an explanation of finances and think making some specifications expedient.

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First, finances overcome the bounds of the distribution and redistribution service of the national income, though it is a basic foundation of finances. The formation and usage of the depreciation fund, which is part of the financial domain, belong not to the distribution and redistribution of the national income (of newly formed value during a year) but to the distribution of already developed weight.

This latest first appears to be a part of the value of main industrial funds; it is moved to the cost price of a ready product (that is, to the deal, too), and after its realization, it is set to the depression fund. Its source is considered beforehand as a depression in the cost of ready products.

Second, the main goal of finances is much wider than “fulfillment of the state functions and obligations and provision of conditions for the widened further production.” Finances exist on the state level and the manufacturers and branches’ groups, too, and in such conditions, most of the manufacturers are not stated.

V. M. Rodionova has a different position about this subject: “Real formation of the financial resources begins on the distribution stage when the value is realized, and concrete economical forms of the realized value are separated from the consistence of the profit.” V. M. Rodionova accentuates finances as distributing relations, while D. S. Moliakov underlines the industrial foundation of finances. Though both of them give quite substantiate discussion of finances as a system of formation, distribution, and usage of the funds of money sources, that comes out of the following definition of finances: “financial cash relations, which forms in the process of distribution and redistribution of the partial value of the national wealth and total social product, is related with the subjects of the economy and formation and usage of the state cash incomes and savings in the widened further production, in the material stimulation of the workers for satisfaction of the society social and other requests.”

In the manuals of the political economy, we meet with the following definitions of finances:
“Finances of the socialistic state represent economic (cash) relations, with the help of which, in the way of planned distribution of the incomes and savings, the funds of money sources of the state and socialistic manufactures are formed for guaranteeing the growth of the production, raising the material and cultural level of the people and for satisfying other general society requests.”

“The creation and usage of necessary funds of cash resources for guarantying socialistic widened further production represent the socialistic society’s finances. And the totality of economic relations arisen between state, manufactures and organizations, branches, regions, and separate citizens 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:

Expression of essence and phenomenon in the definition of finances;

Finances aim to create and use cash sources at the phenomenon level.

The distribution of finances as a social product and the value of national income, the definition of the distributions’ planned character, the main goals of the economy and economic relations, and the purposes for which it is used.

I refuse the preposition “socialistic” in the definition of finances; we may say that it still keeps actuality. We meet with traditional purposfinance definitions without the adjective “socialistic” in modern economic literature. We may give such an elucidation: “Finances represent cash resources of production and usage, cash relations appeared in the process of distributing values of the formed economic product and national wealth for the formation and further production of the cash 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 the traditional inheritance, we meet with the widening of the financial foundation. They concern “distribution and redistribution of the value of the created economical product, also the partial distribution of the value of national wealth.” This latest is very actual, relative to the privatization process and the transition to privacy, and is periodically used in different countries, such as Great Britain and France.