Finance, Credit, Investments - Economical Categories

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

The definition of totality of the economical 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 economical relations, the formation of the funds of money sources, in the process of distribution and redistribution of national receipts according to 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 formation of centralized ad decentralized money sources, economic relations relatively with the distribution and usage, which serve for fulfillment of 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 of its action. We share partly such explanation of finances and think expedient to make some specification.

Read More:

First, finances overcome the bounds of 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, belongs not to the distribution and redistribution of the national income (of newly formed value during a year) but the distribution of already developed value.

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

Second, finances’ main goal 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 on the manufacture’s and branches’ level 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 stage of distribution when the value is realized, and concrete economical forms 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 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 the 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 system of creation and usage of necessary funds of cash resources for guarantying socialistic widened further production represent exactly the socialistic society’s finances. And the totality of economic 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:

Expression of essence and phenomenon in the definition of finances;

The definition of finances is the system of the creation and usage of funds of cash sources on the phenomenon level.

Distribution of finances as social product and the value of national income, the definition of the distributions’ planned character, main goals of the economy and economic relations, for servicing 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 such traditional definitions of finance, without an adjective “socialistic,” in modern economical literature. We may give such an elucidation: “finances represent cash resources of production and usage, also cash relations appeared in the process of distributing values of the formed economical 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, relatively to the process of privatization and the transition to privacy, and is periodically used in different countries, such as Great Britain and France.