Page:Indian Journal of Economics Volume 2.djvu/253

 PRINCIPLES oF FiNNOE expeaditnre, thus increasing the profit. Every business man increases his annual expenditure every direction which he finds remnnerative by wise in its yielding a more than equivalent increase of his income. The theory of economics shows what are the causes, or economic laws, that determine, at any thne, what are the profitable directions of presen-'l)oint.of view in finance, outlay. From our however., the only importan.t point is that the expenditure and income are equally variable' from time to thne in accra'dance vith the requirements of the business. This system of finance is equally applicable to eYery kind of commercial andclOaking whether it is owned by a single individual, by a private firm or company, or by Government, or by any other public authority or institution. The commercial system of finance is the very essence of business; and the failure t<) recognize its essential difference from the system of finance necessary in he normal functions of Government has led to the failure of m.uy commercial enterpises undertaken by Govern- ment, both in India and other countries. 4. Ta:able Capacity. In a later section when we deal with the practicable methods for financing public works it ,511 be necessary for us to consider taxable capacity as the ultimate basis of security for public deb. We shall find that the idea of taxable capacity is essential in the consideration of the question of the extent, to which Government may itself undertake or control a .greater or lessex proportion of the total social expenditure. The taxable capacity of any corn- munity may be briefly defined o! the people above what existence according to the at the time in the country concerned. is standard of as the surplus produce necessary to mainin life prevailing This is not an exact definition, because the phrases, "maintain. exis.