January 18, 2022

Finance, Credit, and Investments – Economical Categories

According to the specifications of the research object they are multi-sided and multi-leveled scientific works on the theories of credit and finances.

Widely accepted is the concept of totality in economic relations that are formed during the formation, distribution, and use of money, or as money sources. Two definitions of finance are available in the “general theory of finances”.

1) “…Finances refer to economic relations, the formation of funds from money sources in the process for distribution and redistribution national receipts according the distribution and use. This definition refers to Capitalism when cash-commodity relationships gain universal character.

2) “Finances are the creation of centralized and decentralized money sources, economic relations relative to the distribution and use, which serve the fulfillment of state functions and obligations, as well as the provision of conditions for the widened further manufacturing. The environment in which it operates is not shown. We agree with part of this explanation and feel it expedient to provide some specifications.

Finances transcend the boundaries of distribution and redistribution of national income. However, it is an essential foundation of finances. The depreciation fund, which is a part of financial domain, is not used for the distribution or redistribution (of new value) of national income, but rather to the distribution of value that has been developed.

The latest one appears to be part of the main industrial fund’s value, then it is moved to the price of a ready-made product (that is, to the value also) and, after it realization, it is put into the depression fund. Its source is considered before it is set as a depression type in the consistence price for ready products.

The second, and most important goal of finances goes beyond “fulfillment state functions and obligations” and the provision of conditions for widened further production. Finances exist at the state and on the manufacturing and branch levels. In such conditions, the majority of the manufactures aren’t state.

V. M. Rodionova takes a different view on this topic: “Real formation of financial resources starts at the stage of distribution when the value is realized, and the concrete economic forms of that realized value are separated form the consistence of profit.” V. M. Rodionova emphasizes finances as distributing relationships, while D. S. Moliakov emphasizes the industrial foundation of finance. Both of them provide a solid discussion on finances as a system for formation, distribution, and use of funds of money sources. However, the following definition of finance is available: “Financial cash relationships, which form in the process distribution and redistribution the partial value national wealth total, are related to the subjects of economy and formation and utilization of state cash incomes, and savings in the widened further productivity, in the material stimulation, of workers for satisfaction society social and other needs.”

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