Uploaded August 2026 | Updated September 2026, 3 weeks ago
What is income? It sounds like one of the simplest questions in economics, but the answer matters enormously.
In this episode of Understanding Economics, I argue that income is not simply money received or money spent. At the level of the economy as a whole, income is the real value we can create and use without leaving ourselves and our planet worse off.
That distinction changes how we think about wages, profit, interest and rent. Conventional economics treats all four as forms of income.
But do interest and rent actually create anything, or do they transfer income created by other people?
And how much corporate profit represents genuine enterprise rather than economic rent extracted through ownership, market power or the extraction of value from labour?
There is an even bigger issue. If economic activity depletes natural resources, destroys environmental capital or consumes assets that cannot be replaced, can we really describe what results as income? Or are we mistaking the consumption of capital for a false measure of prosperity?
That question takes us directly to climate change, inequality and the way we measure economic success.
Understanding income means asking where value really comes from, who creates it, who receives it and whether our apparent prosperity can be sustained.
This is part of my Understanding Economics series, which explains economics from first principles and asks whether the conventional answers still make sense.
You can watch the rest of this series here: youtube.com/playlist?list=PLaSguNBvHIto
Take a look at today's poll: youtube.com/post/Ugkx_jrpBGHfYJIyYcyD_SY-vi5j3zK2YIgU
TRANSCRIPT
A transcript for this video is available at: taxresearch.org.uk
IF YOU WANT TO WRITE TO YOUR MP ABOUT ISSUES IN THIS VIDEO
If you want to write a letter to your MP on the issues raised in this blog post, there is a ChatGPT prompt to assist you in doing so, with full instructions, here. taxresearch.org.uk/Blog/2025/06/20/chatgpt-prompt-for-a-letter-to-your-mp
HOW TO SUPPORT US
Please consider donating: ko-fi.com/taxresearch
ABOUT RICHARD MURPHY
Richard Murphy is Emeritus Professor of Accounting Practice at Sheffield University Management School. He is director of Tax Research LLP and the author of the Funding the Future blog. His best-known book is ‘The Joy of Tax’.
This video was edited by Thomas Murphy.
RICHARD MURPHY ON BLUESKY:
https://bsky.app/profile/richardjmurphy.bsky.social
OR
ON MY BLOG: taxresearch.org.uk/Blog
HIT SUBSCRIBE & GET NOTIFICATIONS
Subscribe and get notified of new videos released.
INTRODUCTION: youtube.com/watch?v=HdHsRPy3060
PLAYLISTS:
The Wealth Series
youtube.com/playlist?list=PLvRueM6wBgobQLeyZYAagFDMjEFTKbhRD
Ecenomics
youtube.com/playlist?list=PLvRueM6wBgob54Gs-fOL-8OAQ-IpduwB4
Britain
youtube.com/playlist?list=PLvRueM6wBgobwTT4ATvJjsf8OO6S7wD10
Tax
youtube.com/playlist?list=PLvRueM6wBgoaMni_12J6ULp3yUJisUZoY
MMT
youtube.com/playlist?list=PLvRueM6wBgoZ6jvRGSW5YXu8qogE6aClX
Money
youtube.com/playlist?list=PLvRueM6wBgoYnLk1c7syTvoIo8bKYUs5m
Climate Change
youtube.com/playlist?list=PLvRueM6wBgob4_wsYaVivWd2WumpPLYwJ
USA
youtube.com/playlist?list=PLvRueM6wBgoYYd3dSyU2Oyl3x7bWJOP7H
Labour
youtube.com/playlist?list=PLvRueM6wBgoa-KhzG-fnjDSg1WROL1zMw
The Trump Administration
youtube.com/playlist?list=PLvRueM6wBgobz41-GLimTho27A3flVWQx
#richardmurphy #richardjmurphy #economy #economics #accountancy #accounting #tax #uktax #ukeconomy #greennewdeal #uk #money #economy #politics #government #tax #labour #health #life
What is income? It sounds like one of the simplest questions in economics, but the answer matters enormously.
In this episode of Understanding Economics, I argue that income is not simply money received or money spent. At the level of the economy as a whole, income is the real value we can create and use without leaving ourselves and our planet worse off.
That distinction changes how we think about wages, profit, interest and rent. Conventional economics treats all four as forms of income.
But do interest and rent actually create anything, or do they transfer income created by other people?
And how much corporate profit represents genuine enterprise rather than economic rent extracted through ownership, market power or the extraction of value from labour?
There is an even bigger issue. If economic activity depletes natural resources, destroys environmental capital or consumes assets that cannot be replaced, can we really describe what results as income? Or are we mistaking the consumption of capital for a false measure of prosperity?
That question takes us directly to climate change, inequality and the way we measure economic success.
Understanding income means asking where value really comes from, who creates it, who receives it and whether our apparent prosperity can be sustained.
This is part of my Understanding Economics series, which explains economics from first principles and asks whether the conventional answers still make sense.
You can watch the rest of this series here: youtube.com/playlist?list=PLaSguNBvHIto
Take a look at today's poll: youtube.com/post/Ugkx_jrpBGHfYJIyYcyD_SY-vi5j3zK2YIgU
TRANSCRIPT
A transcript for this video is available at: taxresearch.org.uk
IF YOU WANT TO WRITE TO YOUR MP ABOUT ISSUES IN THIS VIDEO
If you want to write a letter to your MP on the issues raised in this blog post, there is a ChatGPT prompt to assist you in doing so, with full instructions, here. taxresearch.org.uk/Blog/2025/06/20/chatgpt-prompt-for-a-letter-to-your-mp
HOW TO SUPPORT US
Please consider donating: ko-fi.com/taxresearch
ABOUT RICHARD MURPHY
Richard Murphy is Emeritus Professor of Accounting Practice at Sheffield University Management School. He is director of Tax Research LLP and the author of the Funding the Future blog. His best-known book is ‘The Joy of Tax’.
This video was edited by Thomas Murphy.
RICHARD MURPHY ON BLUESKY:
https://bsky.app/profile/richardjmurphy.bsky.social
OR
ON MY BLOG: taxresearch.org.uk/Blog
HIT SUBSCRIBE & GET NOTIFICATIONS
Subscribe and get notified of new videos released.
INTRODUCTION: youtube.com/watch?v=HdHsRPy3060
PLAYLISTS:
The Wealth Series
youtube.com/playlist?list=PLvRueM6wBgobQLeyZYAagFDMjEFTKbhRD
Ecenomics
youtube.com/playlist?list=PLvRueM6wBgob54Gs-fOL-8OAQ-IpduwB4
Britain
youtube.com/playlist?list=PLvRueM6wBgobwTT4ATvJjsf8OO6S7wD10
Tax
youtube.com/playlist?list=PLvRueM6wBgoaMni_12J6ULp3yUJisUZoY
MMT
youtube.com/playlist?list=PLvRueM6wBgoZ6jvRGSW5YXu8qogE6aClX
Money
youtube.com/playlist?list=PLvRueM6wBgoYnLk1c7syTvoIo8bKYUs5m
Climate Change
youtube.com/playlist?list=PLvRueM6wBgob4_wsYaVivWd2WumpPLYwJ
USA
youtube.com/playlist?list=PLvRueM6wBgoYYd3dSyU2Oyl3x7bWJOP7H
Labour
youtube.com/playlist?list=PLvRueM6wBgoa-KhzG-fnjDSg1WROL1zMw
The Trump Administration
youtube.com/playlist?list=PLvRueM6wBgobz41-GLimTho27A3flVWQx
#richardmurphy #richardjmurphy #economy #economics #accountancy #accounting #tax #uktax #ukeconomy #greennewdeal #uk #money #economy #politics #government #tax #labour #health #life
