Popper’s three worlds as a focus for the next SNA

Abstract Karl Popper, Austrian–British philosopher, proposed “three worlds” in 1970’s; world 1 being the world of physical objects and physical states, world 2 being the world of mental states, and world 3 being the world of products of human minds. This paper proposes that capital formation as well as production should be able to be described in terms of Popper’s world 1 only. We call this “world 1 criterion” concerning the production boundary (and the capital boundary). Unfortunately, the present SNA rules involve some failure about the treatment of world 3. Irish anomaly is a typical consequence. Patents and copy rights are not capital, residents of world 1, but rights, residents of world 3. For example, when a novel, resident of world 3, first appears in the world as an original manuscript, it is a resident of world 1 as well. The 1993 version of SNA called this type of world 3 assets “entertainment, literary and artistic originals.” It is this world 1 product (the original of the novel) that national accounts statistics should record as production and capital formation. The present paper seeks to make clear where the SNA failed and consider how you can fix it. Among them, the tangible-intangible distinction will be examined. Software, database, as well as data in a digital form should be regarded as world 1 products which exist physically. The category “intellectual property products” which newly appeared in the SNA 2008 is so motley that re-examination is definitely needed.