If you’re very interested in the topic of today’s article and want to know more, I highly recommend reading The Levy Institute’s publication “Where do Profits Come From?” I’ll be reposting a few of their great illustrations to make these accounting relations feel more real.If you are interested in this sort of analysis, consider subscribing to Nathan's substack. There is a free option and a paid premium option.
Notes on the Crisis
Where do profits come from?
Nathan Tankus
See also
Naked Capitalism (old but still relevant)
Stephanie Kelton: What Happens When the Government Tightens its Belt?
Yves Smith
Revenues exceed expenses... cash basis...
ReplyDeleteThe question economists could not answer for 200+ years
ReplyDeleteComment on Tom Hickey on “Where do profits come from? — Nathan Tankus”
Where do profits ultimately come from? Macroeconomic profit is not made from a longer labor time, not from higher productivity, not from innovation/creative destruction, not from a lower wage rate, not from more greed, not from exploitation, not from monopoly power, not from risk-taking, not from rent-seeking, not from wishful thinking or any other subjective factor, but in the most elementary case of the production-consumption economy from the dissaving/deficit spending of the household sector. Starting with a balanced-budget economy, macroeconomic profit presupposes credit/money creation by the banking sector (central bank and commercial banks). Macroeconomic profit has nothing to do with property rights. The Profit Law holds for capitalism and communism.
Accordingly, microeconomic profit is the result of the continuous redistribution of macroeconomic profit between the firms that constitute the business sector. If macroeconomic profit is zero, i.e. if the household sector's budget is balanced, then the sum of microeconomic profits is equal to the sum of microeconomic losses.
Macroeconomic profit comes ultimately from the household and state sector’s deficit spending/money creation.#1-#6
Egmont Kakarot-Handtke
#1 Profit
https://axecorg.blogspot.com/2020/06/profit-axiomatic-economics.html
#2 The Levy/Kalecki Profit Equation is false
https://axecorg.blogspot.com/2019/06/the-levykalecki-profit-equation-is-false.html
#3 Truth by definition? The Profit Theory is axiomatically false for 200+ years
https://axecorg.blogspot.com/2018/07/truth-by-definition-profit-theory-is.html
#4 The profit theory is false since Adam Smith
https://axecorg.blogspot.com/2017/11/the-profit-theory-is-false-since-adam.html
#5 Cross-references Profit
https://axecorg.blogspot.com/2015/03/profit-cross-references.html
#6 The Profit Law, Wikimedia AXEC143d
https://commons.wikimedia.org/wiki/File:AXEC143d.png
Anybody spotted where Apple's cash pile sits in all this?
ReplyDeleteThere's a section for household saving, but none for dead net saving by corporations
NeilW
ReplyDeleteYou ask: “Anybody spotted where Apple's cash pile sits in all this? There's a section for household saving, but none for dead net saving by corporations.”
It's there for all who can read and think.
The distributed profit of the business sector is given by Yd.#1 The difference between profit Qm and distributed profit Yd is retained profit and this is the cash pile the corporations sit on if they don't buy government bonds or other financial assets.
Learn economics. I recommend the textbook Sovereign Economics.#2
Egmont Kakarot-Handtke
#1 The Profit Law, Wikimedia AXEC143d
https://commons.wikimedia.org/wiki/File:AXEC143d.png
#2 Amazon or BoD
https://www.bod.de/buchshop/sovereign-economics-egmont-kakarot-handtke-9783751946490