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What is the Source of Profit and Interest? A Classical Conundrum Reconsidered

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  • Tomasson, Gunnar
  • Bezemer, Dirk J

Abstract

Classical political economy was underpinned by a shared view of the economy as a circular flow. This begged the question of how the value of produce can exceed the value of factor inputs: the ‘Profit Puzzle’. In this paper we advocate an understanding of the Profit Puzzle as a monetary paradox arising from Say’s Law. We trace how Classical, Keynesian and Neoclassical economists addressed the Puzzle. We suggest a solution based on the work of Bentham.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 20320.

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Date of creation: 29 Jan 2010
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Handle: RePEc:pra:mprapa:20320

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Related research

Keywords: Circular Flow; Say's Law; Profit; Credit; Marx; Schumpeter; Keynes;

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  1. Hicks, John R [Sir], 1973. "Recollections and Documents," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 40(157), pages 2-11, February.
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Cited by:
  1. Kakarot-Handtke, Egmont, 2012. "Income distribution, profit, and real shares," MPRA Paper 43291, University Library of Munich, Germany.
  2. Kakarot-Handtke, Egmont, 2013. "Redemption and Depression," MPRA Paper 50924, University Library of Munich, Germany.
  3. Kakarot-Handtke, Egmont, 2012. "The common error of common sense: an essential rectification of the accounting approach," MPRA Paper 43196, University Library of Munich, Germany.
  4. de la Fonteijne, Marcel R., 2014. "An inconsistency in using stock flow consistency in modelling the monetary profit paradox," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, vol. 8(15), pages 1-7.
  5. Kakarot-Handtke, Egmont, 2013. "Understanding Profit and the Markets: The Canonical Model," MPRA Paper 48691, University Library of Munich, Germany.
  6. Kakarot-Handtke, Egmont, 2014. "Mr. Keynes, Prof. Krugman, IS-LM, and the End of Economics as We Know It," MPRA Paper 53608, University Library of Munich, Germany.
  7. Kakarot-Handtke, Egmont, 2014. "The Truly General Theory of Employment: How Keynes Could Have Succeeded," MPRA Paper 54367, University Library of Munich, Germany.
  8. Egmont Kakarot-Handtke, 2013. "Why Post Keynesianism is Not Yet a Science," Economic Analysis and Policy (EAP), Queensland University of Technology (QUT), School of Economics and Finance, Queensland University of Technology (QUT), School of Economics and Finance, vol. 43(1), pages 95-108, March.
  9. Kakarot-Handtke, Egmont, 2012. "The rhetoric of failure: a hyper-dialog about method in economics and how to get things going," MPRA Paper 43276, University Library of Munich, Germany.
  10. Kakarot-Handtke, Egmont, 2011. "Trade, productivity, income, and profit: the comparative advantage of structural axiomatic analysis," MPRA Paper 43872, University Library of Munich, Germany, revised 18 Jan 2012.
  11. Kakarot-Handtke, Egmont, 2012. "Intertwined real and monetary stochastic business cycles," MPRA Paper 42793, University Library of Munich, Germany.
  12. Kakarot-Handtke, Egmont, 2014. "Towards Full Employment Through Applied Algebra and Counter-Intuitive Behavior," MPRA Paper 56749, University Library of Munich, Germany.
  13. Kakarot-Handtke, Egmont, 2012. "General formal foundations of the virtuous deficit–profit symmetry and the vicious debt deflation," MPRA Paper 42912, University Library of Munich, Germany.
  14. de la Fonteijne, Marcel, 2013. "The Monetary Profit Paradox and a Sustainable Economy - A Fundamental Approach," MPRA Paper 55235, University Library of Munich, Germany, revised 10 Apr 2014.
  15. Kakarot-Handtke, Egmont, 2012. "Crisis and methodology: some heterodox misunderstandings," MPRA Paper 43260, University Library of Munich, Germany.
  16. Kakarot-Handtke, Egmont, 2012. "Geometrical exposition of structural axiomatic economics (I): Fundamentals," MPRA Paper 43269, University Library of Munich, Germany.
  17. Egmont Kakarot-Handtke, 2013. "The Emergence of Profit and Interest in the Monetary Circuit," World Economic Review, World Economics Association, World Economics Association, vol. 2013(2), pages 106, February.
  18. Kakarot-Handtke, Egmont, 2012. "Taxes, profits, and employment: a structural axiomatic analysis," MPRA Paper 43581, University Library of Munich, Germany.

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