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The Monetary Profit Paradox and a Sustainable Economy - A Fundamental Approach

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  • de la Fonteijne, Marcel

Abstract

Main goal of this paper is to clarify the paradox of monetary profit. The definitions and formulas introduced will make it simple and straight forward to understand the paradox. In order to understand from where the profits or monetary profits of capitalists and firms emerge I examined the phrase of Marx, ‘Die Gesamtklasse der Kapitalisten kann nichts aus der Zirkulation herausziehen, was nicht vorher hineingeworfen war.’ and classified it as very confusing. I will show where this confusion comes from and show how to cope with problems alike in a systematic way by using definitions and formulas. As a bonus these formulas give us insight under which conditions the economy can be sustainable and that the relation between monetary profit for firms and savings for household defines a very limited solution space in which the economy can operate in a sustainable way and yet only considering the boundary condition for firm profit and household savings. It will also give us a clue where the motivation for participating in the economy comes from.

Suggested Citation

  • 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.
    • Handle: RePEc:pra:mprapa:55235
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    References listed on IDEAS

    as
    1. Tomasson, Gunnar & Bezemer, Dirk J, 2010. "What is the Source of Profit and Interest? A Classical Conundrum Reconsidered," MPRA Paper 20320, University Library of Munich, Germany.
    2. Bruun, Charlotte & Heyn-Johnsen, Carsten, 2009. "The paradox of monetary profits: an obstacle to understanding financial and economic Crisis?," Economics Discussion Papers 2009-52, Kiel Institute for the World Economy (IfW Kiel).
    3. Keen, Steve, 2010. "Solving the paradox of monetary profits," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 4, pages 1-32.
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    Cited by:

    1. de la Fonteijne, Marcel R., 2015. "Jones on Piketty's r>g: A critique," MPRA Paper 83830, University Library of Munich, Germany.
    2. de la Fonteijne, Marcel R., 2014. "The (F)Laws of Piketty’s Capitalism: A Fundamental Approach," MPRA Paper 72719, University Library of Munich, Germany.

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    More about this item

    Keywords

    monetary profit; paradox; Marx; Keynes; Capitalists;
    All these keywords.

    JEL classification:

    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution

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