The Determinants of Profits: United States, 1950–88

The total profits obtained in an economy in a particular interval of time is a macroeconomic variable, and it can be shown to be determined by the net effects of four other macroeconomic variables. These variables are gross private domestic investment, the government deficit, net foreign investment and personal saving. This approach to the determination of profits can be traced to Kalecki (1954), but there are strong hints of it in the Marxist literature on the realisation of profits. There are encouraging signs that this general approach is gaining wider currency. It has a prominent role in two recent publications, Levy and Levy (1983), and Minsky (1986).