Blog-References and Blog-Reference
“A satisfactory theory of profits is still elusive.” (Palgrave Dictionary, Desai, 2008)#1 Isn’t this strange? Economists never get tired of producing microeconomic and macroeconomic models and of giving policy advice and do not know what profit is? Strange but true, the fact is that Walrasians, Keynesians, Marxians, Austrians, MMTers, and Pluralists are groping in the dark. Because of this, the whole of economics is scientifically worthless.
The ultimate blunder of economics is that both microfoundations and macrofoundations are provably false. As a result, one has multiple profit theories but not the materially and formally correct one.
Brian Romanchuk discusses the Kalecki profit equation and the Levy profit equation. This is a rather pointless exercise because all these equations are provably false.#2, #3, #4, #5, #6
Because economists messed up macroeconomics, more specifically, the axiomatic foundations of economics,#7, #8 economics still stands at square one.
To make the argument short, the macroeconomic Profit Law for the open economy with a government is given as Q=Qm+Qn with Qm=Yd+(I−Sm)+(G−T)+(X−M). Legend: Q total profit, Qm monetary profit, Qn nonmonetary profit,#9 Yd distributed profit, Sm monetary saving, I investment expenditures,#10 G government spending, T taxes, X export, M import. Because all variables are measurable, the Profit Law is testable.
From the axiomatically correct Profit Law follows immediately that Keynes’ I=S and MMT’s balances equation (X−M)+(G−T)+(I−S)=0 are provably false.#11
The Profit Law is an important relationship for the monetary economy. For 200+ years now, the Profit Theory is false because economics has not been correctly macro-axiomatized.#12 As Mirowski put it “... one of the most convoluted and muddled areas in economic theory: the theory of profit.”
#1 Profit: after 200+ years still elusive
#2 What is Wrong with Heterodox Economics? Kalecki’s Profit Theory as an Example
#3 Rethinking deficit spending
#4 Kalecki got it wrong, Allais got it right
#5 Heterodoxy, too, is proto-scientific garbage
#6 For details of the big picture see cross-references Profit/Distribution
#7 From false micro to true macro: the new economic paradigm
#8 Essentials of Constructive Heterodoxy: Profit
#9 Primary and Secondary Markets
#10 Squaring the Investment Cycle
#11 Rectification of MMT macro accounting
#12 The Profit Theory is False Since Adam Smith. What About the True Distribution Theory?
Related 'DSGE and profit―forget it! MMT and profit―forget it!' and 'The curious non-existence of profit in economics' and 'MMT and grassroots movements' and 'Macroeconomics for retarded economists' and 'The final implosion of MMT' and 'Infantile model bricolage, or, How many economists can dance on a non-existing pinpoint?' and 'Mathiness is NOT the problem — scientific incompetence is' and 'Economists: only good at excuses' and 'Ricardo and the invention of class war' and 'The Common Error of Common Sense: An Essential Rectification of the Accounting Approach' and 'MMT: How mathematical incompetence helps the Kelton-Fraud'.