Solving the Paradox of Monetary Profits

28 Pages Posted: 18 Dec 2010

See all articles by Steve Keen

Steve Keen

University of Western Sydney - School of Economics & Finance

Multiple version iconThere are 2 versions of this paper

Date Written: 2010

Abstract

Bruun and Heyn-Johnsen (2009) state the paradox that economics has failed to provide a satisfactory explanation of how monetary profits are generated, even though the generation of a physical surplus is an established aspect of non-neoclassical economics. They emphasise that our ability to explain phenomena like the Global Financial Crisis (GFC) will be limited while ever we are still unable to explain this fundamental aspect of capitalism. In fact this paradox can be solved very simply, using insights from what is known as Circuit Theory. In this paper the author shows how monetary profits are generated, and introduces a multi-sectoral dynamic disequilibrium monetary model of production.

Keywords: Endogenous money, circuit theory

JEL Classification: E12, E17, E20, E51

Suggested Citation

Keen, Steve, Solving the Paradox of Monetary Profits (2010). Economics Discussion Paper No. 2010-2. Available at SSRN: https://ssrn.com/abstract=1726776 or http://dx.doi.org/10.2139/ssrn.1726776

Steve Keen (Contact Author)

University of Western Sydney - School of Economics & Finance ( email )

Sydney, NSW 1797
Australia
61 2 4620-3016 (Phone)
61 2 4620-3787 (Fax)

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