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In this paper we present estimates of the world (net) profit rate using country-level data from the Extended Penn World Table 7.0 and estimates of the world (gross) profit rate using industry-level data from the World Input Output Database. The country-aggregated world profit rate series spans the period from 1960 to 2019, and the industry-aggregated world profit rate series runs from 2000 to 2014. The country-aggregated world profit rate series displays a strong negative linear trend for the period 1960–1980 and a weaker negative linear trend from 1980 to 2019. A medium run decomposition analysis reveals that the decline in the world profit rate is driven by a decline in the output-capital ratio. The industry-aggregated world profit rate shows a negative linear trend for the period 2000–2014, which, once again, is driven by a fall in the output-capital ratio. We have created a World Profitability Dashboard to allow researchers to freely access the world profit rate series and the underlying data at country, industry, country-group and world levels of aggregation. [ABSTRACT FROM AUTHOR]

Countries all over the world experienced exceptional inflation rates since 2021 as a consequence of global supply chain disruptions, a post-Covid-19 demand shock, and rising energy costs after the Russian Federation's invasion in Ukraine. Germany is one particularly relevant example, given that the European Union's strongest economy has high anti-inflation sentiments and employs relatively tight fiscal policy but nevertheless suffered the longest from those shocks. This study examines price developments – broken down by various sectors – in Germany and how the additional revenues from these price increases were distributed between capital and labor. Results suggest that the high levels of inflation in 2021-2023 in Germany cannot be explained by the substantial rises in energy prices alone. The analysis of deflators for gross value added indicates that the price increases were heterogeneous across economic sectors with particularly high levels in agriculture, construction, energy supply, as well as services in trade, transport, and hospitality. Profits accounted for 57.6% of nominal gross value added in the most inflation-intensive sectors. This is 32% above the average of the other sectors, indicating that most of the inflation was associated with company profits in the high inflation sectors. The inflation consequently benefited capital owners at the expense of workers who suffered from increased prices without receiving sufficient compensation through higher wages. In terms of policy implications, there is no evidence of a wage-price spiral, but clear evidence that the key contributors of inflation were increased energy prices and corporate profits. [ABSTRACT FROM AUTHOR]

Mexican manufacturing shows a long-run divergence between a rising profit share of income and a flat rate of capital accumulation. Following the Cambridge equation, the paper studies the determinants of capital accumulation and finds the divergence to be partly explained by a reduction in the output/capital ratio, which opened a gap between a rising profit share and falling profit rate. But besides this classical, Marxian mechanism, two additional factors were at play: first, nonlinear profitability effects, which reveal that, at the high profitability rates observed in Mexico, profitability was not a binding constraint on accumulation; and second, foreign profitability effects, which show that a rise in US profits rates affected negatively accumulation in Mexico. The results come from estimated equations for the capital accumulation rate and investment share of profits in an annual panel of 17 manufacturing industries during the period 1992–2019. [ABSTRACT FROM AUTHOR]

The paper studies the long-run disconnection between a rising profit share of income and a constant rate of capital accumulation in Mexico since the early 1990s. According to stylized facts based on the Cambridge accumulation equation, the disconnection reflects two factors: first, a flat trajectory of the investment share of profits, and second, a gap between a rising profit share and a constant or even falling profit rate due to a decline in the output/capital ratio. In manufacturing—where the disconnection was particularly sharp—econometric estimates show that the accumulation rate was negatively affected not only by the decline in the output/capital ratio but also by a fall in the relative Mexican/US profit rate. The estimates show in addition that, among financialization indicators, a rise in interest payments as a share of profits may have contributed to the low accumulation rate. [ABSTRACT FROM AUTHOR]

Discussions on “profit inflation” are mired in conceptual unclarities, definitional idiosyncrasies and data problems. This article attempts to bring conceptual clarity to the debate on profit inflation, defining profit inflation strictly as an increase in the gross output price that is caused by an increase in the profit mark-up (keeping all other unit cost items constant). Empirical evidence for the U.S. economy (2020-2022) shows that corporate profit mark-ups have indeed increased, raising both the aggregate profit share and the general price level. Hence, unlike in the 1970s, the recent inflationary episode is the outcome not of a wage-price spiral but of a profit mark-up-price spiral in which real wages get squeezed. However, the conflict underlying the recent surge in inflation concerns not just corporate shareholders profiteering at the cost of workers, but – importantly – also involves struggles between financial speculators (in oil and commodity markets) and the real economy.

The paper investigates the path of the profit rate and its components in Brazil between 1950 and 2020. The high growth in developmentalism, 1950-1980, in contrast to the great stagnation in neoliberalism, 1980-2020, is interpreted based on the rate of profit and its components: the profit share, the productivity of capital and the level of capacity utilization. The fall in the rate of profit due to the decline in capital productivity resulted in a slowdown in the rate of capital accumulation and economic growth. In the 1980-2020 period there was a structural break in the relationship between productive investment and profits with the adoption of neoliberalism, the same profit rate resulted in lower capital accumulation. The great stagnation is explained by the fall in the profit rate and the adoption of neoliberalism. [ABSTRACT FROM AUTHOR]

This paper investigates the incidence and determinants of subcontracting (SC) in unincorporated non-agricultural enterprises, the nature of the relationship and the net accumulation fund of firms undergoing subcontract. The incidences of subcontracting in India among small manufacturing firms have remained stagnant over time. However, there have been some changes within the categories. States with relatively poor infrastructure and industries that involve relatively low skill and technology have higher incidences of subcontracting. The profit share of SC firms is higher than those who do not subcontract, owing to low assets, location and ownership of firms. The higher profit share of the SC firms is because it consists of more OAEs. A considerable portion of the profit of OAEs comprises the wage of working proprietors and unpaid family workers. The net accumulation fund (NAF) of these firms is very low. Low NAF of SC firms is a major obstacle to firm size and output growth and is an important cause behind stagnant and contracting firms' decisions to subcontract. The study also finds that the subcontracting relationship and aftermath of own account firms (without hired workers) and establishments (with at least one hired worker) are different. The institutional intervention in terms of credit and provisions of subcontracting exchanges may lead the unorganized firms to grow and develop stable contracts for the benefit of firms and the economy. [ABSTRACT FROM AUTHOR]

I present a tractable international trade model of monopsonistic competition and heterogeneous firms, in which markups and markdowns are increasing with the size of firms. The model sheds new light on the effects of trade on the aggregate profit share. In a standard model with a Pareto distribution of firm characteristics, the profit share is constant; by augmenting the model with the assumption of monopsonistic competition, trade can increase the profit share under reasonable assumptions for the parameter values. Monopsonistic competition is, thus, a contributing factor to the documented decline in the labor share and rise in corporate profits. [ABSTRACT FROM AUTHOR]

Industrial concentration has led to rising profit shares, higher price markups, and a decline in business investment. In this article, we connect those phenomena to the rise of the Chicago School of Antitrust and its more lenient antitrust treatment of large corporations that parallels the decline in the labor share for U.S. workers. Our analysis of the U.S. manufacturing sector and components of the profit rate provides evidence for the rising profit shares and the slower capital accumulation in the highly concentrated sectors of U.S. manufacturing, and thus the laissez-faire bent of Chicago School antitrust toward corporate bigness during the period of declining labor shares should be recognized as another strong contributor to rising income inequality in the United States over this period. [ABSTRACT FROM AUTHOR]

In Bunno Bedelle zone, soybean is a major cash crop which is mainly produced by smallholder farmers. The study was undertaken with the objective of mapping value chain actors, estimating share of actors' margin, identify major constraints and opportunities and identifying market channel of soybean by smallholder farmers. Multi stage random sampling techniques were employed to select a total of 218 farmers from nine Kebeles. Data were collected from both secondary and primary sources. Descriptive, SWOT analysis and value chain mapping methods of data analyses were used to analysis the data. Soybean value chain analysis of the study areas revealed that the main value chain actors were input suppliers, soybean producers, wholesalers, retailers, collectors, processors, exporters and consumers. The major constraints identified are low access to improved inputs, collateral problem to get credit, poor storage facilities, low price of produce, and low negotiation (bargaining) power of producers. Therefore, improving extension services, sharing of experience among soybean farmers, increase land allocation and market information dissemination are require to improve productivity and profitability of soybean farming in the region and Ethiopia at large. [ABSTRACT FROM AUTHOR]

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This study combines a neo-Kaleckian growth and distribution model with a sort of Sraffian supermultiplier mechanism in which autonomous demand is driven by foreign exports. Short-, medium- and long-run equilibria are considered. In the long-run case, the expectations of sales growth governing investment change adaptively, and this, combined with the autonomous growth rate of exports, produces convergence of the actual rate of capacity utilization to its normal rate. It is demonstrated that some aspects of the main Kaleckian results can be preserved not only in the short or medium run but also in the long run, in the sense that both (1) a decrease in the propensity to save, and (2) a change in income distribution favoring labor, bring about higher average rates of production growth and capital accumulation. However, the impact of a change in the profit share is shown to be subjected to the condition that the responsiveness of the real exchange rate with respect to the profit share has to be bounded from above, confirming that the scope for wage-led demand or wage-led growth can be limited by open-economy considerations, even within the supermultiplier context. [ABSTRACT FROM AUTHOR]