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What is the Source of Profit and Interest? A Classical Conundrum Reconsidered

Tomasson, Gunnar and Bezemer, Dirk J (2010): What is the Source of Profit and Interest? A Classical Conundrum Reconsidered.

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Abstract

Classical political economy was underpinned by a shared view of the economy as a circular flow. This begged the question of how the value of produce can exceed the value of factor inputs: the ‘Profit Puzzle’. In this paper we advocate an understanding of the Profit Puzzle as a monetary paradox arising from Say’s Law. We trace how Classical, Keynesian and Neoclassical economists addressed the Puzzle. We suggest a solution based on the work of Bentham.

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