ABSTRACT
Since at least the middle of the 1800s, since long before modern national accounting was developed, it has been universally recognized that a characteristic of developed capitalist economies is that periods of output growth alternate with periods of contraction. Originally called "trade cycles", these repeating expansions and contractions came to be known as "business cycles" by the second half of the 20th century. The connection of the rate of profit to business cycle fluctuations in the growth of output occurs primarily through several influences on investment, both as a "push" and a "pull". The basic concept of the rising organic composition of capital argument is that over time capitalism keeps increasing the amount of capital it uses for a given amount of labor and therefore for a given potential output. Nonfinancial businesses treat net interest payments as operating expenses, and so the after-tax profits given in the BEA's NIPA tables are the sum of dividend payments plus retained earnings.
