ABSTRACT
In fact, aggregate profits are equal to' capitalists' consumption plus investment plus the balance of foreign trade.l Profits of a given year were either consumed, invested in construction of capital equipment and in increase in inventories or. finally, were used for repayment of foreign debts or granting of foreign credits.2 In the course of a "normal" upswing the increase in profits is due to the rise of the component "investment". Let us suppose that 8 factories are built each year instead of 5. The real income of the capitalists-if other components of profits remain constant-increases by the value of these three "additional" factories.3 The expansion of investment activity must therefore lead to such a rise in aggregate production and in the profit per unit of output that this increase in aggregate profits would materialize. The consequent higher profitability of existing establishments induces a further rise in investment activity which thus enhances the upswing.
