ABSTRACT
This chapter investigates how profits accrue to companies and the linkage between profits and investment. It assumes the existence, in the economy, of a single company and of a single financial institution, a commercial bank. The chapter shows that the commercial bank acts as pure intermediary between households and the company. It also investigates the relation between profit and interest, as well as the growth of bank deposits in the long-term. As with profit, interest may also correspond to a portion of the wages intercepted by companies. Economic activities are influenced both by the ability of income-earners to purchase the macroeconomic product, and by the effective availability of the product. The profit made by any company, which defines the total for bank deposits belonging to the company, allows for the payment of dividends, taxes, and interests, but it allows especially for investment activity.
