With monetary input I, as with inflation, say, we have: I > sl + sc + sg + sf as the condition for growth of revenue in a net closed economy. And in general, allowing for imports and exports:
I + x – m > sl + sc + sg + sf Explicitly, the share of growth of revenue is:
DR = – ( sl + sc + sg + sf ) + I + x – m.
This is rather tautological. With a fixed money supply, total revenue cannot increase, and any quantity of money taken out of the system leads to a decrease in revenue. Since nominal profit requires an increase in revenue, a fixed money supply will, in the best of circumstances, result in an average nominal corporate profit of zero, unless there is dissavings. Some might argue that the policy of the wealthy for the past 35 years has been a forcing of dissavings on labor, (and government,) from which they have taken their profit. This is manifest by the fact that the share of wealth of the 1% has increased from around 20% of the total economy to around 40%. The share of wealth of the rest of society has correspondingly decreased from around 80% to less than 60%, and all but 10% is concentrated in ownership by the next 19%. 80% of the population of the United States combine to own only 10% of its assets.
PS: The diagram is actually kind of a joke. It's really a copy of the backward bending labor supply curve for an individual worker, a janitor say, who, when 'paid to excess,' is expected to produce less, in particular, work fewer hours. (This effect somehow is not thought to apply to CEO's.) While true for the CEO of the Universal Corporation, in an economy it is only true for the sum of all CEO's. Any individual corporate CEO, of course, gets nowhere near the compensation necessary to have a deleterious effect on the economy, (though he still might be expected to produce less if overcompensated.) But that the sum of all CEO compensation, the sum of all compensation to the wealthy, may be harmful lies the problem, which we discuss in my next post.