Everett Historical/Shutterstock
Andrew Carnegie
Everett Collection Historical/Alamy Stock Photo
John Rockefeller
What Are the Causes of These High
Profits?
One possible cause of high corporate profits is an economic
environment in which investment is highly profitable, either
because of increases in the productivity of capital or because
of increases in the underlying demand for firms’ products. As
U.S. economist Paul Krugman has noted, in such an
environment we should expect to see highly profitable firms
also making large investments in physical capital.
The facts, however, appear to be different. The last decade has
seen high U.S. corporate profits combined with low rates of