Profit inflation is real

Servaas Storm ()
Additional contact information
Servaas Storm: Delft University of Technology

PSL Quarterly Review, 2023, vol. 76, issue 306, 243-259

Abstract: Discussions on "profit inflation" are mired in conceptual unclarities, definitional idiosyncrasies and data problems. This article attempts to bring conceptual clarity to the debate on profit inflation, defining profit inflation strictly as an increase in the gross output price that is caused by an increase in the profit mark-up (keeping all other unit cost items constant). Empirical evidence for the U.S. economy (2020-2022) shows that corporate profit mark-ups have indeed increased, raising both the aggregate profit share and the general price level. Hence, unlike in the 1970s, the recent inflationary episode is the outcome not of a wage-price spiral but of a profit mark-up-price spiral in which real wages get squeezed. However, the conflict underlying the recent surge in inflation concerns not just corporate shareholders profiteering at the cost of workers, but – importantly – also involves struggles between financial speculators (in oil and commodity markets) and the real economy.

Keywords: inflation; profit inflation; stagflation; mark-up pricing; profit share; energy and oil prices; speculation (search for similar items in EconPapers)
JEL-codes: E0 E5 E6 E62 I12 J08 O23 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://rosa.uniroma1.it/rosa04/psl_quarterly_review/article/view/18217/17106 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:psl:pslqrr:2023:34

Ordering information: This journal article can be ordered from
http://www.pslquarterlyreview.info

Access Statistics for this article

PSL Quarterly Review is currently edited by Alessandro Roncaglia and Carlo D'Ippoliti

More articles in PSL Quarterly Review from Economia civile
Bibliographic data for series maintained by Carlo D'Ippoliti ().