The reliably excellent Justin Fox summarizes last quarter’s corporate profits.
You might not be able to tell this from the chart, but the third-quarter 2010 profit share, at 9.46%, is slightly below the peak of 9.58% in the third-quarter of 2006. But it’s still quite high by historical standards. The chart above only goes back to 1947, because that’s as far back as quarterly data goes. There is annual data to 1929, and the only time besides 2006 and (one can predict with some confidence) this year when the profit share topped 9% was 1929, when it hit 9.9%.
And who is getting the money and why:
So the reason that corporate profits are near their all-time highs would appear to be that financial corporations (mainly big financial corporations) and multinationals are making lots of money and paying less of it out in taxes. Hmmmm.
The corporate profit picture would seem to mirror what’s been going on in the income distribution for individuals for the past few decades. The money is increasingly going to a select group at the very top of the economic food chain, who are able to reap the rewards of global growth, play the financial system astutely, and avoid taxes. You can spin this in a moderately positive way: these are very dynamic economic times, and the rewards are going to those companies and individuals who position themselves to take advantage of this dynamism. But there are an awful lot of negative ways you can spin it, too.
As an aside, Fox mentions that he has never read Das Kapital (I haven’t either). Is it time to start wondering if our economic system might be in something similar to the kind of death spiral Marx predicted for capitalism, that the rich will get richer and everyone else get poorer or stay the same, as far as the eye can see?