Profits and the Future of American Society

The Levys argue that aggregate corporate profits are determined at the level of the whole economy — by investment, government deficits, net exports and household saving behaviour — rather than being the sum of what individual managers accomplish, and they use that accounting identity as a forecasting tool rather than a curiosity. The policy half of the book reads the early-1980s American economy through that lens: where the profit flow was coming from, what would happen to it as deficits and investment moved, and what that implied for growth. The family’s forecasting practice and the Levy Economics Institute both grew out of this line of work.

Why it’s on the list: Li Lu’s investing section keeps widening out from security analysis into the macro and political economy that determines what profits exist at all to be allocated — this entry sits beside Hayek, Schumpeter and Richard Koo for that reason.

Where I saw it: Li Lu’s Recommended Book List, entry 33 of section IV, cited as “Happer & Row” (Harper & Row), 1983. This is the section the saved X posts photographed. Full transcription: Li Lu’s Recommended Book List.

Connections

• Li Lu’s Recommended Book List — the list this came from.
• Li Lu — the Himalaya Capital founder who assembled it.
• Macroeconomics — profits treated as a macro flow rather than a firm-level outcome.
• The Other Half of Macroeconomics and the Fate of Globalization — Richard Koo, entry 43, the modern end of the same balance-sheet argument.
• The Road to Serfdom — Hayek, entry 36, one of the political-economy entries this sits among.
• Capitalism, Socialism and Democracy — Schumpeter, entry 39, the same cluster.
• Capital Allocation — what the profit pool determines is available to allocate.