Given that a basic question about money flow in such an important science as economics is unsettled to this day, can basic questions about objective reality be resolved in economics (or any subject)? Is the proper response denying the assumption that economics (or any subject) has a basic reality?
Similar to the issue I discuss below with respect to the source of profits and interest at the macroeconomic level, some scientists and others have cited the Heisenberg principle of uncertainty or indeterminacy in quantum mechanics as support for a belief in solipsism. According to this principle, both the location and momentum of a particular electron cannot be determined at the same time. Due to this lack of understanding and measurement at a basic scientific level, some scientists and others believe that the universe is irrational or unreal. Others, however, respond that epistemological problems should not lead to ontological conclusions.
Likewise, the conundrum in economics as to the source of profits and interest at the macroeconomic level is baffling to economists as a whole. A free paper on this issue, entitled “What is the Source of Profit and Interest? A Classical Conundrum Reconsidered,” by Gunnar Tomasson and Dirk J. Bezemer, dated January 29, 2010, and posted March 11, 2010, can be found online at https://mpra.ub.uni-muenchen.de/21292/. Although I have not exhaustively researched this issue or economists’ attempts to address it, of the explanations I have studied, I believe that the monetary-circuit approach of Professor Louis-Philippe Rochon most plausibly resolves the conundrum by considering that, in firms’ investment cycles, a cash outflow required for the purchase of capital goods and financed by long-term bank loans occurs in the first period of production in the investment cycle while long-term bank loans may be paid back over multiple periods of production until the end of the investment cycle.
Just as the Heisenberg principle may be fundamental to quantum mechanics, knowing the source of profits and interest at the macroeconomic level appears to get to the heart of the concept of money flow and seems fundamental to economics.