5
The signs of growing weakness of private investment became
noticeable in the course of time in several countries: In
Britain there has been a perennial weakness of investment.
In Germany private investment has weakened from the end of
the sixties.. Also there was in Britain a decline of profits
before tax (in relation to capital or to sales) - perhaps
more than explained by fall in utilization, at any rate
before 1975 -(the so called profit crisis). It has been shown
1)
that profits after taxes have declined much less if at all.
An explanation might be that the tax allowances have led to
a sharper competitive effort in exports, thereby lowering
the profits before tax without harming seriously profits
after tax.
To return to the question put earlier on. The following
answers may be considered:
1. It has to be borne in mind that in Europe and especially
on the continent private investment received a special
boon from the transfer of technology from the U.S. (partly
in form of equipment) which amounted to a catching up with
U.S. standards of technology. Unlike the transfer of
new know-how, this was cheap and not subject to restrictions.
This drawing from a stock of old know-how in U.S. was bound
to subside gradually so that the special incentive
1) King, M.A.: The U.K. Profits crisis. Economic Journal,
March 1975