Full text: Government Debts and Inflation: Stumbling-Blocks in the Way of Keynesian Full Employment Policy

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 
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

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