High wages stimulate profits and investment, boosting economic activity and demand.
The article discusses how profits affect investment and economic activity. When profits are low, there is less incentive for businesses to invest. However, in a Keynesian view, higher wages can lead to more demand, which in turn boosts profits and investment. High demand can help both workers and business owners by increasing capacity utilization. This means that even with high wages, profits can still be high. The study emphasizes the importance of balancing profits and wages to maintain a healthy economy.