A new economic model shows that long-term growth is determined by how much capital is being invested, which is equal to the profit rate. The profit rate is a balance between workers and business owners. The relationship between output and inputs is measured in money, not physical units. The model suggests that the output can change based on the investment rate, which is not constant. The level of technology can be linked to wage levels. The reasons for the 2007-2008 global recession have been clarified.