Boner:

In this hypothetical closed country where there are only four of us, what were we all doing before the company got formed? We were productive in some way. Suppose X, Y, Z, and me produced a good independently and X brought in $2, Y $3, Z $5 and me $5 worth of the good. Gross domestic product is $15. Now supposed we form a company, and by working together we produce $16 worth of the good. That extra $1 is economic profit and it resulted from the entrepreneural talents of someone. Money is not a problem in this example since there is only one good and no coincidents of wants problem.

The economic profit came from better use of existing resources, not from some hypothetical non-industrialized country somewhere else.

That should have been *coincidence.

Yes you can produce $16 of product but who pays $16. You just said there's only $15 in the market.

What I'm getting at is that the collective purchasing power of the country can't spontaneously increase. The only reason such a system function in this country is because we essentially offload our purchasing deficit onto other countries. It's become increasingly difficult to do that and as a result we are in this quasi-recession. You can thank Reagan for that.

I didn't just say that there was $15 in the market. I said there was $16 worth of goods produced and that is what was consumed by the four factors of production: land, labor, capital, and entrepreneurship.

The collective purchasing power of the country can spontaneously increase. It can happen if someone figures out how to use existing resources in a more productive way.