The Soviet economist Karagedov examined the role of profits in different systems with intelligence and imagination. He made one point which it is useful for us to take on board. He distinguished, rightly, between profits as a micro criterion and the general level of profits in the economy. With a given level of wages and prices, provided prices correctly reflect supply-and-demand conditions, profitability is an appropriate criterion for efficiency (other things being equal, and abstracting from considerations of quality). If it goes up, then indeed this is a fair measure of the difference between cost (effort) and result. But this ceases to be true at macro level. At that level, incomes (wages) are no longer given, they are a variable. 6 If one imagines a model in which net investments are financed largely out of profits, the magnitude of profits desired would be directly influenced by the level of required savings. In no sense should these be 'maximised'. The balance between consumption and investment (savings) is a political decision, and it would be no evidence of 'inefficiency' if it were decided, by increasing wages, to reduce the level of profits and savings. Of course, if an increase in wages is accompanied by a simultaneous rise in investment and other state expenditures, then the total increase in demand could outrun supply, and tile result would be inflation, balance-ofpayments crises, shortages and other unpleasant phenomena. One hopes, optimistically, that the democratically expressed desires of the citizens will not take the form of deciding to have the cake and eat it, to distribute more cake than actually exists. Such a danger can no more be eliminated than one can 'abolish' the possibility that power can be abused. Institutional safeguards and political and economic education may - we hope! - reduce the risk of such disagreeable occurrences.