Is the pursuit of the return on equity damaging capitalism? Robert Jenkins of the Bank of England's Financial Policy Committee has already answered this in the affirmative (pdf) for banks. But might it also be true for the wider economy?

I ask because today's figures show that company profits, at least outside of manufacturing, are doing quite well. Excluding oil and financial companies, the return on capital has risen since 2009, and is now higher than it was in 2001-02 or in the early 90s or, I suspect, the mid-80s.

And a fat lot of good this is doing the economy. The volume of private sector business investment is 17.7 per cent below its pre-recession level and firms are, net, laying off workers and expected (pdf) to continue to do so. There's a marked contrast between profits, which aren't doing so badly, and the share of business investment in GDP which is near an all-time low.

Decent profits, then, are not encouraging firms to spend.

There are, of course, many reasons for this. One, I suspect, might be that firms are now much more focused on shareholder value than in the past. Until a few years ago, they would invest and hire if they had the money to do so; companies' financial surplus used to be a great lead indicator of GDP growth. But now, they don't. They pay more attention to prospective returns and less to retained profits, with the result that past profits no longer predict future corporate spending so well.

Whilst this might be rational for individual firms, it is collectively self-defeating, because as Michal Kalecki famously said, 'capitalists get what they spend'. Low aggregate investment means weak economic activity and thus weak profits.

Herein, though, lies a quirk. Whilst some of us are suggesting that the behaviour of capitalists is damaging the economy, Liam Byrne is obsessing about the need for a 'responsible workforce'. Rather than challenge the behaviour of capital, he is propagating the ridiculous myth that the workshy are a significant economic problem. In this sense, he is way to the right not just of me, but of the Bank of England. Which poses the question: is he an abominable and idiotic disgrace to the Labour party or is he instead its true face?