Where Do Corporate Profits Come From?

Philip Pilkington gives an explanation for where corporate profits come from (sort of an MMT primer):

As we can see, profits actually come from some fairly unusual sources. Government spending up to the point of full employment actually increases profits, while workers’ savings diminishes them. This ties into the MMT argument that government should offset workers’ desired savings. As we can clearly see from the contemporary situation, this happens in an almost automatic manner; as the private sector saves and pays down debt in the current uncertain environment, the government goes into deficit in order to float profitability.

We should also note that capitalist economies are not perpetual motion machines. Many people seem to have a vague inclination that capitalist economies are somehow ‘self-generating’ and, for example, that government spending or private debt-financing are exogenous or external factors. This is clearly not the case. Money enters the economy through either government spending or private sector indebtedness. These then wash through the economy and eventually turn up as profits. These facts need to be front and centre when public policy is considered.

This is thought-provoking on a worldwide level.  The United States budget deficit and U.S. consumers, along with the PIIGs and the U.K. are providing the market for German and Chinese goods, and offset the German and Chinese citizens savings.  As these countries take austerity measures, what happens to the Germans and Chinese?