Posted on 12/31/2006 11:00:40 AM PST by G. Stolyarov II
All too often today we hear condemnations of the profit motive as destructive and uncaring. But is it really? Or is the profit motive one of the noblest forces that can impel a man to act?
To understand whether the profit motive is desirable, we must first grasp the goals of a life properly lived. These goals are twofold; on the first level, survival is the goal of sustaining one's biological existence and preventing one's downward slide toward poverty, ruination, and death. On the second level, flourishing is the extension of one's control over the external reality—the ability to harness ever more elements in the service of one's life.
In the process of living, every man—provided that he acts and uses his reason at all—will gain certain benefits from the external reality. He will also incur certain expenses in order to act in the ways he chooses. If the man breaks even-- if his gains are equal to his expenses-- then he has accomplished the goal of survival; he is no worse off than he was when he started. But neither is he better off. In order to accomplish the goal of flourishing, his gains must be greater than his expenses. In other words, he needs to make a profit.
It is vitally important to understand that making profits is the only way to flourish. One cannot consistently extend one's control over the external reality if one keeps losing one's assets or if one merely breaks even. Profits can come in many different forms; they can be intellectual profits or gains of knowledge, technical profits or gains of skill, material profits or gains of property, physiological profits or gains in health and fitness, social profits or gains in valuable relationships, or monetary profits or gains of money. The value each individual assigns to these different kinds of profits is highly contextual; it depends on the ways in which that individual wants to flourish.
Virtually nobody will condemn every single kind of profit, even though many people will deny that certain types of profit are, in fact, profits. Oddly enough, the type of profit that draws the greatest condemnation is monetary profit. This condemnation is wholly unwarranted.
Monetary profit is a kind of profit that can be most easily harnessed to the pursuit of the greatest variety of ends. While it might be true to an extent that "money cannot buy everything," it certainly can go a long way to help one fulfill any of one's objectives. Money is a universally accepted medium of exchange; it can be traded for a wide range of goods or services far more conveniently than any other commodity in most situations. Money can buy books or pay for courses that will give a person knowledge and skills. Money can buy training equipment to increase one's health and fitness. Money can even buy gifts to friends to sustain positive social relationships. Money can buy leisure goods used to rejuvenate one's energies and improve one's standard of living. Furthermore, money can be invested into valuable assets to generate additional money. If flourishing is one's goal, money should at least play an important role in attaining it.
Profit is moral because flourishing and improving one's life are moral; profit by definition cannot be destructive to one's own life. Yet some claim that profit is destructive to the lives of others. This, too, cannot be.
A man can only make a profit in two ways. He can pursue an action which benefits himself but is irrelevant to other people. That is, he can embark on a solitary self-improvement program or in a direct transformation of inanimate objects without the participation of other people. Or he can pursue an action in cooperation with other people in order to achieve a mutually beneficial objective. He can embark in a voluntary trade with another individual or collaborate on a project or participate in a mutually valued friendship. In the first case, no other person is harmed, and many indirect benefits will flow to other people as a result of the individual's self-improvement and improvement of inanimate entities. In the second case, other people are directly benefited; they earn a profit in return for helping the individual make a profit.
Furthermore, pure entrepreneurial profit on the free market is gained by observing and eliminating arbitrage opportunities caused by widespread errors of perception. If errors in people's knowledge at present cause resources to be misallocated away from their optimal uses, the entrepreneur can try to find a better allocation by distributing these resources in a different way than had been done before. If the entrepreneur makes a profit in doing so, then he has put the resources to a better use than previously; people are willing to pay him more for the new allocation of resources than they were willing to pay for the prior allocation. By pursuing and eliminating arbitrage opportunities, entrepreneurs benefit everybody in correcting market errors and aligning supply with demand to optimally satisfy human needs. The market's profit-and-loss test is the best way to determine what should be produced and how it should be distributed.
In order to pursue profit, man needs to be free to do so. He needs to depend on his own rational judgment in deciding what is profitable to him and in determining how to pursue it. If somebody else restricts him from following his best judgment or imposes an unprofitable course of action upon him, then the individual cannot act in his best interests or flourish maximally. The only political, social, and economic system which allows individuals to flourish freely is laissez-faire capitalism, which tolerates no coercive restraints on voluntary, non-coercive, individual profit-seeking activities. Under laissez-faire capitalism, every man has sovereignty to decide the value he will assign to each type of profit, the ways in which he will pursue this profit, and the types of exchanges he will make with other consenting individuals in order to flourish.
If compulsory economic regulations prevent the individual from seeking his own flourishing in his own way, this will also damage other people; the market errors that entrepreneurial activity might have corrected will remain and continue to result in misallocated resources. Numerous mutually beneficial value-trades will be obstructed. Most tragically, individuals will be stunted in their self-improvement and flourishing by restrictions on certain activities—especially money-making. They will instead suffer great losses through the diversion of resources to sustain an inefficient and harmful regulatory regime.
If human flourishing is moral—if the improvement of individual lives is moral—than so is the pursuit of profit. If the pursuit of profit is moral, then men should be free to pursue it. This reasoning leads us to favor maximal economic liberty under laissez-faire capitalism.
I'm not sure about the morality of profit, but the morality of self-promotion [like pushing one's screeds from some obscure places] is iffy. Happy New Year.
Money itself is nothing. I know an old lady that won't even pick up money from the floor anymore. Profit is a means to an end and hardly directly important to most, who are not in business but pull down a wage until they retire.
Imagine if, in the 80's everyone bought only U.S.Gov't bonds paying 14-15%. What an investment!? Still paying too. (30 yr. notes.) What a high tx rate(s) it would take to service this debt.
If it wasn't for "profit" we would all still be living in caves..or perhaps not living at all since death would overtake us and no one would want to help...with out some sort of return on their investment in time or energy. Profit exists because it must.
"The Pursuit of Profit is Moral"
Bump for later read. However, as a small business owner, I'd like to see a follow up piece titled:
"The Confiscation of Profit by the Government is Immoral" ;)
It all depends on what your pursuit is for- Self indulgences? or providing security for those you love? - The love of money is the root of all evil- not the money itself- We're exhorted in the bible to be prudent and responsible with money- living within our means, and providing for our future with the understanding that it is God who gives, and God who takes. Be content in whatsoever ye have been allotted by God- pursue, but do so with the knowledge that God makes the final decisions.
God is NOT against Heddonism- He commands us to be happy time and time again- however, do NOT hang all your happiness on money so that you are able to say along with Paul in the bible that having known BOTH sides of wealth, he has learned to be content no matter the circumstances. Amen- the end, happy new year (And, one last thing- Can someone loan me a dollar?) http://sacredscoop.com
No, it doesn't depend on what your pursuit is for.
If you want it, you can spend your money on it, and you live with the consequences.
I had a soldier with a lot of debts. When asked on what he spend his money, he replied:
"Some I spend on booze, some on whores, and the rest I just spent foolishly."
Profound, that guy.
I guess I wasn't clear- moral correctness in the pursuit of money depends on what your pursuits include
"The Pursuit of Profit is Moral"
Bump for later read. However, as a small business owner, I'd like to see a follow up piece titled:
"The Confiscation of Profit by the Government is Immoral" ;)
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Different story here. CT businesses will have to "absorb" a 55%+ increase in our electric bill within the next 6 months. One businessman I spoke to yesterday fired two workers and bought a $12,000.00 diesel generator and will go "off the grid". He says he'll get ROI in 18 -20 months.
Interesting times here in the NE.
Profit is really your reward for adding to our standard of living.
You take X inputs (which have a certain value to society), you combine them to create Y product (which has more overall value to society than the inputs) and you get rewarded with Profit (the increase in value to society of your product versus the inputs.)
You can only make money if your product is worth more to society than the inputs which went into it.
It can only be moral to add to our standard of living.
The interesting thing: private pursuit of money will create morality.
Even if you are a thief, in pursuit of money you will have to plan, present the illusion of honesty to your "coworkers", and select a victim that has more money than has the ability to protect that money. When crime goes up, the honest people protect their money more carefully, and crime goes back down.
By contrast, taxation damages the the most productive immediately, rewards lying politicians with their cut, and then provides it to spenders who are less efficient than private parties.
Type 1 spending you do for yourself. you care about cost and value.
Type 2 spending you spend for another, like a present. You car about cost a lot, but value? not that much.
Type 3 is expense spending on your self. You care about value, but cost, not so much.
Type 4 spending is government spending. You don't care much about cost, nor do you care much about quality.
Government spending is normally Type 4, and is therefore less efficent.
Rev. Ike thanks you....
Wow! Luckily our contractor for office space is also the builder for one of the partners' "McMansion." He's already made his pile-o-cash, LOL! But I'm pretty sure he totally underestimated the amount of electricity we would use each month being in the Computer Repair biz." ;)
He'll figure it out eventually, but for now...my lips are sealed. :)
But thanks for the 'Heads Up' on the generator thing. I only have two employees right now; one of which is my husband, so it'll be hard to fire him. (Not that it couldn't be done; it would just be uncomfortable that day when he came home for dinner, LOL!)
I've heard rumblings that electricity in our neck of the woods is going up substantially...no doubt due to those that wish to keep the landscape as pristine as in the "Bronze Age."
Luddites. They're everywhere! They're everywhere! ;)
Money is the most effective general means of measuring value. It’s not all encompassing, but no better single measurement exists.
Since money is the most effective general means of measuring value, profit is the achievement of value. Saying you’re not sure about the morality of profit is almost like saying you’re not sure of the morality of productivity.
The two are separate issues. Making a profit is the measurement of productivity, virtually always moral in and of itself. Unwise spending is another issue.
bump
I'm afraid you completely missed it. There are a bunch of phenomena that are outside of morality sphere [is sneezing moral, or not quite moral?], and to which the notion of morality is simply not applicable. Also, the whole construct could be read as "whether making a profit is moral or not, your habit of self-quotation is not". While I meant the latter, I'm afraid you missed even the former.
Most of that debt has been called over the last five years, unfortunately, so it is not still paying. I knew at least one investment officer at a bank in the South in 1981 who actually stood on a conference table and ripped off his tie begging the investment committee to let him buy 30 year US Gov't debt at 16%. They thought he was crazy because money market funds were paying 21%. LOL.
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