Profit motive
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As it extends beyond economics into ideology, the profit motive has been a major matter of contention.
Economics
Theoretically, when an economy is fully competitive (i.e. has no market imperfections like externalities, monopolies, information or power imbalances etc), the profit motive ensures that resources are being allocated
Criticisms
The majority of criticisms against the profit motive center on the idea that profits should not supersede the needs of people or the environment. Michael Moore's film Sicko, for example, attacks the healthcare industry for its alleged emphasis on profits at the expense of patients.[4] Moore explains:
- We should have no talk of profit when it comes to helping people who are sick. The profit motive should be nowhere involved in this. And you know what? It's not fair to the insurance companies either because they have a fiduciary responsibility to make as much money as they can for their shareholders. Well, the way they make more money is to deny claims or to kick people off the rolls or to not even let people on the rolls because they have a pre-existing condition. You know, all of that is wrong.[5]
Another common criticism of the profit motive is that it is believed to encourage selfishness and greed. Critics of the profit motive contend that companies disregard morals or public safety in the pursuit of profits.[6]
Socialist Theory
Socialists claim that producers can and should profit from their own labour but object when some in society profit from others' labour. Socialists oppose the capitalist form of profits which involves accumulating and reinvesting ever-larger amounts of capital while expecting the same rate of profit as before and while the purchasing power of society does not increase in proportion. Socialists claim this is a contradiction or "the Achilles Heel of capitalism".[7]
Counter-criticisms
Free-market economists argue that the profit motive, coupled with competition, often reduces the final price of an item for consumption, rather than raising it. They argue that businesses profit by selling a good at a lower price and at a greater volume than the competition. Economist Thomas Sowell uses supermarkets as an example to illustrate this point: "It has been estimated that a supermarket makes a clear profit of about a penny on a dollar of sales. If that sounds pretty skimpy, remember that it is collecting that penny on every dollar at several cash registers simultaneously and, in many cases, around the clock."[8]
Economist Milton Friedman has argued that greed and self-interest are universal human traits. On a 1979 episode of The Phil Donahue Show, Friedman states, "The world runs on individuals pursuing their separate interests." He continues by arguing that only in capitalist countries, where individuals can pursue their own self-interest, people have been able to escape from "grinding poverty".[9]
Author and philosopher Ayn Rand defended selfishness on ethical grounds. Her nonfiction work, The Virtue of Selfishness, argues that selfishness is a moral good and not an excuse to act with disregard for others:
- The Objectivist ethics holds that the actor must always be the beneficiary of his action and that man must act for his own rational self-interest. But his right to do so is derived from his nature as man and from the function of moral values in human life—and, therefore, is applicable only in the context of a rational, objectively demonstrated and validated code of moral principles which define and determine his actual self-interest. It is not a license “to do as he pleases” and it is not applicable to the altruists’ image of a “selfish” brute nor to any man motivated by irrational emotions, feelings, urges, wishes or whims.[10]
See also
References
- ^
Compare:
Duska, Ronald F. (1997). "The Why's of Business Revisited". Contemporary Reflections on Business Ethics. Issues in Business Ethics. Vol. 23. Dordrecht: Springer Science & Business Media (published 2007). p. 41. ISBN 9781402049842. Retrieved 8 July 2019.
In microeconomics courses, profit maximization is frequently given as the goal of the firm. [...] In microeconomics, profit maximization functions largely as a theoretical goal, with economists using it to prove how firms behave rationally to increase profit. Unfortunately, it ignores many real-world complexities.
- Ludwig Von Mises Institute.
Recorded during the 2008 Mises University, Jeffrey Tucker interviews leading Austrian Economists on the topic of Henry Hazlitt's classic book Economics in One Lesson.
- ^ "Corporate Profits Reached Record High of Nearly $3 Trillion in 2021". truthout.org. April 1, 2022.
- ^ "Press Room." Michaelmoore.com. Michael Moore. Web. 22 Apr. 2013.
- ^ Ballasy, Nicholas. "Michael Moore: 'It's Absolutely a Good Thing' for Government to Drive Private Health Insurance Out of Business." Michael Moore: 'It's Absolutely a Good Thing' for Government to Drive Private Health Insurance Out of Business. CNS News, 02 Oct. 2009. Web. 22 Apr. 2013.
- ^ Baldor, Lolita C.; Press, Associated (2011-10-05). "'Occupy Wall Street' Protests Give Voice to Anger Over Greed, Corporate Culture". PBS NewsHour. Retrieved 2018-06-19.
- ^ https://search.informit.org/doi/10.3316/informit.818838886883514
- ^ Sowell, Thomas. "Profit Motive Underrated By Intelligentsia." Sun-sentinel.com. Sun-Sentinel, 26 Dec. 2003. Web. 22 Apr. 2013.
- ^ Travis Pantin (2007). "Milton Friedman Answers Phil Donahue's Charges". The New York Sun. Retrieved 2018-06-19.
- ^ Ayn Rand; Nathaniel Branden (1964). "Introduction". The Virtue of Selfishness: A New Concept of Egoism (PDF) (Ix. Print ed.). New York: Signet Book. Archived from the original (PDF) on 2020-11-12. Retrieved 2018-06-19.