ChapterIII

Chapter III – Myth 2: Profit Benefits the People

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MYTH 2 from MYTHS OF CAPITALISM

—What is Profit?

—Where Does Profit Go?

—Profit Corrupts by Necessity 

—Profits and Despoliation

—People Pay for Profits Plus 

Government Collusion with Profit

Globalized Profits

People – or Profit?

A Word on Adam Smith

 

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Excerpt from Chapter III

MYTH 2: PROFIT BENEFITS THE PEOPLE

There is nothing more germane to a discussion of capitalism than the concept of profit, since it is the single defining element without which the system can’t exist. Profit dictates production, consumption, and employment, and therefore the rules, mores, and culture of society – not to mention survival itself. It is a tyrant, since nothing can be done without its permission, and everyone is subject to it whether he likes it or not. Its legitimacy is unquestioned by most Americans – including most academics and leading economists –  who regard it as a natural, essential, and justifiable element of an economy. Profit is taken as a given in orthodox economic models, its nature or history never examined. It is considered so integral to human exchange that many people assume profit as we know it today has always existed. However, like private property, it has not – and like private property it began its ascendancy in pre-capitalist mercantilism and came to full blossom with the industrial revolution and the flowering of capitalism itself.

For the more than two centuries of capitalism’s development, most people have held the Panglossian[1] notion that profit is the single, indispensable key for achieving the best of all possible worlds. Without it there would be no human motivation, the theory goes, and we’d all be eternally mired in backwardness. Nonetheless, beneath the surface of what is ostensibly common opinion, there are really three separate camps regarding the benefits of profit.  Some claim that profit – or the capitalist market – is the ultimate guarantor of efficiency and quality regardless of the product or service, and, for the sake of progress and common good, it should be the sole economic mover regardless of any social fallout. Others say that profit should not be the motive for providing certain social necessities – for example, medicine and education – and should be excluded from their function.[2] And still others conclude that profit as the motive for anything counters the interests of society as a whole, and should be eliminated.  Perhaps the best way to address these arguments is to examine profit itself, exclusive of its relation to products or services.  Exactly what is it and where does it come from?



[1] Dr. Pangloss, a character created with satirical intent by Voltaire in his novel “Candide”, claimed that we lived in the “best of all possible worlds” and, as an eternal optimist, blissfully conjured the benefits of even the most horrific tragedies and disasters.

[2] Since in this discussion I consider profits to accrue only from capital, a doctor, lawyer, or other professional who “overcharges” is not earning profit. He is simply valuing his services at what may be above “market.”

 

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